<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K


[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from.......................to.........................
Commission file number...................................................0-18046


                           FIRST FEDERAL CAPITAL CORP
             (Exact name of Registrant as specified in its charter)


WISCONSIN                                                             39-1651288
(State or other jurisdiction of                                    (IRS employer
incorporation or organization)                               identification no.)

605 STATE STREET
LA CROSSE, WISCONSIN                                                       54601
(Address of principal executive office)                               (Zip code)

       Registrant's telephone number, including area code: (608) 784-8000

   Securities registered pursuant to Section 12(b) of the Act: NOT APPLICABLE

           Securities registered pursuant to Section 12(g) of the Act:
                     COMMON STOCK, PAR VALUE $.10 PER SHARE
                         PREFERRED STOCK PURCHASE RIGHTS
                                (Title of Class)


Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period as the Registrant
has been subject to such requirements), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate value of the common stock of the Registrant that was held by
non-affiliates as of March 1, 2002, was approximately $258.2 million. This
amount was based on the closing price of $16.25 per share of the Registrant's
common stock as of the same date.

The number of shares of common stock of the Registrant outstanding as of March
1, 2002, was 20,033,558 (net of 182,375 shares held as treasury stock).

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2002 Annual Meeting of Stockholders are
incorporated into Part III, Items 10 through 13 of this Form 10-K.


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                           FORM 10-K TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I                                                                                                    Page
<S>                                                                                                       <C>
             Item 1--Business................................................................................2

             Item 2--Properties.............................................................................16

             Item 3--Legal Proceedings......................................................................16

             Item 4--Submission of Matters to a Vote of Security Holders....................................16

PART II

             Item 5--Market for Registrant's Common Equity and Related Stockholder Matters..................17

             Item 6--Selected Financial Data................................................................18

             Item 7--Management's Discussion and Analysis of Financial Condition and Results of
                     Operations.............................................................................19

             Item 7A--Quantitative and Qualitative Disclosures about Market Risk............................34

             Item 8--Financial Statements and Supplementary Data............................................38

             Item 9--Changes in and Disagreements with Accountants on Accounting and Financial
                     Disclosure.............................................................................67

PART III

             Item 10--Directors and Executive Officers of the Registrant....................................68

             Item 11--Executive Compensation................................................................68

             Item 12--Security Ownership of Certain Beneficial Owners and Management and Related
                      Stockholder Matters...................................................................68

             Item 13--Certain Relationships and Related Transactions........................................68

PART IV

             Item 14--Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................68

SIGNATURES..................................................................................................70

EXHIBITS....................................................................................................72
</TABLE>


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FORWARD-LOOKING STATEMENTS

         This report includes certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
include words and phrases such as "will likely result", "are expected to", "will
continue", "is anticipated", "is estimated", "is projected", "intends to", or
similar expressions. Forward-looking statements are based on management's
current expectations. Examples of factors which could cause future results to
differ from management's expectations include, but are not limited to, the
following: general economic and competitive conditions; legislative and
regulatory initiatives; monetary and fiscal policies of the federal government;
general market rates of interest; interest rates on competing investments;
interest rates on funding sources; consumer and business demand for deposit and
loan products and services; consumer and business demand for other financial
services; changes in accounting policies or guidelines; and changes in the
quality or composition of the Corporation's loan and investment portfolios.
Readers are cautioned that forward-looking statements are not guarantees of
future performance and that actual results may differ materially from
management's current expectations.

         Management of the Corporation does not undertake and specifically
disclaims any obligation to update any forward-looking statements to reflect the
occurrence of anticipated or unanticipated events or circumstances after the
date of such statements.

                                     PART I

ITEM 1--BUSINESS

         This section of the report contains general information about First
Federal Capital Corp (the "Corporation"), its wholly-owned subsidiary First
Federal Saving Bank of La Crosse-Madison (the "Bank"), and the Bank's
wholly-owned subsidiaries (collectively "the reporting group"). Included in this
section is information regarding the reporting group's markets and business
environments, significant operating and accounting policies, practices, and
procedures, as well as its competitive and regulatory environments. Information
regarding the reporting group's current financial condition and results of
operations is included in Part II, Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations", Part II, Item 7A,
"Quantitative and Qualitative Disclosures about Market Risk", and Part II, Item
8, "Financial Statements and Supplementary Data". This section should be read in
conjunction with those sections.

FIRST FEDERAL CAPITAL CORP

         The Corporation was incorporated under the laws of the State of
Wisconsin in 1989. In that year the Corporation also became the savings and loan
holding company for the Bank upon its conversion from mutual to stock form. The
Corporation currently owns all of the outstanding capital stock of the Bank,
which is the principal asset of the Corporation. The Corporation's principal
office is located at 605 State Street, La Crosse, Wisconsin, 54601, and its
telephone number is (608) 784-8000.

FIRST FEDERAL SAVINGS BANK LA CROSSE-MADISON

         The Bank was founded in 1934 and is a federally-chartered,
federally-insured, savings bank headquartered in La Crosse, Wisconsin. The
Bank's primary business is community banking, which includes attracting deposits
from and making loans to the general public, businesses, government, and
professional customers. In addition to deposits, the Bank obtains funds through
borrowings from the Federal Home Loan Bank of Chicago ("FHLB"), as well as
through other sources such as securities sold under agreements to repurchase and
purchases of federal funds. These funding sources are principally used to
originate loans, including single-family residential loans, commercial real
estate loans, business loans and lines of credit, consumer loans, and education
loans. The Bank also purchases single-family residential and commercial real
estate loans from third-party financial institutions and invests in
mortgage-backed and related securities. The Bank is also an active seller of
residential loans in the secondary market.

         The Bank's primary market areas for conducting its activities consist
of communities located in the western, south-central, and eastern portions of
Wisconsin and the northern portion of Illinois, as well as contiguous counties



                                       3
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in Iowa and Minnesota. The Bank maintains 78 banking offices in its market
areas. Twenty of these offices are located in the Madison metropolitan area, six
in the La Crosse metropolitan area, five in the city of Eau Claire, four in the
Appleton and Wausau areas, three in the Beloit, Hudson, and Green Bay areas, and
two each in the cities of Kenosha, Janesville, Neenah, Oshkosh, and Racine,
Wisconsin. The Bank also maintains one banking facility in thirteen other cities
located throughout its market area in Wisconsin, as well as five offices in the
Rockford, Illinois, area. The Bank also has two separate residential loan
production offices in Appleton, Wisconsin.

         The Bank is subject to regulation and examination by the Office of
Thrift Supervision ("OTS"), its chartering authority and primary regulator, and
by the Federal Deposit Insurance Corporation ("FDIC"), which administers the
Savings Association Insurance Fund ("SAIF"), which insures the Bank's deposits
to the maximum extent permitted by law.

         The Bank's principal executive offices are located at 605 State Street,
La Crosse, Wisconsin, 54601, and its telephone number is (608) 784-8000. The
Bank's internet site is www.firstfed.com.

ORGANIZATIONAL STRUCTURE AND SEGMENT REPORTING

         In 2001, the Corporation completed a reorganization along functional
lines rather than product lines. The principal components of the Corporation's
organization now consist of a Community Banking Group, which has primary
responsibility for the sale and delivery of all the Corporation's products and
services, and a Corporate Administration and Operations Group, which has primary
responsibility for product support, data and technology management, and property
management. The Corporation also has a Commercial Real Estate Lending Division,
which is responsible for the origination and servicing of commercial real estate
loans, a Finance and Treasury Division, and a Human Resources Division. Each
group or division is led by an executive officer that reports directly to the
president of the Corporation.

         Despite its reorganization along functional rather than product lines,
the Corporation continues to account for its operations along product lines. The
Corporation tracks profitability in four major areas: (i) residential lending,
(ii) commercial real estate lending, (iii) consumer lending, and (iv) investment
and mortgage-related securities. Residential lending is divided into two profit
centers for segment reporting purposes: (i) a mortgage banking profit center
that is responsible for loan origination, sales of loans in the secondary
market, and servicing of residential loans, and (ii) a residential loan
portfolio that consists of loans held by the Corporation for investment purposes
(loans held for sale are included in the mortgage banking profit center). This
profit center also includes mortgage-backed securities that are collateralized
by loans that were originated by the Corporation. Commercial real estate lending
consists of the Corporation's portfolio of multi-family and non-residential
mortgage loans, as well as functions related to the origination and servicing of
such loans. Consumer lending is divided into two profit centers for segment
reporting purposes: (i) a consumer lending portfolio, which consists of the
Corporation's second mortgage, automobile, and other consumer installment loans,
as well as functions related to the origination and servicing of such loans, and
(ii) an education loan portfolio, which also includes functions related to the
origination and servicing of the loans. Finally, the Corporation's investment
and mortgage-related securities portfolio is considered a profit center for
segment reporting purposes. However, mortgage-backed securities collateralized
by loans originated by the Corporation are included in the residential loan
profit center, rather than the investment and mortgage-related securities
portfolio.

         The Corporation's extensive branch network, which delivers checking,
savings, certificates of deposit and other financial products and services to
customers, is considered a support department for segment reporting purposes.

         In October 2001, the Corporation completed the acquisition of American
Community Bankshares, Inc. ("ACB"). In addition, in January 2002 the Corporation
announced an agreement to purchase three branch offices in Rochester, Minnesota,
from another financial institution. This purchase includes the customer loans
and deposits at those branches. In addition to offering products and services
similar to the Corporation's existing product lines, these institutions also
deliver commercial loan and deposit products and services to business customers.
This represents a new line of business for the Corporation and a new reportable
segment. The financial results of this new line of business have not been
separately reported in 2001 due to continuing efforts to design these products
on the Corporation's systems, as well as efforts to complete the integration of
the operations of ACB and the three



                                       4
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Rochester branches. For additional discussion, refer to Notes 14 and 15 of the
Corporation's Audited Consolidated Financial Statements, included herein under
Part II, Item 8, "Financial Statements and Supplementary Data".

         For additional discussion regarding the Corporation's reportable
segments, refer to Note 13 of the Corporation's Audited Consolidated Financial
Statements, included herein under Part II, Item 8, "Financial Statements and
Supplementary Data", as well as Part II, Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

LENDING ACTIVITIES

         GENERAL The principal categories of loans in the Corporation's
portfolio are conventional real estate loans secured by single-family
residences, commercial real estate loans secured by multi-family residential and
non-residential real estate, consumer loans secured primarily by second
mortgages on single-family residences and automobiles, government-guaranteed
education loans, and commercial loans to businesses secured by varied collateral
or consideration. Although the Corporation also originates single-family
residential loans that are insured or partially guaranteed by federal and state
agencies, the Corporation does not generally retain such loans in its
residential loan portfolio. As of December 31, 2001, approximately 68% of the
Corporation's total assets consisted of loans held for investment purposes.

         RESIDENTIAL LENDING Single-family residential loans accounted for
approximately 36% of the Corporation's gross loans as of December 31, 2001.
Applications for single-family residential and construction loans are accepted
by commission-based employees of the Corporation at a number of locations (most
of which are located with deposit-taking offices) and by salaried employees at a
few other deposit-taking offices that are able to handle such applications.

         In general, the Corporation retains in its portfolio only single-family
residential mortgage loans that provide for periodic adjustments of the interest
rate ("adjustable-rate mortgage loans"). These loans generally have terms of up
to 30 years and interest rates which adjust every one to two years in accordance
with an index based on the yield on certain U.S. government securities. A
portion of these loans may guarantee borrowers a fixed rate of interest for the
first three to five years of the loan's term. Furthermore, most of these loans
have annual interest rate change limits ranging from 1% to 2%, maximum lifetime
interest rates ranging from 11% to 17%, and minimum lifetime rates of
approximately 6%. It is the Corporation's practice from time-to-time to discount
the interest rate it charges on its adjustable-rate mortgage loans during the
first one to five years of the loan, which has the effect of reducing a
borrower's payment during such years. In addition, most of the Corporation's
adjustable-rate mortgage loan agreements permit borrowers to convert their
adjustable-rate loans to fixed-rate loans under certain circumstances in
exchange for a fee. Upon conversion, the Corporation generally sells such loans
in the secondary market.

         Adjustable-rate mortgage loans decrease the Corporation's exposure to
risks associated with changes in interest rates, but involve other risks because
as interest rates increase, borrowers' monthly payments increase, thus
increasing the potential for default. This risk has not had any adverse effect
on the Corporation to date, although no assurances can be made with respect to
future periods.

         The Corporation occasionally purchases adjustable-rate single-family
residential loans from third-party financial institutions. In general, such
loans are subject to the same underwriting standards as loans originated
directly by the Corporation. However, such loans are usually secured by
properties located outside of the Corporation's primary market areas. The seller
generally retains servicing of the loans.

         Although the Corporation generally retains only adjustable-rate
mortgage loans in its portfolio, it continues to originate fixed-rate mortgage
loans in order to provide a full range of products to its customers. In general,
such loans are originated only under terms, conditions, and documentation
standards that make such loans eligible for sale to the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association
("FNMA"), the FHLB, and other institutional investors. The Corporation generally
sells these loans at the time they are originated. In addition, the Corporation
generally sells any adjustable-rate mortgage loans that convert to fixed-rate
loans in accordance with options granted to such borrowers in the original loan
documents, as previously described. Sales of mortgage loans provide additional
funds for lending and other business purposes.


                                       5
<PAGE>

         Sales or securitizations of mortgage loans through FHLMC and FNMA have
generally been under terms that do not provide for any recourse against the
Corporation by the investor. In the case of sales to the FHLB, however, the
Corporation retains the credit risk on the underlying loans in exchange for a
credit enhancement fee. Furthermore, the Corporation on occasion has also
retained the credit risk on certain securitizations of its own loans into
mortgage-backed securities ("MBSs") through FHLMC or FNMA.

         The Corporation's general policy is to lend up to 80% of the
independently appraised value of the property securing a first mortgage loan
(referred to as the "loan-to-value ratio"). The Corporation will occasionally
lend in excess of an 80% loan-to-value ratio on a first mortgage loan, but will
generally require the borrower to obtain mortgage impairment insurance on the
portion of the loan that exceeds 80%. The Corporation receives commission
revenue from the independent insurance providers that sell such policies to the
Corporation's loan customers. Beginning in 2001, premium revenue on the sale of
such policies is also received through a wholly-owned, second-tier subsidiary of
the Bank. This revenue is received in exchange for the subsidiary's reinsurance
of a portion of the mortgage impairment risk. Refer to "Subsidiaries", below,
for additional discussion.

         In 2001, the Corporation began to offer loan programs to qualifying
borrowers with good credit standing which will enable them to obtain a second
mortgage loan from the Corporation in conjunction with their first mortgage
loan. Under these programs, the combined principal balance of the loans will not
exceed 100% of the property's value and the Corporation will waive the
requirement for mortgage impairment insurance.

         The Corporation also originates loans to individuals to construct
single-family residences. Such loans accounted for approximately 3% of the
Corporation's gross loans as of December 31, 2001. Construction loans may be
made without commitments to purchase the property being constructed and the
borrower may not have take-out commitments for permanent financing on hand at
the time of origination. Construction loans generally have a maturity of 6 to 12
months and a fixed rate of interest, with payments being made monthly on an
interest-only basis. Construction loans are otherwise underwritten and approved
in the same manner as other single-family residential loans. Construction loans,
however, are generally considered to involve a higher degree of risk than
conventional residential mortgage loans. This is because the risk of loss is
largely dependent on the accuracy of the initial estimate of the property's
value at completion of construction, the estimated cost of construction, and the
borrower's ability to advance additional construction funds, if necessary.

         In addition to servicing the loans in its own portfolio, the
Corporation continues to service most of the loans that it sells to third-party
investors (commonly referred to as "loans serviced for others"). Servicing
mortgage loans, whether for its own portfolio or for others, includes such
functions as collecting monthly principal and interest payments from borrowers,
maintaining escrow accounts for real estate taxes and insurance, and making such
payments on behalf of borrowers when they are due. When necessary, servicing of
mortgage loans also includes functions related to the collection of delinquent
principal and interest payments, loan foreclosure proceedings, and disposition
of foreclosed real estate.

         When the Corporation services loans for others, it is compensated for
these services through the retention of a servicing fee from borrowers' monthly
payments. The Corporation pays the third-party investors an agreed-upon yield on
the loans, which is generally less than the interest agreed to be paid by the
borrowers. The difference, typically 25 basis points or more, is retained by the
Corporation and recognized as servicing fee income over the lives of the loans,
net of amortization of capitalized mortgage servicing rights. The Corporation
also receives fees and interest income from ancillary sources such as
delinquency charges and float on escrow and other funds. The Corporation also
purchases mortgage servicing rights from third parties for which it retains an
agreed-upon fee from borrowers' monthly payments, as previously described. The
Corporation performs substantially the same services for these loans as it does
on its own originations.

         Management believes that servicing mortgage loans for third parties
provides a natural hedge against other risks inherent in the Corporation's
mortgage banking operations. That is, fluctuations in volumes of mortgage loan
originations and resulting gains on sales of such loans caused by changes in
market interest rates will generally be offset in part by an opposite change in
loan servicing fee income. These fluctuations are usually the result of actual
loan prepayment activity that is different from that which was anticipated when
the related servicing rights were originally recorded. However, fluctuations in
the value of mortgage servicing rights may also be caused by mark-to-market
adjustments under generally accepted accounting principles ("GAAP"). That is,
the value of servicing rights



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may fluctuate because of changes in the discount rates or future prepayment
assumptions used to periodically value servicing rights. Although management
believes that most of the Corporation's loans that prepay are replaced by a new
loan to the same customer or even a different customer (thus preserving the
future servicing cash flow), GAAP requires mark-to-market losses resulting from
a change in future prepayment assumptions to be recorded in the period in which
the change occurs. However, the offsetting gain on the sale of the new loan, if
any, cannot be recorded under GAAP until the customer actually prepays the old
loan and the new loan is sold in the secondary market. Mortgage servicing rights
are particularly susceptible to unfavorable mark-to-market adjustments during
periods of declining interest rates during which prepayment activity typically
accelerates to levels above that which had been anticipated when the servicing
rights were originally recorded. For additional discussion, refer to Notes 1 and
4 of the Corporation's Audited Consolidated Financial Statements, included
herein under Part II, Item 8, "Financial Statements and Supplementary Data", as
well as Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations".

         COMMERCIAL REAL ESTATE LENDING Multi-family residential loans and
non-residential real estate loans (together "commercial real estate loans")
accounted for approximately 28% of the Corporation's gross loans as of December
31, 2001. Applications for commercial real estate loans are accepted at the
Corporation's main office in La Crosse, as well as offices in Madison, Appleton,
Milwaukee, and Wausau, Wisconsin. All underwriting and approval of such loans,
however, is performed at the Corporation's main office in La Crosse, as is the
servicing of such loans on an on-going basis. It is the Corporation's general
policy to restrict its commercial real estate lending to loans secured by
properties located within a 300-mile radius of La Crosse, which includes all or
a portion of the states of Wisconsin, Nebraska, Illinois, Iowa, and Minnesota.

         The Corporation's emphasis in commercial real estate lending is in
loans secured by collateral classified as Type A properties, which are to
comprise not less than 80% of the Corporation's total commercial real estate
loan portfolio. Examples of such properties include multi-family residential
properties, retail shopping establishments, office buildings, and multi-tenant
industrial buildings. Not more than 20% of the Corporation's commercial real
estate loan portfolio is to include loans secured by collateral classified as
Type B properties, examples of which include nursing homes, single-tenant
industrial buildings, hotels and motels, and churches. The Corporation's current
policy is to not make any new loans secured by collateral classified as Type C
properties, examples of which include restaurants, recreation facilities, and
other special purpose facilities, although the Corporation has made loans
secured by such properties in the past. The properties securing the
Corporation's commercial real estate loans are generally "non-owner occupied".
That is, the borrower is not a major tenant in the property.

         Applications for commercial real estate loans are generally obtained
from existing borrowers, direct contacts by loan officers, and referrals. In
general, these loans have amortization periods ranging from 20 to 30 years,
mature in ten years or less, and have interest rates which are fixed for one to
five years--thereafter adjusting in accordance with a designated index that is
generally subject to a floor and a ceiling. Loan-to-value ratios on the
Corporation's commercial real estate loans may be as high as 80% for loans
secured by Type A properties and 75% or lower for commercial real estate loans
secured by Type B properties. In addition, as part of the criteria for
underwriting commercial real estate loans, the Corporation generally imposes on
potential borrowers a "debt coverage ratio" (the ratio of net cash from
operations before payment of debt service to debt service). This ratio ranges
from 115% to 120% for loans secured by Type A properties and 120% to 150% for
loans secured by Type B properties. It is also the Corporation's general policy
to obtain personal guarantees on its commercial real estate loans and, when such
guarantees cannot be obtained, to impose more stringent loan-to-value ratios,
debt service ratios, and other underwriting requirements.

         The Corporation occasionally purchases commercial real estate loans
from third-party financial institutions. In general, such loans are subject to
the same geographic restrictions and underwriting standards as loans originated
directly by the Corporation. The Corporation, however, does not generally
service such loans after their acquisition.

         From time-to-time the Corporation originates loans to construct
multi-family residential and non-residential real estate properties. Such loans
accounted for approximately 1% of the Corporation's gross loans as of December
31, 2001. Construction loans are generally considered to involve a higher degree
of risk than mortgage loans on completed properties. The Corporation's risk of
loss on a construction loan is dependent largely upon the accuracy of the
initial estimate of the property's value at completion of construction, the
estimated cost of construction, and the borrower's ability to advance additional
construction funds if such should become necessary.



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The Corporation's construction lending activities are generally limited to an
area within a 150-mile radius of each of Madison, La Crosse, Appleton,
Milwaukee, and Wausau, Wisconsin.

         Commercial real estate lending is generally considered to involve a
higher level of risk than single-family residential lending. This is due to the
concentration of principal in a limited number of loans and borrowers, the
effects of general economic conditions on real estate developers and managers
and on income producing properties, and the increased difficulty of evaluating
and monitoring these types of loans. Moreover, a construction loan can involve
additional risks because of the inherent difficulty in estimating both a
property's value at completion of the project and the estimated cost of the
project. In addition, loans secured by properties located outside of the
Corporation's immediate market area may involve a higher degree of risk. This is
because the Corporation may not be as familiar with market conditions and other
relevant factors as it would be in the case of loans secured by properties
located within its market areas. The Corporation does not have a material
concentration of commercial real estate loans outside of its immediate market
area.

         The Corporation has attempted to minimize the foregoing risks by
adopting what management believes are conservative underwriting guidelines that
impose more stringent loan-to-value ratios, debt service ratios, and other
requirements on loans, which are believed to involve higher elements of risk.
The Corporation also requires independent appraisals on all loans, requires
personal guarantees where appropriate, limits the geographic area in which the
Corporation will make construction loans, and limits the types of loans in its
portfolio, as previously described.

         CONSUMER LENDING The Corporation offers consumer loans in order to
provide a full range of financial services to its customers. Such loans
accounted for approximately 19% of the Corporation's gross loans as of December
31, 2001. Applications for consumer loans are taken at the Corporation's banking
offices, as well as over the phone at the Corporation's headquarters in La
Crosse. The majority of such loans, however, are underwritten, approved, and
serviced on an on-going basis at the Corporation's headquarters. Most of the
Corporation's consumer loan portfolio consists of second mortgage loans, but
also includes automobile loans, home equity lines of credit, recreational
vehicle and mobile home loans, deposit account secured loans, and unsecured
lines of credit or signature loans. The Corporation services all of its own
consumer loans.

         Consumer loans generally have shorter terms and higher rates of
interest than conventional mortgage loans, but typically involve more credit
risk than such loans because of the nature of the collateral and, in some
instances, the absence of collateral. In general, consumer loans are more
dependent upon the borrower's continuing financial stability, are more likely to
be affected by adverse personal circumstances, and are often secured by rapidly
depreciating personal property such as automobiles. In addition, various laws,
including bankruptcy and insolvency laws, may limit the amount that may be
recovered from a borrower. However, such risks are mitigated to some extent in
the case of second mortgage loans and home-equity lines of credit. These types
of loans are secured by a second mortgage on the borrower's residence for which
the total principal balance outstanding (including the first mortgage) does not
generally exceed 100% of the property's value. Second mortgage loans are
generally fixed-rate and have terms of up to ten years.

         The Corporation believes that the higher yields earned on consumer
loans compensate for the increased risk associated with such loans and that
consumer loans are important to the Corporation's efforts to increase the
interest rate sensitivity and shorten the average maturity of its loan
portfolio. Furthermore, the Corporation's net charge-offs on consumer loans as a
percentage of gross loans have not been significant in recent years, despite the
risks inherent in consumer lending.

         In conjunction with its consumer lending activities, the Corporation
also offers customers credit life and disability insurance products underwritten
and administered by an independent insurance provider. The Corporation receives
commission revenue related to the sales of these products. In addition, a
wholly-owned subsidiary of the Bank receives premium revenue in exchange for the
portion of the insurance risk it has reinsured on these sales. Refer to
"Subsidiaries" below, for additional discussion.

         EDUCATION LENDING The Corporation offers education loans through
programs sponsored by the federal government. As such, the federal government
guarantees most of the principal and interest on such loans. A third


                                       8
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party services the loans for the Corporation after they are originated.
Education loans accounted for approximately 11% of the Corporation's gross loans
as of December 31, 2001.

         Education loans generally carry a floating-rate of interest and have
terms of up to 15 years. Legislation enacted in late 1999 changed the interest
rate earned by lenders on education loans from the three-month U.S. Treasury
bill plus 220 basis points (280 basis points for borrowers no longer in school)
to a commercial paper rate plus 174 basis points (234 basis points for borrowers
no longer in school). This change was effective for loans originated after
January 1, 2000.

         COMMERCIAL BUSINESS LENDING As of December 31, 2001, commercial loans
accounted for approximately 2% of the Corporation's gross loans. The Corporation
completed the acquisition of ACB, a state-chartered commercial bank in Wausau,
Wisconsin, in October 2001. As a result of this acquisition, the Corporation
began to offer loans to commercial businesses and agricultural entities in the
Wausau area. These loans may take the form of lines of credit, single payment
loans, or term payment loans, and may be secured or unsecured depending on the
creditworthiness of the borrower. The Corporation is currently operating under
the commercial lending policies in place at ACB at the time of its acquisition.
However, a new comprehensive commercial lending policy is being developed and is
expected to be in place during the first quarter of 2002. Applications for
commercial business loans are currently accepted only at the Corporation's
downtown Wausau office. Underwriting and approval of commercial loans is
performed in Wausau and at the Corporation's main office in La Crosse. The
servicing of such loans on an on-going basis will be performed in La Crosse once
the operations of ACB are fully integrated into the Corporation.

         Upon completion of the recently announced purchase of three banking
offices in Rochester, Minnesota, from another financial institution (along with
the related customer loans and deposits), the Corporation will also begin
offering commercial loan products in that market area. In addition, the
Corporation anticipates that it will begin extending loans to small and middle
market business customers in other selected market areas in 2002. However, there
can be no assurances.

         For additional discussion relating to the acquisition of ACB and the
three banking offices in Rochester, Minnesota, refer to Notes 14 and 15 of the
Corporation's Audited Consolidated Financial Statements, included herein under
Part II, Item 8, "Financial Statements and Supplementary Data".

         NON-PERFORMING AND OTHER CLASSIFIED ASSETS Loans are generally placed
on non-accrual status and considered "non-performing" when, in the judgment of
management, the probability of collection of principal or interest is deemed to
be insufficient to warrant further accrual of interest. When a loan is placed on
non-accrual and/or non-performing status, previously accrued but unpaid interest
is deducted from interest income. In general, the Corporation does not record
accrued interest on loans 90 or more days past due. Refer to Notes 1 and 3 of
the Corporation's Audited Consolidated Financial Statements, included herein
under Part II, Item 8, "Financial Statements and Supplementary Data".

         When a loan is placed on non-accrual and/or non-performing status, the
Corporation generally institutes foreclosure or other collection proceedings.
Real estate property acquired by the Corporation as a result of foreclosure or
deed-in-lieu of foreclosure is classified as "real estate" and is considered
"non-performing" until it is sold. Other property acquired through adverse
judgement, such as automobiles and other depreciable assets, are generally
classified as an "other asset". The amount of foreclosed real estate and other
repossessed property has not been material to the Corporation in recent years.

         Federal regulations require thrift institutions to classify their
assets on a regular basis. In addition, in connection with examinations of
thrift institutions, federal examiners have authority to classify problem assets
as "Substandard", "Doubtful", or "Loss". An asset is classified as "Substandard"
if it is determined to involve a distinct possibility that the Corporation could
sustain some loss if deficiencies associated with the loan are not corrected. An
asset is classified as "Doubtful" if full collection is highly questionable or
improbable. An asset is classified as "Loss" if it is considered uncollectible,
even if a partial recovery could be expected in the future. The regulations also
provide for a "Special Mention" designation, described as assets which do not
currently expose the Corporation to a sufficient degree of risk to warrant
adverse classification, but which possess credit deficiencies or potential
weaknesses deserving management's close attention. If an asset or portion
thereof is classified as "Loss", the



                                       9
<PAGE>

Corporation must either establish a specific allowance for the portion of the
asset classified as "Loss", or charge off such amount. Refer to Part II, Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", for additional discussion.

         ALLOWANCES FOR LOSSES ON LOANS AND REAL ESTATE The Corporation's policy
is to establish allowances for estimated losses on specific loans and real
estate when it determines that losses are expected to be incurred. In addition,
the Corporation maintains a general loss allowance against its loan and real
estate portfolios that is based on its own loss experience, management's ongoing
assessment of current economic conditions, the credit risk inherent in the
portfolios, and the experience of the financial services industry. For
additional information, refer to Part II, Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Notes 1 and 3 of
the Corporation's Audited Consolidated Financial Statements, included herein
under Part II, Item 8, "Financial Statements and Supplementary Data".

         Management of the Corporation believes that the current allowances
established by the Corporation are adequate to cover any potential losses in the
Corporation's loan and real estate portfolios. However, future adjustments to
these allowances may be necessary and the Corporation's results of operations
could be adversely affected if circumstances differ substantially from the
assumptions used by management in making its determinations in this regard.

INVESTMENT AND MORTGAGE-RELATED SECURITIES

         The Corporation periodically invests in collateralized mortgage
obligations ("CMOs") and MBSs (collectively "mortgage-backed and related
securities"). As of December 31, 2001, such investments accounted for
approximately 16% of the Corporation's total assets.

         Management believes CMOs represent attractive investment alternatives
relative to other investment vehicles, due to the variety of maturity and
repayment options available through such investments and due to the limited
credit risk associated with such securities. CMOs purchased by the Corporation
represent a participation interest in a pool of single-family residential
mortgage loans and are generally rated "AAA" by independent credit-rating
agencies. In addition, such investments are secured by credit enhancements
and/or subordinated tranches or are collateralized by U.S. government agency
MBSs. The Corporation generally invests only in sequential-pay, planned
amortization class ("PAC"), and targeted amortization class ("TAC") tranches
that, at the time of their purchase, are not considered to be high-risk
derivative securities, as defined in applicable regulations. The Corporation
does not invest in support-, companion-, or residual-type tranches. Furthermore,
the Corporation does not invest in interest-only, principal-only,
inverse-floating-rate CMO tranches, or similar complex securities.

         The Corporation also invests in MBSs that are guaranteed by FHLMC,
FNMA, or the Government National Mortgage Association ("GNMA"). In addition, the
Corporation periodically securitizes or "swaps" mortgage loans in its own
portfolio into FHLMC or FNMA MBSs and continues to hold such securities. MBSs
enhance the quality of the Corporation's assets by virtue of the guarantees that
back them, although the Corporation at times has relinquished such guarantee on
loans it has swapped into MBSs (for additional discussion, refer to Note 2 of
the Corporation's Audited Consolidated Financial Statements, included herein
under Part II, Item 8, "Financial Statements and Supplementary Data"). In
addition, MBSs are more liquid than individual mortgage loans and receive
treatment that is more favorable when used to collateralize certain borrowings
of the Corporation.

         In addition to MBSs and CMOs, federally-chartered savings institutions
such as the Bank have authority to invest in various other types of investment
securities, including U.S. and state government obligations, securities of
various federal agencies, certificates of deposit issued by insured banks and
savings institutions, and federal funds. Subject to various restrictions,
federally-chartered savings institutions may also invest a portion of their
assets in commercial paper, corporate debt securities, and mutual funds whose
assets conform to the investments that a federally-chartered savings institution
is authorized to make directly. In general, investments in these types of
securities are limited to the four highest credit categories as established by
the major independent credit-rating agencies. Excluding U.S. government and
federal agency securities and mutual funds that invest exclusively in such
securities, the Corporation does not invest in individual securities that exceed
10% of its stockholder's equity. As of December 31, 2001, such investments were
approximately 1% of the Corporation's total assets.



                                       10
<PAGE>

         The Corporation classifies its mortgage-backed and related securities
and its other investment securities as either available for sale or held for
investment. For additional discussion, refer to Note 1 of the Corporation's
Audited Consolidated Financial Statements, included herein under Part II, Item
8, "Financial Statements and Supplementary Data".

SOURCES OF FUNDS

         DEPOSIT LIABILITIES The Corporation's current deposit products include
regular savings accounts, checking accounts, money market deposit accounts,
individual retirement accounts, and certificates of deposit ranging in terms
from three months to five years. Substantially all of the Corporation's deposits
are obtained from individuals and businesses located in Wisconsin and the
northern portion of Illinois. As of December 31, 2001, deposit liabilities
accounted for approximately 75% of the Corporation's total liabilities and
equity.

         In addition to serving as the Corporation's primary source of funds,
deposit liabilities (especially checking accounts) are a substantial source of
non-interest income. This income is generally received in the form of overdraft
fees, periodic service charges, automated teller machine ("ATM") and debit card
fees, and other transaction charges. The Corporation's extensive branch network
also creates opportunities for sales of non-deposit products such as
tax-deferred annuities, mutual funds, and other investment products. In exchange
for these sales, the Corporation receives commission revenue from the
third-party providers of the financial products and/or services.

         The principal methods used by the Corporation to attract deposit
accounts include offering a variety of products and services, competitive
interest rates, and convenient office locations and hours. Most of the
Corporation's free-standing banking offices have drive-up facilities and 41 of
the Corporation's banking facilities are located in supermarkets. The
Corporation also owns over 100 ATM machines, all of which are located in
Wisconsin and the northern portion of Illinois. Depositors may also obtain a
VISA "debit card" from the Corporation, which allows them to purchase goods and
services directly from any merchant that accepts VISA credit cards. The same
debit card also provides access to the ATM network.

         From time-to-time, the Corporation has also used certificates of
deposit sold through third-party brokers ("brokered deposits") as an alternative
to borrowings from the FHLB. FDIC regulations govern the acceptance of brokered
deposits by insured depository institutions such as the Corporation. At December
31, 2001, the Corporation had $22.3 million in brokered deposits outstanding.

         FEDERAL HOME LOAN BANK ADVANCES The Corporation obtains advances from
the FHLB secured by certain of its home mortgage loans and mortgage-related
securities, as well as stock in the FHLB that the Corporation is required to
own. Such advances may be made pursuant to several different credit programs,
each with its own interest rate and range of maturity dates. As of December 31,
2001, FHLB advances accounted for approximately 17% of the Corporation's total
liabilities and equity.

         SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE The Corporation
occasionally enters into sales of securities under agreements to repurchase
(commonly referred to as "reverse-repurchase agreements"). In form, these
transactions are an arrangement in which the sale of securities is accompanied
by a simultaneous agreement to repurchase the identical securities (or
substantially the same securities) at a future date. In substance, however,
these arrangements are borrowings secured by high-quality, highly-liquid
securities such as FNMA or FHLMC MBSs. Accordingly, these arrangements are
accounted for as borrowings in the Corporation's financial statements.

         Securities sold under repurchase agreements are physically delivered to
the broker-dealers that arrange the transactions. The broker-dealers may sell,
loan, or otherwise dispose of such securities to other parties in the normal
course of their operations. The Corporation is exposed to risk in these types of
transactions in that changes in market prices, economic losses, or other factors
could prevent or delay the counter-parties in the transaction from returning the
securities at the maturity of the agreement. The Corporation limits its exposure
to such risk by utilizing standard industry agreements, limiting transactions to
large, reputable broker-dealers, limiting the amount that can be borrowed from
an individual broker-dealer, and limiting the duration of such agreements
(typically one to six months). There were no securities sold under agreements to
repurchase as of December 31, 2001.



                                       11
<PAGE>

         FEDERAL FUNDS PURCHASED AND OTHER BORROWINGS The Corporation has lines
of credit with three financial institutions. These lines, which amount to $60.0
million in the aggregate, permit the overnight purchase of federal funds. The
Corporation also has a $5.0 million line of credit with a fourth financial
institution. The interest rate on borrowings under this line is determined on a
periodic basis using an index based on the London Inter-Bank Offered Rate
("LIBOR"). As of December 31, 2001, there was no balance outstanding under these
lines of credit.

SUBSIDIARIES

         The Bank has a number of subsidiaries that engage in certain activities
that management believes are more appropriately conducted by a subsidiary of the
Bank. Following is a brief description of each subsidiary.

         FIRST CAP HOLDINGS, INC. The Bank formed a wholly-owned subsidiary in
the State of Nevada in 1993. The subsidiary, First Cap Holdings, Inc. ("FCHI"),
was formed to consolidate and improve the efficiency, management, safekeeping,
and operations of the Bank's investment securities portfolio and certain other
holdings. In addition, the formation of FCHI has resulted in a lower effective
income tax rate for the Bank because the State of Nevada does not currently
impose a corporate income tax. As of December 31, 2001, FCHI was managing $475.0
million in investments and mortgage-related securities and $234.4 million in
purchased single-family residential loans for the Bank. FCHI's net income was
$26.4 million $27.7 million, and $24.6 million during the years ended December
31, 2001, 2000, and 1999, respectively. The Bank's net investment in FCHI as of
December 31, 2001, was $793.5 million, which was eliminated in consolidation in
accordance with GAAP.

         FIRST REINSURANCE, INC. The Bank formed a wholly-owned subsidiary in
the State of Arizona in 1998. The subsidiary, First Reinsurance, Inc. ("FRI"),
was formed to reinsure or "underwrite" credit life and disability insurance
policies sold to the Bank's consumer loan customers. FRI assumes the first level
of risk on these policies and a third-party insurer assumes the remaining risk.
The third-party insurer is also responsible for performing most of the
administrative functions of the subsidiary on a contract basis. FRI's net income
was $227,000, $163,000, and $140,000 during the years ended December 31, 2001,
2000, and 1999, respectively. At December 31, 2001, the Bank's net investment in
FRI was $1.0 million, which was eliminated in consolidation in accordance with
GAAP.

         TURTLE CREEK CORPORATION The Bank acquired Turtle Creek Corporation
("Turtle Creek") in 1995 as a result of its acquisition of another financial
institution. Turtle Creek, a Wisconsin corporation, holds a 40% limited
partnership interest in an apartment complex providing housing for
low-to-moderate income and elderly persons. Turtle Creek's aggregate investment
in this project was $78,000 at December 31, 2001. Turtle Creek had net income
(loss) of ($18,000), ($10,000), and $66,000 during the years ended December 31,
2001, 2000, and 1999, respectively. Results for 1999 included a $107,000 gain on
the sale of Turtle Creek's remaining interest in a land development project. The
Bank's net investment in Turtle Creek as of December 31, 2001, was $95,000,
which was eliminated in consolidation in accordance with GAAP.

         FIRST ENTERPRISES, INC. The Bank's wholly-owned subsidiary, First
Enterprises, Inc. ("FEI"), was incorporated in 1971 in the State of Wisconsin.
During the period from the late-1970s to the mid-1980s, FEI was primarily
involved in the acquisition and development of hotels. Except for the
maintenance of its two remaining hotel investments, however, FEI is no longer
involved in these types of activities. The principal asset of FEI is its
investment in FFMR, described in the next paragraph. FEI had net income of
$113,000, $30,000, and $84,000 during the years ended December 31, 2001, 2000,
and 1999, respectively. At December 31, 2001, the Bank's net investment in FEI
was $659,000, which was eliminated in consolidation in accordance with GAAP.

         FF MORTAGE REINSURANCE, INC. In 2000, the Bank completed the formation
of FF Mortgage Reinsurance, Inc. ("FFMR"), a Vermont corporation, as a
wholly-owned subsidiary of FEI. FFMR was formed to reinsure or "underwrite" a
portion of the mortgage impairment insurance policies purchased by the Bank's
loan customers (refer to "Lending Activities--Residential Lending"). FFMR
assumes a second level of risk on these policies, which is capped at a certain
level. Third-party insurers assume the first level of risk, as well as any risk
above the capped amount. A third-party management company is responsible for
performing most of the administrative functions of the subsidiary on a contract
basis. FFMR had net income of $42,000 during its first year of operations in
2001. FEI's net investment in FFMR as of December 31, 2001, was $614,000 which
was eliminated in consolidation in accordance with GAAP.



                                       12
<PAGE>


COMPETITION

         The Corporation faces significant competition in attracting deposits
through its branch network. Its most direct competition has historically come
from commercial banks, credit unions, and other savings institutions located in
its market area. In addition, the Corporation faces significant competition from
mutual fund and insurance companies, as well as primary financial markets such
as the stock and bond markets. The Corporation competes for deposits principally
by offering customers a variety of deposit products, convenient branch
locations, operating hours, and other services. The Corporation does not rely
upon any individual group or entity for a material portion of its deposits.

         The Corporation's competition for loans comes principally from mortgage
banking companies, other savings institutions, commercial banks, finance
companies, and credit unions. The Corporation competes for loan originations
primarily through the interest rates and loan fees it charges, the efficiency
and quality of services it provides borrowers, the variety of its products, and
on referrals from real estate brokers, builders, and business customers.

REGULATION AND SUPERVISION

         References in this section to applicable laws and regulations are brief
summaries only. All such summaries are qualified in their entirety by the
applicable laws and regulations, which you should consult to understand their
details and operation.

         REGULATION OF THE CORPORATION The Corporation is a savings and loan
holding company within the meaning of Section 10 of the Home Owners' Loan Act
("HOLA"). As such, the Corporation is registered with and subject to OTS
examination and supervision as well as to certain OTS reporting requirements.
The Corporation is also required to file certain reports and otherwise comply
with the rules and regulations of the Securities and Exchange Commission
("SEC"). Furthermore, the Corporation is limited with respect to the
transactions it can execute with its affiliates (including the Bank), and its
ability to acquire control of another insured financial institution, as
specified more fully in the applicable regulations. There generally are no
restrictions as to activities of a unitary savings and loan holding company such
as the Corporation as long as its sole insured subsidiary, the Bank, continues
to meet certain regulatory requirements, which management believes it did as of
December 31, 2001.

         REGULATION OF THE BANK The Bank, as a federally-chartered savings bank,
is subject to federal regulation and oversight by the OTS extending to all
aspects of its operations. The Bank also is subject to regulation and
examination by the FDIC, which insures the deposits of the Bank to the maximum
extent permitted by law, and to certain requirements established by the Federal
Reserve Board. The laws and regulations governing the Bank generally have been
promulgated to protect depositors and not for the purpose of protecting
stockholders of financial institutions or their holding companies.

         The investment and lending authority of a federally-chartered savings
bank is prescribed by federal laws and regulations. The Bank is also subject to
regulatory provisions affecting a wide variety of matters including, but not
limited to, branching, loans to one borrower, investment restrictions,
activities of subsidiaries, loans to "insiders," and transactions with
affiliates. Certain of the regulatory requirements applicable to the Bank are
described in more detail in the following paragraphs.

                  INSURANCE OF DEPOSITS The Bank's savings deposits are insured
by SAIF, which is administered by the FDIC, up to the maximum extent provided by
law, currently $100,000 for each depositor. The Bank is subject to a risk-based
insurance assessment system under which higher insurance assessment rates are
charged to those thrift institutions that are deemed to pose greater risk to the
deposit insurance fund. Under this system, insurance assessments range from 0%
of deposits for the healthiest financial institutions to 0.27% of deposits for
the weakest. This risk-based assessment schedule is identical to that for
institutions insured by the Bank Insurance Fund ("BIF"), which is also
administered by the FDIC. Under both funds, the insurance assessment paid by a
particular institution will depend on the "supervisory rating" it receives from
the FDIC ("A," "B," or "C") and on its regulatory capital level ("well
capitalized," "adequately capitalized," or "undercapitalized"). Based upon its
current supervisory rating and regulatory capital level, and assuming no change
in the Bank's risk classification or in overall premium



                                       13
<PAGE>

assessment levels, the Bank anticipates that its insurance assessment for 2002
will be zero, which is the same as the Bank's 2001 rate.

                  CAPITAL STANDARDS The Bank is subject to minimum regulatory
capital requirements as specified by OTS regulations. As more fully described in
such regulations, the Bank is subject to a leverage limit of at least 3% of
total assets, a tangible capital limit of at least 1.5% of total assets and a
risk-based capital limit of at least 8% of risk-weighted assets. As of December
31, 2001, the Bank exceeded all minimum regulatory capital requirements as
specified by the OTS.

                  The Bank is also subject to minimum regulatory capital
requirements as specified by FDIC regulations. As more fully described in such
regulations, the Bank must meet the following capital standards to be classified
as "adequately capitalized" under FDIC guidelines: (1) Tier 1 capital in an
amount not less than 4% of adjusted total assets, (ii) Tier 1 capital in an
amount not less than 4% of risk-weighted assets, and (iii) total capital in an
amount not less than 8% of risk-weighted assets. As of December 31, 2001, the
Bank exceeded all minimum regulatory capital requirements as specified by the
FDIC. For additional discussion, refer to Note 11 of the Corporation's Audited
Consolidated Financial Statements, included herein under Part II, Item 8,
"Financial Statements and Supplementary Data."

                  CLASSIFICATION OF ASSETS As previously described, the Bank's
problem assets are subject to classification according to one of three
categories: "Substandard", "Doubtful" and "Loss". An institution is required to
develop its own program to classify its assets on a regular basis and to set
aside appropriate loss reserves on the basis of such classification. The Bank
believes that it is in compliance with the foregoing requirements.

                  QUALIFIED THRIFT LENDER TEST A savings association that does
not meet the Qualified Thrift Lender Test ("QTL Test"), as set forth in the HOLA
and OTS regulations, may lose access to FHLB advances and must either convert to
a bank charter or comply with certain restrictions on its operations. Under the
QTL Test, a savings association is required to maintain a certain percentage of
its assets in qualifying investments, as defined by regulations. In general,
qualifying investments consist of housing-related assets. At December 31, 2001,
the Bank's assets invested in qualifying investments exceeded the percentage
required to qualify the Bank under the QTL Test.

                  FEDERAL HOME LOAN BANK SYSTEM The Bank is a member of the FHLB
System, which consists of 12 regional FHLBs, subject to supervision and
regulation by the Federal Housing Finance Board. The FHLBs provide a central
credit facility primarily for member financial institutions. The Bank, as a
member of the FHLB of Chicago, is required to purchase and hold shares of
capital stock in the FHLB of Chicago. The requirement is equal to the greater of
1% of the Bank's aggregate unpaid residential mortgage loans, home purchase
contracts and similar obligations at the beginning of each year or 5% of its
outstanding advances from the FHLB of Chicago. At December 31, 2001, the Bank
had a $28.1 million investment in the stock of the FHLB of Chicago and was in
compliance with this requirement.

                  The Bank's investment in FHLB stock, its single-family
mortgage loans and certain other assets (consisting principally of CMOs and
MBSs) are used to secure advances from the FHLB of Chicago. The interest rates
charged on advances vary with the maturity of the advance and the FHLB's own
cost of funds.

                  FEDERAL RESERVE SYSTEM Regulation D, as promulgated by the
Federal Reserve Board, requires savings institutions to maintain
non-interest-earning reserves against certain transaction deposit accounts and
other liabilities. At December 31, 2001, the Bank's minimum required reserve
level was $37.3 million and it was in compliance with the regulation.

                  DIVIDEND RESTRICTIONS The payment of dividends by the Bank is
subject to various limitations set forth in federal regulations and as briefly
described in Note 11 of the Corporation's Audited Consolidated Financial
Statements, included herein under Part II, Item 8, "Financial Statements and
Supplementary Data." The Bank has not paid any dividends in violation of these
regulations.

                  COMMUNITY REINVESTMENT ACT Under the Community Reinvestment
Act of 1977, as amended (the "CRA"), and as implemented by OTS regulations, a
savings institution has a continuing and affirmative




                                       14
<PAGE>

obligation, consistent with its safe and sound operation, 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 its examination of a savings institution,
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
by such institution. The CRA also requires all institutions to make public
disclosure of their CRA ratings. The Bank's latest CRA rating, received in 2000,
was "Outstanding."

         FINANCIAL SERVICES MODERNIZATION ACT The Gramm-Leach-Bliley Act of 1999
(the "Financial Services Modernization Act" or "Act") is intended to increase
competition in the financial services area, including repealing sections of the
1933 Glass-Steagall Act so that financial firms, such as banks and securities
and insurance firms can affiliate with each other through the formation of
financial holding companies. The Act appoints the Federal Reserve as the
"umbrella" regulator for such entities. The Act also restricts the chartering
and transferring of unitary thrift holding companies, although it does not
restrict the operations of unitary holding companies which were in existence
prior to May 4, 1999, and which continue to meet the test and control only a
single savings institution. Since the Corporation was treated as a unitary
holding company prior to May 4, 1999, and since the Bank is in compliance with
the QTL test, the Act will not prohibit the Corporation from engaging in
nonfinancial activities or acquiring nonfinancial subsidiaries; however, the Act
would restrict any nonfinancial entity from acquiring the Corporation, unless
that entity was, or had submitted an application to become, a unitary savings
and loan holding company prior to May 4, 1999.

         The Act provides a number of consumer protections, including provisions
aimed at protecting the privacy of consumer information. Many of the Act's
provisions, including those pertaining to consumer privacy, require regulatory
action, including the promulgation of regulations, to become effective. The
Act's consumer privacy requirements require among other things that the Bank (i)
provide new customers with a notice explaining their privacy rights at the time
they become customers, (ii) provide an initial privacy rights notice to existing
customers, (iii) provide an annual privacy rights notice to all continuing
customers, (iv) implement internal privacy safeguards, and (v) not disclose
protected information to any unaffiliated third party (except as required to
affect, administer or enforce a transaction requested by the customer or certain
other limited exceptions) without first giving the customer the option to elect
not to allow such disclosure. The Bank does not believe that compliance with the
new consumer privacy provisions has had a significant impact on its business. It
is too early to assess the eventual impact of the Act or other implementing
regulations on the financial services industry in general or on the specific
operations of the Bank and the Corporation.

TAXATION

         FEDERAL TAXATION The Corporation is subject to those rules of federal
income taxation generally applicable to corporations under the Internal Revenue
Code of 1986, as amended (the "IRC"). The Corporation, the Bank, and the Bank's
wholly-owned subsidiaries (excluding FRI) file consolidated federal income tax
returns, which has the effect of eliminating or deferring the tax consequences
of intercompany distributions, including dividends, in the computation of
consolidated taxable income. The consolidated entity pays taxes at the federal
statutory rate of 35% of its taxable income, as defined in the IRC. Refer to
Notes 1 and 8 of the Corporation's Audited Consolidated Financial Statements,
included herein under Part II, Item, 8, "Financial Statements and Supplemental
Data," for additional discussion. As of December 31, 2001, the Corporation had
no material disputes outstanding with Internal Revenue Service.

         STATE TAXATION The states of Wisconsin, Illinois and Minnesota impose a
tax on their apportioned shares of the Corporation's taxable income at the rate
of 7.9%, 7.3% and 9.8%, respectively (all state income taxes are deductible on
the Corporation's federal income tax return). These states' definitions of
taxable income are generally similar to the federal definition, except that
interest from state and municipal obligations is taxable, no deduction is
allowed for state income taxes (except for Illinois, which allows a deduction
for taxes paid to other states), and, in Wisconsin and Minnesota, net operating
losses may be carried forward but not back. Minnesota and Illinois require the
filing of consolidated state income tax returns, whereas Wisconsin currently
requires separate returns for each entity in the consolidated group.



                                       15
<PAGE>

         FCHI and FRI are subject to taxation in the states of Nevada and
Arizona, respectively. The State of Nevada does not currently impose a corporate
income tax and the State of Arizona imposes a tax on the premium revenues of
insurance companies rather than taxable income. Although the taxable income of
these subsidiaries is not currently subject to taxation in the State of
Wisconsin, from time-to-time the government of the State of Wisconsin proposes
legislation that would require consolidated income tax returns for entities
headquartered in the state. To date, none of these legislative proposals have
been passed into law. However, if such legislation were to ever be passed into
law, it could result in the taxable income of FCHI, and possibly FRI, being
subject to taxation in the State of Wisconsin. If the Corporation had been
required to file a consolidated state income tax return in Wisconsin for the
year ended December 31, 2001, the Corporation's income tax expense would have
been approximately $2.2 million higher than that which has been reported. This
would have reduced diluted and basic earnings per share by approximately $0.12
per share. At this time, management of the Corporation is not aware of any
legislative proposals that would result in the filing of a consolidated state
income tax return in the State of Wisconsin. However, there can be no assurances
that such legislation will not be introduced and passed into law in the future.


ITEM 2--PROPERTIES

         As of December 31, 2001, the Corporation conducted its business from
its corporate offices in La Crosse, Wisconsin, 75 other banking facilities
located throughout Wisconsin, as previously described, and two separate loan
production offices, also located in Wisconsin. At such date, the Corporation
owned the building and/or land for 27 of its offices and leased the building
and/or the land for its remaining 51 properties, including 41 located in
supermarkets. The Corporation also owns or leases certain other properties to
meet various business needs. For additional information, refer to Note 5 of the
Corporation's Audited Consolidated Financial Statements, included herein under
Part II, Item 8, "Financial Statements and Supplementary Data".


ITEM 3--LEGAL PROCEEDINGS

         The information required herein is included in Note 10 of the
Corporation's Audited Consolidated Financial Statements, included herein under
Part II, Item 8, "Financial Statements and Supplementary Data".


ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to security holders for vote during the
fourth quarter of 2001.












                                       16
<PAGE>

                                     PART II

ITEM 5--MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Corporation's common stock is traded on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") National Market System under
the symbol FTFC. As of February 15, 2002, the Corporation had 20,163,241 common
shares outstanding (net of 52,692 shares of treasury stock), 1,520 stockholders
of record, 3,145 estimated beneficial stockholders, and 4,665 estimated total
stockholders.

         Dividend and stock price information required by this item, as well as
information relating to the Corporation's stock repurchase plans, is included
under the following sections of this report:

         (1) "Liquidity and Capital Resources", included herein under Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

         (2) "Note 11--Stockholder's Equity", included herein under Item 8,
"Financial Statements and Supplementary Data--Audited Consolidated Financial
Statements".

         (3) "Quarterly Financial Information", included herein under Item 8,
"Financial Statements and Supplementary Data--Supplementary Data".















                                       17
<PAGE>



ITEM 6--SELECTED FINANCIAL DATA

         The information in the following table contains selected consolidated
financial and other data. This information has been derived in part from the
Audited Consolidated Financial Statements included herein under Item 8,
"Financial Statements and Supplementary Data". Accordingly, the table should be
read in conjunction with such consolidated statements.

<TABLE>
<CAPTION>

Dollars in thousands, except for per share amounts
-------------------------------------------------------------------------------------------------------------------
SELECTED BALANCE SHEET DATA AS OF DECEMBER 31               2001         2000       1999         1998         1997
-------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>        <C>          <C>          <C>

Total assets                                          $2,717,710   $2,352,726 $2,084,554   $1,786,504   $1,544,294
Investment securities available for sale, at fair
 value                                                    35,462          817        873            -       21,377
Mortgage-backed and related securities:
  Available for sale, at fair value                      305,980      331,237    252,165      204,109       47,895
  Held for investment, at cost                           134,010       77,299    103,932      102,500      124,336
Loans held for investment, net                         1,851,316    1,772,477  1,538,595    1,177,526    1,193,893
Allowance for loan losses                                  9,962        8,028      7,624        7,624        7,638
Mortgage servicing rights, net                            29,909       23,280     21,728       21,103       16,291
Intangible assets                                         24,946       11,490     12,463       13,485        5,921
Deposit liabilities                                    2,029,254    1,699,252  1,471,259    1,460,136    1,146,534
FHLB advances and other borrowings                       467,447      490,846    469,580      189,778      275,779
Stockholders' equity                                     192,398      146,549    127,275      122,685      109,361
===================================================================================================================
SELECTED OPERATING DATA FOR YEAR ENDED DECEMBER 31          2001         2000       1999         1998         1997
-------------------------------------------------------------------------------------------------------------------
Interest income                                         $171,533     $161,436   $130,071     $118,668     $114,976
Interest expense                                         108,330      101,896     75,953       71,457       70,265
-------------------------------------------------------------------------------------------------------------------
  Net interest income                                     63,202       59,540     54,117       47,211       44,711
Provision for loan losses                                  1,763        1,009        387          293          539
-------------------------------------------------------------------------------------------------------------------
  Net interest income after provision for loan losses     61,439       58,531     53,730       46,918       44,172
-------------------------------------------------------------------------------------------------------------------
Gains from sales of loans                                 24,423        2,736      7,226       16,929        6,374
Gains (losses) from sales of real estate and
 investments                                                  13        1,189          -          343        (725)
Other non-interest income                                 25,091       31,708     27,952       14,088       18,645
-------------------------------------------------------------------------------------------------------------------
  Total non-interest income                               49,527       35,633     35,178       31,360       24,294
Non-interest expense                                      67,119       58,250     54,299       47,597       40,197
-------------------------------------------------------------------------------------------------------------------
  Income before income tax expense                        43,847       35,914     34,609       30,681       28,269
Income tax expense                                        15,398       12,770     12,167       11,257       10,879
-------------------------------------------------------------------------------------------------------------------
  Net income                                             $28,448      $23,144    $22,441      $19,424      $17,390
-------------------------------------------------------------------------------------------------------------------
SELECTED OTHER DATA AT OR FOR THE YEAR ENDED                2001         2000       1999         1998         1997
DECEMBER 31 (1)
====================================================================================================================
Return on average assets                                   1.14%        1.04%      1.19%        1.19%        1.13%
Return on average equity                                   17.19        17.01      17.63        16.59        17.20
Average equity to average assets                            6.65         6.12       6.74         7.16         6.57
Average tangible equity to average assets                   6.15         5.61       6.10         6.77         6.21
Average interest rate spread                                2.12         2.34       2.58         2.51         2.63
Average net interest margin                                 2.70         2.83       3.05         3.07         3.07
Ratio of allowance for loan losses to total loans
 held for investment at end of period                       0.54         0.45       0.50         0.65         0.64
Ratio of non-performing assets to total assets at
 end of period                                              0.31         0.19       0.10         0.13         0.32
Ratio of non-interest income to total revenue (2)          43.93        37.44      39.40        39.91        35.21
Ratio of non-interest expense to average assets             2.70         2.62       2.88         2.91         2.61
Earnings per share:
  Diluted earnings per share                               $1.51        $1.25      $1.17        $0.98        $0.88
  Basic earnings per share                                  1.52         1.26       1.21         1.05         0.95
Dividends paid per share                                   0.470        0.420      0.340        0.270        0.233
Stock price at end of period                               15.70        14.50      14.63        16.38        16.94
Book value per share at end of period                       9.52         7.99       6.92         6.68         5.95
Banking facilities at end of period                           78           72         64           61           50
Full-time equivalent employees at end of period            1,033          897        831          808          690
====================================================================================================================
</TABLE>

(1) Per share data and historical stock prices have been adjusted for a 2-for-1
    stock split on June 11, 1998.
(2) Total revenue is defined as the sum of net interest income and non-interest
    income.


                                           18
<PAGE>


ITEM 7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         This section should be read in conjunction with Item 8, "Financial
Statements and Supplementary Data", as well as Item 7A, "Quantitative and
Qualitative Disclosures about Market Risk", and Part I, Item 1, "Business".

RESULTS OF OPERATIONS

         OVERVIEW The Corporation's earnings for the years ended December 31,
2001, 2000, and 1999, were $28.4 million, $23.1 million, and $22.4 million,
respectively. These amounts represented returns on average assets of 1.14%,
1.04%, and 1.19%, respectively, and returns on average equity of 17.19%, 17.01%,
and 17.63%, respectively. Diluted earnings per share during these periods were
$1.51, $1.25, and $1.17, respectively.

         The increase in net income from 2000 to 2001 was principally due to
increases in gain on sales of loans, net interest income, retail banking fees,
and premiums and commissions. These developments were partially offset by a
decrease in loan servicing fees, an increase in non-interest expense
(particularly compensation and employee benefits), an increase in provision for
loan losses, and an increase in income tax expense (the latter due to higher
pre-tax earnings).

         The increase in net income from 1999 to 2000 was principally due to
increases in net interest income, retail banking fees, and loan servicing fees.
Also contributing to the increase in net income was a $1.2 million gain on the
sale of a real estate property. These developments were largely offset by a
substantial decline in gain on sales of loans, an increase in non-interest
expense (most notably compensation and employee benefits), and an increase in
provision for loan losses.

         The following paragraphs discuss the aforementioned changes in greater
detail along with other changes in the components of net income during the years
ended December 31, 2001, 2000, and 1999.

         NET INTEREST INCOME Net interest income increased by $3.7 million or
6.2% and $5.4 million or 10.0% during the years ended December 31, 2001 and
2000, respectively. The improvement in both of these periods was primarily
volume related as the Corporation's average interest-earning assets grew by
$241.0 million or 11.5% in 2001 and by $327.7 million or 18.4% in 2000. The
principal source of growth in both periods occurred in the Corporation's
commercial real estate, consumer, and single-family residential loan portfolios.
The growth in 2001 was also supported by a substantial increase in overnight
investments. The growth in earning assets in both years was principally funded
by an increase in deposit liabilities. Furthermore, an increase in borrowings
from the FHLB and other wholesale sources during 2000 contributed to that years'
increase.

         Also contributing to the increase in net interest income during 2001
was an increase in average non-interest-bearing deposit liabilities, which was
the principal reason the Corporation's ratio of average interest-earning assets
to average interest-bearing liabilities improved from 110% in 2000, to 112% in
2001. This improvement was due in part to an increase in custodial deposit
accounts. The Corporation maintains borrowers' principal and interest payments
in these accounts on a temporary basis pending their remittance to the
third-party owners of the loans. Balances in these accounts increased
significantly because of increased loan prepayment activity, which was brought
about by a lower interest rate environment in 2001.

         The Corporation's interest rate spread has declined in recent years
from 2.58% in 1999 to 2.34% in 2000 and 2.12% in 2001. These declines partially
offset the increases in net interest income caused by the favorable developments
described in the preceding paragraphs. Beginning in 1999 and continuing into
2000, market interest rates increased significantly, led generally by short-term
interest rates. The yield curve also flattened substantially, and was even
inverted at times during 2000. Although higher interest rates resulted in an
increase in the average yield on the Corporation's earning assets in 2000, the
cost of the Corporation's interest-bearing liabilities increased by a greater
amount, which resulted in an overall decline in the Corporation's average
interest rate spread in that year. In 2001, market interest rates reversed trend
and declined dramatically, particularly on the short end of the yield curve.
However, the Corporation's interest rate spread did not improve because only a
relatively small portion of its funding sources repriced or matured during the
year. In general, declines in the Corporation's overall cost of interest-bearing
liabilities in 2001 were eclipsed by declining yields on its interest-earning
assets, particularly education loans, which declined in yield by 162 basis
points in 2001. Education loans carry floating rates of interest

                                       19

<PAGE>


that adjust quarterly. As such, the yield on these loans declined sharply in
2001 as market interest rates declined. Also declining in 2001 were the yields
the Corporation earned on its single-family mortgage loans and its
mortgage-backed and related securities. These declines were principally caused
by increased prepayments of higher-yielding loans, due to the declining interest
rate environment, and the replacement of such loans with lower-yielding assets.
During 2001, the Corporation purchased $178.1 million in adjustable-rate
mortgage loans at an average expected yield of 6.32% and $268.1 million in CMOs
at an average expected yield of 5.55%. The yields on these assets were
substantially lower than the yields on the assets they replaced.

         Management expects the Corporation's interest rate spread to improve in
the near term, although there can be no assurances. During the first quarter of
2002, 39% of the Corporation's time deposits will mature. Management expects to
replace these deposits at interest rates that are 200 to 250 basis points below
their current cost.

         The following table sets forth information regarding the average
balances of the Corporation's assets, liabilities, and equity, as well as the
interest earned or paid and the average yield or cost of each. The information
is based on daily average balances for the years ended December 31, 2001, 2000,
and 1999.

<TABLE>
<Caption>

Dollars in thousands                       2001                         2000                          1999
--------------------------------------------------------------------------------------------------------------------
                                 AVERAGE            YIELD/    AVERAGE            YIELD/  AVERAGE              YIELD/
                                 BALANCE INTEREST   COST      BALANCE  INTEREST    COST  BALANCE   INTEREST    COST
--------------------------------------------------------------------------------------------------------------------
<S>                             <C>      <C>        <C>       <C>     <C>       <C>      <C>       <C>        <C>

Interest-earning assets:
  Single-family mortgage loans  $817,647  $58,799    7.19%   $769,755  $56,637   7.36%   $588,928  $41,592    7.06%
  Commercial real estate loans   498,796   39,973     8.01    433,512   34,479    7.95    352,919   28,008     7.94
  Consumer loans                 355,504   30,530     8.59    306,650   26,202    8.54    240,260   19,981     8.32
  Education loans                202,504   14,300     7.06    197,415   17,130    8.68    184,896   14,289     7.73
  Commercial business loans        6,459      405     6.27         68        6    8.82        121       10     8.26
--------------------------------------------------------------------------------------------------------------------
  Total loans                  1,880,910  144,007     7.66  1,707,400  134,454    7.87  1,367,124  103,880     7.60
Mortgage-backed and
  related securities             378,413   24,060     6.36    360,087   24,516    6.81    362,418   23,728     6.55
Investment securities              6,482      209     3.15        799       40    5.03      1,019       44     4.37
Interest-bearing deposits
  with banks                      52,111    1,585     3.04     10,530      603    5.73     29,932    1,405     4.69
Other earning assets              26,281    1,672     6.36     24,359    1,822    7.48     14,959    1,013     6.78
--------------------------------------------------------------------------------------------------------------------
  Total interest-earning
    assets                     2,344,197  171,533     7.32  2,103,175  161,436    7.68  1,775,452  130,071     7.33
Non-interest-earning assets:
  Office properties and
    equipment                     28,652                       25,621                      24,855
  Other assets                   116,035                       95,178                      87,762
--------------------------------------------------------------------------------------------------------------------
   Total assets               $2,488,884                   $2,223,974                  $1,888,069
====================================================================================================================
Interest-bearing liabilities:
  Regular savings accounts      $116,809   $1,529    1.31%   $108,965   $1,619   1.49%   $109,318   $1,741    1.59%
  Checking accounts               80,221      573     0.71     75,062      571    0.76     70,404      558     0.79
  Money market accounts          177,128    5,539     3.13    160,950    6,578    4.09    177,025    6,587     3.72
  Certificates of deposit      1,257,943   75,944     6.04  1,082,318   64,819    5.99    949,500   51,661     5.44
--------------------------------------------------------------------------------------------------------------------
  Total interest-bearing
    deposits                   1,632,101   83,585     5.12  1,427,295   73,588    5.16  1,306,248   60,547     4.64
FHLB advances                    401,954   22,061     5.49    380,328   22,078    5.80    281,652   15,060     5.35
Other borrowings                  51,208    2,685     5.24    101,317    6,230    6.15     11,025      346     3.14
--------------------------------------------------------------------------------------------------------------------
  Total interest-bearing
    liabilities                2,085,263  108,330     5.20  1,908,940  101,896    5.34  1,598,926   75,953     4.75
Non-interest-bearing
  liabilities:
  Non-interest-bearing
    deposits                     209,986                      160,963                     145,428
  Other liabilities               28,098                       18,003                      16,397
--------------------------------------------------------------------------------------------------------------------
  Total liabilities            2,323,347                    2,087,906                   1,760,751
Stockholders' equity             165,537                      136,068                     127,318
--------------------------------------------------------------------------------------------------------------------
  Total liabilities and
    stockholders' equity      $2,488,884                   $2,223,974                  $1,888,069
====================================================================================================================
Net interest income                       $63,202                      $59,540                     $54,117
====================================================================================================================
Interest rate spread                                 2.12%                       2.34%                        2.58%
====================================================================================================================
Net interest income as a
  percent of average earning
  assets                                             2.70%                       2.83%                        3.05%
====================================================================================================================
Average interest-earning
  assets to average
  interest-bearing liabilities                     112.42%                     110.18%                      111.04%
====================================================================================================================
</Table>


                                       20
<PAGE>


         The following table sets forth the effects of changing rates and
volumes on net interest income of the Corporation for the periods indicated.
Information is provided with respect to (i) effects on net interest income
attributable to changes in volume (changes in volume multiplied by prior rate);
(ii) effects on net interest income attributable to changes in rate (changes in
rate multiplied by prior volume); (iii) changes attributable to combined effects
of rate and volume (changes in rate multiplied by changes in volume); and (iv)
the net change in interest income.
<Table>
<Caption>
                                            2001 COMPARED TO 2000                       2000 COMPARED TO 1999
Dollars in thousands                         INCREASE (DECREASE)                          INCREASE (DECREASE)
-------------------------------------------------------------------------------------------------------------------
                                                           RATE/                                     RATE/
                                       RATE     VOLUME    VOLUME     NET         RATE    VOLUME     VOLUME    NET
-------------------------------------------------------------------------------------------------------------------
<S>                               <C>         <C>       <C>      <C>          <C>      <C>       <C>      <C>
INTEREST-EARNING ASSETS:
  Single-family mortgage loans     ($1,283)     $3,524     ($79)   $2,162       $1,740   $12,771     $535   $15,046
  Commercial real estate loans          260      5,193        41    5,494           35     6,427        8     6,470
  Consumer loans                        133      4,174        21    4,328          548     5,521      152     6,221
  Education loans                   (3,187)        442      (83)  (2,830)        1,755       967      119     2,841
  Commercial business loans             (2)        564     (163)      399            1       (4)        -       (3)
-------------------------------------------------------------------------------------------------------------------
    Total loans                     (4,079)     13,897     (266)    9,553        4,079    25,682      814    30,574
  Mortgage-backed and related
     securities                     (1,621)      1,248      (83)    (456)          947     (153)      (6)       788
  Investment securities                (14)        286     (103)      169            7      (10)      (1)       (4)
  Interest-bearing deposits with
     banks                            (283)      2,382   (1,117)      982          310     (911)    (201)     (802)
  Other earning assets                (273)        144      (21)    (150)          106       636       67       809
-------------------------------------------------------------------------------------------------------------------
  Total net change in income on
    Interest-earning assets         (6,270)     17,957   (1,588)   10,097        5,449    25,244      673    31,365
-------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
  Interest-bearing deposits         (1,250)     11,331      (84)    9,997        5,714     6,659      668    13,041
  FHLB advances                     (1,204)      1,255      (68)     (17)        1,290     5,276      452     7,018
  Other borrowings                    (918)    (3,081)       454  (3,545)          332     2,837    2,715     5,884
-------------------------------------------------------------------------------------------------------------------
  Total net change in expense on
    Interest-bearing liabilities    (3,372)      9,505       301    6,434        7,336    14,772    3,835    25,943
-------------------------------------------------------------------------------------------------------------------
  Net change in net interest
      income                       ($2,898)     $8,452  ($1,892)   $3,662     ($1,887)   $10,472 ($3,162)    $5,423
===================================================================================================================

</TABLE>

         PROVISION FOR LOAN LOSSES Provision for loan losses was $1.8 million,
$1.0 million, and $387,000 during the years ended December 31, 2001, 2000, and
1999, respectively. In 1999, the Corporation's provision for loan losses
approximated its actual net charge-off activity. However, in 2001 and 2000, the
Corporation recorded approximately $672,000 and $404,000, respectively, in
provision for loan losses over-and-above its actual net charge-off activity.
These additional provisions were recorded to maintain the Corporation's
allowance for loan losses at a level deemed appropriate by management, and were
considered proper in light of significant growth in the Corporation's loans held
for investment in recent periods, an increased mix of higher-risk consumer
loans, commercial real estate loans, and commercial business loans, and an
increase in non-performing and classified assets. As of December 31, 2001, 2000,
and 1999, the Corporation's allowance for loan losses was $10.0 million, $8.0
million, and $7.6 million, respectively, or 0.54%, 0.45%, and 0.50% of loans
held for investment, respectively. The allowance for loan and real estate losses
was 120%, 188%, and 365% of non-performing assets as of the same dates,
respectively. For additional discussion, refer to "Financial
Condition--Non-Performing Assets".


                                       21
<PAGE>



         The following table summarizes the activity in the Corporation's
allowance for loan losses during each of years indicated. The purchased
allowances shown for 2001 were from the acquisition of ACB (for additional
discussion, refer to Note 14 of the Corporation's Audited Consolidated Financial
Statements, included herein under Part II, Item 8, "Financial Statements and
Supplementary Data").
<TABLE>
<CAPTION>

Dollars in thousands                                                 2001       2000      1999       1998      1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>       <C>       <C>        <C>       <C>

Balance at beginning of period                                     $8,028     $7,624    $7,624     $7,638    $7,888
Provision for losses                                                1,763      1,009       387        293       539
--------------------------------------------------------------------------------------------------------------------
Charge-offs:
  Single-family mortgage loans                                         96          -         -          -        13
  Consumer loans                                                    1,057        632       408        332       530
  Education loans                                                      36         33        26         33       272
--------------------------------------------------------------------------------------------------------------------
    Total loans charged-off                                         1,189        665       434        365       815
  Recoveries                                                           98         60        47         58        26
--------------------------------------------------------------------------------------------------------------------
    Charge-offs net of recoveries                                   1,091        605       387        307       789
Purchased allowances                                                1,262          -         -                    -
--------------------------------------------------------------------------------------------------------------------
Balance at end of period                                           $9,962     $8,028    $7,624     $7,624    $7,638
====================================================================================================================
Net charge-offs as a percentage of average loans outstanding        0.06%      0.04%     0.03%      0.03%     0.07%
====================================================================================================================
Ratio of allowance to total loans held for investment at end
  of period                                                         0.54%      0.45%     0.50%      0.65%     0.64%
====================================================================================================================
Ratio of allowance to total non-performing assets                    120%       188%      365%       330%      159%
====================================================================================================================
</TABLE>


Note: there were no charge-offs of commercial real estate or commercial business
loans during the five years ended December 31, 2001.

         The following table shows the Corporation's total allowance for loan
losses and the allocation to the various loan categories as of December 31 for
each of the years indicated.

<TABLE>
<CAPTION>

Dollars in thousands                     2001            2000            1999           1998             1997
--------------------------------------------------------------------------------------------------------------------

                                    AMOUNT     %     AMOUNT   %     AMOUNT     %    AMOUNT     %     AMOUNT   %
--------------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>     <C>     <C>    <C>       <C>   <C>       <C>   <C>       <C>

Single-family mortgage loans          $140   0.02%     $149  0.02%     $144   0.02%     $156  0.04%     $148  0.03%
Commercial real estate loans         7,665    1.50    7,257   1.65    7,088    2.00    7,017   2.43    7,200   2.90
Consumer loans                         873    0.25      585   0.17      355    0.13      414   0.19      253   0.12
Commercial business loans            1,284    3.31       37  18.97       37   12.50       37   9.97       37   6.65
--------------------------------------------------------------------------------------------------------------------
  Total allowance for loan losses   $9,962   0.54%   $8,028  0.45%   $7,624   0.50%   $7,624  0.65%   $7,638  0.64%
====================================================================================================================
</TABLE>


         The amounts in the preceding table are expressed as a percentage of
gross loans outstanding for each loan category, excluding construction loans.
The total allowance is expressed as a percent of net loans held for investment.
There was no allowance for loan losses allocated to education loans as of
December 31 for any of the years presented.

         Although management believes that the Corporation's present level of
allowance for loan losses is adequate, there can be no assurance that future
adjustments to the allowance will not be necessary, which could adversely affect
the Corporation's results of operations.

         NON-INTEREST INCOME Non-interest income for the years ended December
31, 2001, 2000, and 1999, was $49.5 million, $35.6 million, and $35.2 million,
respectively. These amounts represented 44%, 37%, and 39% of the Corporation's
total revenue during such periods, respectively. The following paragraphs
discuss the principal components of non-interest income and the primary reasons
for their changes from 2000 to 2001 and 1999 to 2000.

         Retail banking fees and service charges increased by $3.0 million or
13.3% in 2001 and by $2.2 million or 11.0% in 2000. These increases were due in
part to growth of 9.3% (excluding the impact of checking accounts acquired in
the ACB acquisition) and 8.3% in the number of checking accounts serviced by the
Corporation during 2001 and 2000, respectively. Also contributing to the growth
in retail banking fees was a $1.4 million or over 20% increase and a $905,000 or
16.0% increase in fees from customers' use of debit cards and ATMs in 2001 and
2000, respectively.

         Premium and commission revenue increased by $1.0 million or over 37% in
2001 and by $170,000 or 6.5% in 2000. The Corporation's principal sources of
premium and commission revenue are from sales of tax-deferred annuity contracts,
credit life and disability insurance policies, mortgage loan insurance policies,
and mutual funds and other equity and debt securities. The increase in 2001 was
primarily attributable to increased sales of tax-

                                       22

<PAGE>


deferred annuity contracts due to an interest rate environment that made such
products more attractive to customers relative to other investment alternatives.
Also contributing was a $296,000 increase in retail brokerage commissions from
sales of mutual funds and other equity and debt securities. During 2001, the
Corporation increased the number of registered investment representatives in its
offices from three to ten. The increase in premium and commission revenue in
2000 was principally due to increased sales of credit life and disability
insurance policies.

         The Corporation expects growth in premium and commission revenue to
moderate in 2002. Although there can be no assurances, the Corporation expects
increased commission revenue from retail brokerage sales to be offset somewhat
by lower commissions from tax-deferred annuity sales. The Corporation intends to
increase the number of registered investment representatives in its offices from
10 to 14 in 2002. However, there can be no assurances.

         Loan servicing fees were ($7.5) million, $3.9 million, and $2.8 million
in 2001, 2000, and 1999, respectively. As market interest rates declined in
2001, loan prepayment activity increased dramatically as borrowers refinanced
older, high-rate residential mortgage loans, into low-rate loans. As a result of
this activity, the Corporation recorded $12.4 million more in amortization of
mortgage servicing rights in 2001 than it did in 2000. Excluding this increase,
loan servicing fees would have increased by $960,000 or almost 25% in 2001
compared to 2000. This increase was principally caused by $345.4 million or
17.7% in growth in average loans serviced for others in 2001 compared to the
previous year. This growth was caused by a significant increase in the
origination and sale of fixed-rate mortgage loans, as described in a later
paragraph. Also contributing were increased conversions by borrowers of
adjustable-rate mortgage loans into fixed-rate loans. Upon conversion, such
loans are generally sold in the secondary market and the Corporation retains the
servicing. Finally, in 2001 the Corporation purchased mortgage servicing rights
related to $89.4 million in mortgage loans. Such loans consisted principally of
fixed-rate, residential mortgage loans on properties located in Iowa.

         The increase in loan servicing fees from 1999 to 2000 was caused by a
low interest rate environment in 1998 and early 1999. Similar to 2001, this
environment resulted in a higher level of mortgage servicing rights amortization
in 1999 compared to 2000.

         Subsequent to December 31, 2001, market interest rates have remained at
relatively low levels, albeit slightly higher than the historically low levels
reached in the fourth quarter of 2001. If market interest rates stabilize or
increase in 2002 (as management anticipates), the Corporation may experience a
substantial decline in amortization on its mortgage servicing rights due to
slower loan prepayment activity, although there can be no assurances.
Furthermore, the Corporation may be required to recapture through earnings all
or a portion of any unfavorable mark-to-market adjustments on mortgage servicing
rights that were recorded in previous periods, in accordance with GAAP. Such
recapture would be appropriate if expectations for future loan prepayments
decline, which typically occurs in stable or rising rate environments, although
there can be no assurances. As of December 31, 2001, the Corporation had
recorded $2.6 million in unfavorable mark-to-market adjustments against its
mortgage servicing rights.

          If interest rates decline in 2002, the Corporation will most likely
continue to record high levels of amortization on its mortgage servicing rights
as a result of high levels of loan prepayment activity. Such amortization,
however, will most likely continue to be offset by high levels of gains on sales
of mortgage loans, although there can be no assurances. It should be noted,
however, that declines in market interest rates may also expose the Corporation
to unfavorable mark-to-market adjustments against its portfolio of mortgage
servicing rights--primarily because of increases in market expectations for
future prepayments. Although management believes that most of the Corporation's
loans that prepay are replaced by a new loan to the same customer or even a
different customer (thus preserving the future servicing cash flow), GAAP
requires mark-to-market losses resulting from increases in market expectations
for future prepayments to be recorded in the current period. However, the
offsetting gain on the sale of the new loan, if any, cannot be recorded until
the customer actually prepays the old loan and the new loan is sold in the
secondary market.

         At December 31, 2001 and 2000, loans serviced for others were $2.7
billion and $2.1 billion, respectively. As of the same dates, mortgage servicing
rights were $29.9 million and $23.3 million, respectively. For additional
discussion, relating to mortgage servicing rights, refer to Part I, Item 1,
"Business--Lending Activities", and Notes 1 and 4 of the Corporation's Audited
Consolidated Financial Statements, included herein under Part II, Item 8,
"Financial Statements and Supplementary Data".


                                       23

<PAGE>

         Gains on sales of loans for the years ended December 31, 2001, 2000,
and 1999, were $24.4 million, $2.7 million, and $7.2 million, respectively. The
increase in 2001 was primarily attributable to a $1.2 billion or over 820%
increase in the Corporation's mortgage loan sales in 2001. This increase was due
to a declining interest rate environment that resulted in increased originations
of fixed-rate mortgage loans, as well as increased conversions of
adjustable-rate loans into fixed-rate loans, both of which were generally sold
in the secondary market.

         In recent months, market interest rates have stabilized at a level that
is somewhat higher than the historically low levels reached in the fourth
quarter of 2001. Although there can be no assurances, management expects this
trend to continue in the near future. If interest rates remain stable or
increase in 2002, management expects customer demand for fixed-rate mortgage
loans to decrease. As such, management expects the Corporation's gain on sales
of loans to decrease from recent levels. These gains, however, may be offset to
some degree by decreased losses on mortgage servicing rights, as more fully
described in a previous paragraph.

         The decrease in gains on sales of loans from 1999 to 2000 was due
primarily to a $197.7 million or approximately 56% decline in the Corporation's
mortgage loan sales in 2000. The decline was due to a rising interest rate
environment during 2000 that slowed originations of fixed-rate mortgage loans,
as well as conversions of adjustable-rate loans into fixed-rate loans, both of
which the Corporation generally sells in the secondary market.

         In the fourth quarter of 2000, the Corporation sold a piece of real
estate it had acquired in the 1980s, having originally intended to build a
retail office at the location. The pretax gain on this sale was $1.2 million.
The estimated after tax gain was $771,000 or $0.04 per diluted share.

         The recognition of gains or losses from sales of loans, mortgage-backed
and related securities, and other investments is dependent on market and
economic conditions. Accordingly, there can be no assurance that the gains
reported in prior periods can be achieved in the future or that there will not
be significant inter-period variations in the results from such activities.
Furthermore, the Corporation is subject to accounting principles established by
Statement of Financial Accounting Standards No. 115 ("SFAS 115"), which limits
the Corporation's ability to sell investments classified as "held for
investment". For additional discussion, refer to Note 1 of the Corporation's
Audited Consolidated Financial Statements, included herein under Part II, Item
8, "Financial Statements and Supplementary Data".

         Other income was $3.3 million, $2.6 million, and $2.4 million for the
years ended December 31, 2001, 2000, and 1999, respectively. The increase in
2001 was due in part to an increase in fees from customers' conversions of
adjustable-rate mortgage loans into fixed-rate mortgage loans due to the low
interest rate environment, as previously described. Also contributing to the
increase in other non-interest income in 2001 was an increase in the cash
surrender value of the Corporation's bank owned life insurance policies.

         NON-INTEREST EXPENSE Non-interest expense for the years ended December
31, 2001, 2000, and 1999, was $67.1 million, $58.3 million, and $54.3 million,
respectively. Non-interest expense as a percent of average assets during these
periods was 2.70%, 2.62%, and 2.88%, respectively. The following paragraphs
discuss the principal components of non-interest expense and the primary reasons
for their changes from 2000 to 2001 and 1999 to 2000.

         Compensation and employee benefits increased by $4.9 million or 13.9%
in 2001 and $3.7 million or 11.8% in 2000. In general, the increase in both
periods was due to growth in the number of banking facilities operated by the
Corporation and resulting increase in the number of employees, as well as normal
annual merit increases. Both years were also impacted by an increase in the cost
of employee healthcare benefits. Such costs rose by $229,000 or 8.2% in 2001 and
by $682,000 or 32% in 2000. Finally, the increase in compensation and employee
benefits from 1999 to 2000 was also impacted by a $910,000 increase in costs
related to a performance-based, variable stock compensation plan. As of December
31, 2001, the Corporation had 1,033 full-time equivalent employees. This
compared to 897 and 831 as of December 31, 2000 and 1999, respectively.

         Occupancy and equipment expense increased by $894,000 or 11.4% in 2001
and $446,000 or 6.0% in 2000. In addition, communications, postage, and office
supplies expense increased by $951,000 or 22.1% in 2001 and $285,000 or 7.1% in
2000. These increases were primarily attributable to growth in the number of
banking

                                       24

<PAGE>


facilities operated by the Corporation, as well as increases in the number of
full-time equivalent employees and in the number of customers served by the
Corporation.

         Since December 31, 1999, the Corporation has opened fourteen banking
facilities. In January 2002, the Corporation signed a definitive agreement with
another financial institution to purchase three banking facilities in Rochester,
Minnesota (for additional discussion, refer to Note 15 of the Corporation's
Audited Consolidated Financial Statements, included herein under Part II, Item
8, "Financial Statements and Supplementary Data"). Furthermore, in 2002 the
Corporation intends to open up to seven banking facilities, although there can
be no assurances.

         ATM and debit card transaction costs increased by $314,000 or 10.7% in
2001 and $233,000 or 8.7% in 2000. The increase in both years was attributable
to increased use by the Corporation's customers of ATM and debit card networks,
as well as an increase in the number of ATMs operated by the Corporation. During
2001, the Corporation increased to over 100 the number of ATMs it owns and
operates in its market areas, as compared to 92 at the end of 2000.

         Advertising and marketing costs increased by $211,000 or 8.9% in 2001
and $102,000 or 4.5% in 2000. These increases correspond to general increases in
prices for marketing-related products and services, as well as increases in the
number of communities and/or market areas served by the Corporation.

         Amortization of intangible assets, which consists primarily of
deposit-based intangibles and purchase accounting goodwill, increased by $57,000
or 5.6% in 2001, due to deposit-based intangibles acquired in the acquisition of
ACB in October 2001. Amortization of intangible assets in 2000 was substantially
unchanged from 1999.

         In January 2002, the Corporation will adopt new accounting standards
relating to business combinations, as well as goodwill and other intangible
assets (for more information, refer to Note 1 of the Corporation's Audited
Consolidated Financial Statements, included herein under Part II, Item 8,
"Financial Statements and Supplementary Data"). The Corporation estimates that
adoption of these new accounting standards will result in an $875,000 decline in
amortization of intangibles in 2002. However, the Corporation believes
substantially all of this decline may be offset by increased amortization of
intangible assets from the acquisition of ACB and three bank offices in
Rochester, Minnesota. For additional discussion, refer to Notes 14 and 15 of the
Corporation's Audited Consolidated Financial Statements, included herein under
Part II, Item 8, "Financial Statements and Supplementary Data".

         Other non-interest expenses increased $1.5 million or over 33% in 2001,
and decreased by $846,000 or 15.7% in 2000. The increase in 2001 was caused by a
variety of factors, the most significant of which were increased costs related
to the operation and disposition of foreclosed real estate, increased losses on
customers' deposit accounts, and increased costs related to servicing of loans
for FNMA and FHLB. Among these factors, increased costs related to the servicing
of loans for the latter were the most notable, as they increased by $759,000 or
over 300%. Under the terms of its servicing agreements with these investors, the
Corporation is required to forward a full month's interest to the investors when
certain loans are repaid, regardless of the actual date of the loan payoff.
Lower interest rates in 2001 resulted in higher prepayment and refinance
activity, which increased the amount of "loan pay-off interest" remitted to FNMA
and FHLB.

         The decline in 2000 was due in part to a $508,000 or over 60% decrease
in the cost of FDIC deposit insurance. This decrease was caused by a reduction
in the amount the Corporation was required to pay for its pro rata share of the
bond obligation of FICO, a governmental agency. Also contributing to the decline
in other non-interest expense in 2000 was a $250,000 or 50% decrease in costs
related to the servicing of loans for FNMA and FHLB under its servicing
agreements with these investors, as previously described. Higher interest rates
in 2000 resulted in lower prepayment and refinance activity, which reduced the
amount of "loan pay-off interest" remitted to these investors.

         INCOME TAX EXPENSE Income tax expense for the years ended December 31,
2001, 2000, and 1999, was $15.4 million, $12.8 million, and $12.2 million,
respectively, or 35.1%, 35.6%, and 35.2% of pretax income, respectively. The
decline in the Corporation's effective income tax rate during 2001 was due in
part to the purchase



                                       25

<PAGE>


of bank owned life insurance policies. Refer to Part I, Item 1,
"Business--Subsidiaries" and "Business--Taxation", for additional discussion
relating to the Corporation's tax situation.

         SEGMENT INFORMATION The following paragraphs contain a discussion of
the financial performance of each of the Corporation's reportable segments
(hereafter referred to as "profit centers") for the years ended December 31,
2001, 2000, and 1999. This section of the report should be read in conjunction
with Note 13 of the Corporation's Audited Consolidated Financial Statements,
included herein under Part II, Item 8, "Financial Statements and Supplementary
Data".

         The following table summarizes the after-tax profits (losses) of the
Corporation's profit centers during each of the years ended December 31, 2001,
2000, and 1999 (Note 13 of the Corporation's Audited Consolidated Financial
Statements contains a more detailed profit (loss) statement for each profit
center).

<TABLE>
<CAPTION>

PROFIT (LOSS) BY PROFIT CENTER                                                       2001         2000          1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>          <C>          <C>

Mortgage banking                                                               $5,192,458   $3,630,010    $3,663,321
Residential loans                                                               6,953,652    8,364,834     7,650,881
Commercial real estate lending                                                  5,344,423    4,505,490     4,741,426
Consumer lending                                                                4,039,371    3,758,533     3,437,607
Education lending                                                               2,978,899    3,925,613     2,773,665
Investment and mortgage-related securities                                      1,138,434    1,823,019     1,947,185
Other segments                                                                  (145,142)    (448,015)     (276,073)
Non-GAAP adjustments                                                            2,946,129  (2,415,608)   (1,496,802)
---------------------------------------------------------------------------------------------------------------------
  Net income                                                                  $28,448,225  $23,143,876   $22,441,210
---------------------------------------------------------------------------------------------------------------------
</TABLE>

                  MORTGAGE BANKING Profits from the Corporation's mortgage
banking activities during 2001 were up $1.6 million or over 40% in 2001 compared
to the previous year. In contrast, profits in 2000 were down slightly from 1999.
Loan origination volumes and mortgage servicing fees are the principal drivers
of performance in this profit center. The Corporation's mortgage banking
operation originated $1.5 billion in single-family residential loans in 2001
compared to $524 million and $629 million in 2000 and 1999, respectively. Due to
the low interest rate environment in 2001, the large increase in origination
volume in that year was caused by a surge in refinance activity. In such
situations, a substantial portion of the revenue allocated to the mortgage
banking profit center for originations will be offset by an increase in lost
servicing value related to refinanced loans. As a result, the percentage
increase in profits in 2001 was significantly lower than the percentage increase
in loan originations. Refer to "Non-GAAP Adjustments", below, for additional
discussion.

                  RESIDENTIAL LOANS Profits from the Corporation's residential
loan portfolio declined by $1.4 million or 16.9% in 2001 compared to the
previous year. In 2000, profits were up $714,000 or 9.3% compared to 1999. In
2001, the performance of this profit center was impacted by a significant
increase in charge-offs of internally-capitalized origination costs assigned to
the loans in the portfolio. These charge-offs were $3.2 million in 2001 compared
to only $579,000 in 2000 and $265,000 in 1999 (refer to "Non-GAAP Adjustments",
below, for additional information). These increases resulted from increased
conversions of the profit center's adjustable-rate mortgage loans into
fixed-rate loans, as discussed elsewhere in this report.

                  COMMERCIAL REAL ESTATE LENDING Profits from commercial real
estate lending increased by $839,000 or 18.6% in 2001 after decreasing by
$236,000 or 5.0% in 2000 compared to 1999. The profit center's earnings in both
periods benefited from an increase in its average assets, which increased by
$67.7 million or 14.8% in 2001 and $84.5 million or 22.7% in 2000. The profit
center originated $112.7 million, $120.5 million, and $112.2 million in loans
during 2001, 2000, and 1999, respectively. The volume-related improvement in
2000 was more than offset by a narrower interest rate spread in that year. This
development was caused by a higher interest rate environment in 2000, which
resulted in a large increase in the profit center's average cost of funds. In
contrast, the average yield on the commercial real estate loan portfolio did not
change significantly in 2000 as compared to 1999.

                  CONSUMER LENDING Profits in the Corporation's consumer lending
profit center increased by $281,000 or 7.5% and $321,000 or 9.3% in 2001 and
2000, respectively, as compared to previous years. These improvements were
principally the result of a $51.4 million or 15.7% increase and $70.1 million or
27.3% increase in the profit center's average assets during 2001 and 2000,
respectively. The profit center originated $274 million, $236 million, and $189
million in loans during 2001, 2000, and 1999, respectively. In 2001, the
improvement in profits caused by increased volume was partially offset by a
$497,000 or over 80% increase in credit losses. This

                                       26

<PAGE>



increase was the result of a general decline in economic conditions during that
period. The volume-related improvement in 2000 was partially offset by a
narrower interest rate spread in that year. This development was caused by a
higher interest rate environment in 2000, which resulted in a larger increase in
the profit center's average cost of funds than its average yield on assets.

                  EDUCATION LENDING Profits from education lending decreased by
$947,000 or 24.1% in 2001 and increased by $1.2 million or over 40% in 2000
compared to previous years. The decrease in 2001 was principally the result of a
sharp decline in market rates of interest during the year, which resulted in a
162 basis point decline in the yield on education loans. In contrast, the cost
of the Corporation's money market accounts, which are the primary funding source
for this profit center, declined by only 96 basis points. In addition, the
profit center's results for 2001 include a $50,000 gain on the sale of loans
compared to a gain of $197,000 in the previous year.

                  In 2000, education loans benefited from an improved interest
rate spread as a result of higher market interest rates in that year. The
average yield on education loans improved by 95 basis points in 2000. In
contrast, the profit center's average cost of funds increased by only 37 basis
points. Education loans also benefited from a gain on sale of loans in 2000 that
was $108,000 higher than the gain recorded in 1999.

                  INVESTMENT AND MORTGAGE-RELATED SECURITIES Profits from the
Corporation's investment securities portfolio declined by $685,000 or 37.6% in
2001 and by $124,000 or 6.4% in 2000 as compared to prior years. The decline in
2001 occurred despite a $61.1 million or 23.1% increase in the average assets
assigned to the profit center. This situation was caused by a substantial change
in the profit center's mix of assets during the year. In 2001, a declining
interest rate environment resulted in a substantial increase in prepayments on
the profit center's higher-yielding assets, principally CMOs. These assets were
replaced by purchases of lower-yielding CMOs and, to a lesser extent, by
overnight and other short-term investments. Overnight and short-term investments
increased during the last half of the year as a result of the temporary
investment of proceeds from increased sales of single-family mortgage loans, as
described elsewhere in this report.

                  The decrease in this profit center's earnings in 2000, as
compared to 1999, was principally volume related. Average assets assigned to the
profit center declined by $14.2 million or 5.1% in 2000 as compared to the
previous year.

                  A significant portion of the assets of the investment and
mortgage-related securities portfolio are located in Nevada. As such, this
profit center experiences a substantial tax advantage because Nevada does not
currently impose a corporate tax. However, the liabilities that fund this profit
center's operations are maintained in Wisconsin, which preserves the
tax-deductibility of the interest expense in that state. This situation results
in a very low effective tax rate or, at times, a negative effective tax rate for
this profit center.

                  OTHER SEGMENTS This segment consists primarily of the parent
holding company, as well as some of the Bank's wholly-owned subsidiaries. In
addition, in 2001 this profit center contains the preliminary results of the
Corporation's new line of business--commercial banking. The financial results of
this profit center have not been reported separately in 2001 due to continuing
efforts to design these products on the Corporation's systems, as well as
efforts to complete the integration of the operations of ACB and the three
branches the Corporation has agreed to acquire in Rochester, Minnesota. For
additional discussion, refer to Notes 14 and 15 of the Corporation's Audited
Consolidated Financial Statements, included herein under Part II, Item 8,
"Financial Statements and Supplementary Data".

                  The improvement in the earnings (loss) from this segment was
principally the result of lower interest expense in the holding company in 2001
as compared to 2000. This change was caused by a higher level of borrowings in
2000, the proceeds of which were largely used to repurchase the Corporation's
stock.

                  NON-GAAP ADJUSTMENTS Non-GAAP adjustments were $2.9 million in
2001 compared to ($2.4) million in 2000 and ($1.5) million in 1999. The change
between 2001 and the two prior years was due primarily to the fact that a large
portion of the efforts of the mortgage banking profit center in 2001 were
devoted to the refinance of existing loans rather than the origination of new
loans. As such, the Corporation recorded significantly higher levels of internal
charge-offs related to its mortgage servicing operations. In addition, the

                                       27
<PAGE>


residential loan profit center experienced a substantially higher level of
charge-offs related to internally-capitalized origination costs.

                  NET COST TO ACQUIRE AND MAINTAIN DEPOSIT LIABILITIES In
addition to the after-tax performance of the aforementioned profit centers,
management of the Corporation closely monitors the net cost to acquire and
maintain deposit liabilities. The Corporation's profit centers are allocated a
share of the net cost to acquire and maintain deposit liabilities according to
their proportionate use of such deposits as a funding source. As such, changes
in the net cost to acquire and maintain deposit liabilities will impact all of
the Corporation's profit centers.

                  The net cost to acquire and maintain deposit liabilities was
1.20%, 1.15%, and 1.13% of average deposit liabilities outstanding during the
years ended December 31, 2001, 2000, and 1999, respectively. The increase in
cost during these periods was due principally to increased openings of new
banking facilities. In 2001, the Corporation opened six new facilities, one of
which was a full-service office. This compares to an increase of eight
supermarket facilities in 2000 and three in 1999.

FINANCIAL CONDITION

         OVERVIEW The Corporation's total assets increased by $365 million or
15.5% during the twelve months ended December 31, 2001. This increase was due in
part to the acquisition of $156 million in assets of ACB on October 31, 2001.
For additional discussion, refer to Note 14 of the Corporation's Audited
Consolidated Financial Statements, included herein under Part II, Item 8,
"Financial Statements and Supplementary Data").

         Excluding the effect of the ACB acquisition, total assets increased by
approximately $209 million or 8.9% in 2001. This increase was primarily the
result of increases in interest-bearing deposits, loans held for investment,
investment and mortgage-related securities, cash and due from banks, loans held
for sale, and other assets. These increases were primarily funded by increases
in deposit liabilities, FHLB advances, and stockholders' equity (the latter due
in part to the issuance of $28.6 million in equity to acquire ACB). These
funding sources were also used to reduce federal funds purchased and borrowings
under reverse-repurchase agreements in 2001.

         CASH AND DUE FROM BANKS The Corporation's cash and due from banks,
which consists primarily of vault and teller cash, as well as correspondent bank
balances, increased by $45.3 million or over 175% during the twelve months ended
December 31, 2001. Most of this increase was caused by a timing difference at
December 31, 2000, related to payment of real estate taxes at year-end for
borrowers that maintain escrow relationships with the Corporation.

         INTEREST-BEARING DEPOSITS WITH BANKS Interest-bearing deposits with
banks, which consist of overnight investments at the FHLB and short-term money
market accounts, increased by $85.2 million from $13.1 million at December 31,
2000, to $98.2 million at December 31, 2001. The large amount of overnight
investments at December 31, 2001, was caused by the temporary investment of
proceeds from loan sales. These investments will be used to pay down funding
sources as they mature or will be reinvested in other interest-earning assets.

         INVESTMENT SECURITIES The Corporation's investment securities increased
from $817,000 at December 31, 2000, to $35.5 million at December 31, 2001.
During the fourth quarter of 2001, the Corporation purchased $35.5 million in
callable securities issued by various agencies of the U.S. government. These
securities were sold in January of 2002 at an accounting loss of $166,000.
Despite this loss, the holding period return on these securities was comparable
to a money market yield, which was the Corporation's expectation when it
purchased the securities.

         MORTGAGE-BACKED AND RELATED SECURITIES The Corporation's aggregate
investment in its mortgage-backed and related securities portfolios increased by
$31.5 million or 7.7% during the twelve months ended December 31, 2001. This
increase was caused by the purchase of $232.8 million in short- and medium-term,
fixed-rate CMOs, as well as $35.3 million in floating-rate CMOs. These purchases
were offset in part by $236.9 million in principal repayments on the portfolio.
Principal repayments on mortgage-related securities increased substantially
during 2001 as a result of a historically low interest rate environment that
encouraged borrowers to refinance higher-rate mortgage loans into lower-rate
loans.

                                       28
<PAGE>
         The following table sets forth the composition of the  Corporation's
mortgage-backed and related securities  portfolios as of December 31 for each
of the years indicated.

<TABLE>
<CAPTION>

Dollars in thousands                               2001                      1999                      2000
--------------------------------------------------------------------------------------------------------------------
                                          AMORTIZED        FAIR    AMORTIZED         FAIR    AMORTIZED         FAIR
                                               COST       VALUE         COST        VALUE         COST        VALUE
--------------------------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>         <C>           <C>         <C>          <C>

Available for sale:
  Collateralized mortgage obligations      $221,777    $223,399     $120,538     $119,026     $148,311     $143,790
  Mortgage-backed securities                 81,011      82,581      207,052      212,211      105,651      108,376
--------------------------------------------------------------------------------------------------------------------
    Total available for sale                302,789     305,980      327,591      331,237      253,963      252,165
--------------------------------------------------------------------------------------------------------------------
Held for investment:
  Collateralized mortgage obligations       132,755     133,666       75,532       74,708      100,522       97,733
  Mortgage-backed securities                  1,255       1,272        1,767        1,749        3,410        3,335
--------------------------------------------------------------------------------------------------------------------
    Total held for investment:              134,010     134,937       77,299       76,457      103,932      101,068
--------------------------------------------------------------------------------------------------------------------
    Total mortgage-backed and related
      securities                           $436,799    $440,917     $404,889     $407,694     $357,895     $353,234
====================================================================================================================
Weighted-average yield                        6.06%                    7.00%                     6.82%
====================================================================================================================
</TABLE>

         LOANS HELD FOR SALE The Corporation's loans held for sale increased by
$33.1 million or over 140% during the year ended December 31, 2001. This
increase was due to a declining interest rate environment during 2001 that
stimulated consumer demand for fixed-rate residential mortgage loans and
resulted in increased conversions of adjustable-rate loans into fixed-rate
loans, which the Corporation generally sells in the secondary market.

         The following table sets forth the activity in the Corporation's
portfolio of loans held for sale during each of the years indicated.

<TABLE>
<CAPTION>

Dollars in thousands                                  2001          2000          1999           1998          1997
--------------------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>           <C>            <C>           <C>

Balance at beginning of period                     $22,974        $6,346       $72,002        $45,577       $20,339
Single-family mortgage loans originated
for sale (1)                                     1,252,070       142,985       305,345        818,292       258,818
Loans transferred from held for investment (2)     165,583        23,743        21,283         98,718        92,573
Loans transferred to held for investment (3)             -             -      (43,554)              -             -
Principal balance of loans sold                (1,384,518)     (150,100)     (348,730)      (890,585)     (326,153)
--------------------------------------------------------------------------------------------------------------------
  Balance at end of period                         $56,109       $22,974        $6,346        $72,002       $45,577
====================================================================================================================
</TABLE>
(1) Net of monthly principal payments received from borrowers during the period
    held for sale.
(2) Consists of single-family adjustable-rate mortgage loans originated for
    investment that converted to fixed-rate loans. The Corporation generally
    sells such loans in the secondary market.
(3) Consists of fixed-rate mortgage loans transferred to loans held for
    investment at the lower of cost or market to maintain growth in the
    Corporation's earning assets.

         In the fourth quarter of 1999, the Corporation transferred $43.6
million in fixed-rate mortgage loans that had been originated for sale to its
portfolio of loans held for investment. In accordance with GAAP, these loans
were transferred at the lower of cost or market, which resulted in a $152,000
loss in that period. The loss reduced the amount reported as gain on sales of
loans in 1999.

         LOANS HELD FOR INVESTMENT The Corporation's loans held for investment
declined by $35.4 million or 2.0% during the twelve months ended December 31,
2001 (excluding $114.3 million in loans acquired in the ACB acquisition in the
fourth quarter of 2001). During the twelve months ended December 31, 2001, the
Corporation originated $269.4 million in adjustable-rate single-family mortgage
loans, $273.5 million in consumer loans (consisting mostly of second mortgages),
$112.7 million in commercial real estate loans, $33.7 million in education
loans, and $2.3 million in commercial business loans. During the same period,
the Corporation purchased $178.1 million in adjustable-rate residential mortgage
loans originated by third-party financial institutions. During 2001, the
interest rate environment had a significant impact on the ability of the
Corporation to maintain its internally-originated portfolio of loans held for
investment. This situation developed because low interest rates tend to increase
customer preference for fixed-rate mortgage loans, as opposed to adjustable-rate
loans. In addition, a low interest rate environment encourages borrowers to
refinance their existing adjustable-rate residential loans into fixed-rate loans
to "lock-in" a lower long-term rate. Given the Corporation's policy of selling
these types of loans in the secondary market, its internally-originated
portfolio of adjustable-rate residential loans declined significantly in the
most recent period. Although the Corporation was able to maintain internal
growth in commercial real estate, consumer, and education loans, the Corporation
purchased adjustable-rate mortgage loans from three third-party financial
institutions in an effort to maintain growth in its level of earning assets.
These loans were subjected to substantially the same underwriting process as the
Corporation's own loans. These loans are located throughout the


                                       29

<PAGE>



U.S., with no single state making up a significant portion of the overall
principal. The loans have adjustable-rates that reset annually at an average
margin of approximately 200 to 250 basis points above the one-year U.S. Treasury
bill. Most of the loans have fixed interest rates for terms of three to seven
years before their first adjustment date. The loans were purchased by FCHI, the
Corporation's wholly-owned investment subsidiary in Nevada.

         The Corporation will continue to explore alternatives to maintain
growth in its interest-earning assets in the near term. These alternatives
include, but are not limited to, the purchase of additional adjustable-rate
residential mortgage loans from third-party financial institutions, the purchase
of mortgage-backed and related securities, and the retention of certain
fixed-rate loans that are currently sold by the Corporation in the secondary
market. However, there are many considerations involved in such decisions and
there can be no assurances that the Corporation will elect to continue any of
these strategies to increase its interest-earning assets.

         The following table sets forth the composition of the Corporation's
portfolio of loans held for investment as of December 31 for each of the years
indicated.

<TABLE>
<CAPTION>

Dollars in thousands                2001             2000              1999              1998             1997
--------------------------------------------------------------------------------------------------------------------
                               AMOUNT         %  AMOUNT     %    AMOUNT      %     AMOUNT       %  AMOUNT       %
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>   <C>       <C>    <C>       <C>    <C>        <C>  <C>        <C>

Real estate loans:
  Single-family mortgage
   loans                        $669,867    36%   $719,671   40%   $652,883    42%  $426,603   36%  $537,722   45%
  Non-residential real
   estate loans                  257,043     14    203,842    11    168,453     11   141,046    12   107,315    9
  Multi-family residential
   loans                         252,312     14    236,003    13    186,591     12   148,060    13   140,589   12
  Construction loans (1)          83,537      4     77,216     4     80,563      5    63,035     5    51,319    4
-------------------------------------------------------------------------------------------------------------------
    Total real estate loans    1,262,759     68  1,236,732    70  1,088,490     70   778,744    66   836,945   70
-------------------------------------------------------------------------------------------------------------------
Consumer loans:
  Second mortgage and home
   equity loans                  249,501     13    253,866    14    204,806     13   175,541    15   163,231   14
  Automobile loans                75,009      4     64,841     4     46,956      3    37,558     3    31,182    3
  Other consumer loans (2)        29,949      2     25,262     1     14,239      1     9,006     1     9,149    1
-------------------------------------------------------------------------------------------------------------------
    Total consumer loans         354,459     19    343,969    19    266,001     17   222,105    19   203,562   17
-------------------------------------------------------------------------------------------------------------------
Education loans                  201,183     11    197,579    11    190,170     12   182,380    15   159,893   13
Commercial business loans         38,736      2        195     -        296      -       371     -       557    -
-------------------------------------------------------------------------------------------------------------------
    Subtotal                   1,857,137   100%  1,778,475  100%  1,544,958   100% 1,183,600  100% 1,200,957 100%
Unearned discounts, premiums,
  and net deferred loan
  fee/costs                        4,141             2,029            1,260            1,549             574
Allowance for loan losses        (9,962)           (8,028)          (7,624)          (7,624)         (7,638)
-------------------------------------------------------------------------------------------------------------------
    Total loans held for
      investment              $1,851,316        $1,772,477       $1,538,595       $1,177,526      $1,193,893
===================================================================================================================
Weighted average contractual
  rate                             7.36%             8.00%            7.58%            7.80%           8.22%
===================================================================================================================
</TABLE>

(1)  At December 31, 2001, construction loans consisted of $56.4 million in
     single-family residences, $22.5 million in multi-family residences, and
     $4.6 million in non-residential real estate.
(2)  At December 31, 2001, other consumer loans included $22.3 million of
     unsecured loans, $4.5 million of recreational and household good loans,
     $1.9 million of deposit account-secured loans, and $1.2 million of mobile
     home loans.


                                       30
<PAGE>


         The following table sets forth the activity in the Corporation's
portfolio of loans held for investment during each of the years indicated.

<TABLE>
<CAPTION>

Dollars in thousands                                  2001          2000          1999           1998          1997
--------------------------------------------------------------------------------------------------------------------
<S>                                            <C>            <C>           <C>            <C>          <C>

Balance at beginning of period                  $1,772,477    $1,538,595    $1,177,526     $1,193,893    $1,106,040
--------------------------------------------------------------------------------------------------------------------
Real estate loan originations:
  Single-family mortgage loans (1)                 270,071       354,734       293,227        212,964       243,694
  Commercial real estate loans                     112,715       120,459       112,180        106,146        71,554
  Decrease (increase) in loans in process
    (2)                                              9,276      (13,546)       (7,086)          1,654      (13,081)
--------------------------------------------------------------------------------------------------------------------
    Total real estate loans originated             392,062       461,647       398,321        320,764       302,167
--------------------------------------------------------------------------------------------------------------------
Consumer loan originations:
  Second mortgage and home equity loans            192,574       160,386       137,459        136,659       120,809
  Automobile loans                                  56,081        52,967        39,635         33,729        23,923
  Other consumer loans (3)                          24,894        22,490        12,168          6,461         7,004
--------------------------------------------------------------------------------------------------------------------
    Total consumer loans originated                273,549       235,843       189,262        176,849       151,736
--------------------------------------------------------------------------------------------------------------------
Education loan originations                         33,705        33,859        29,521         37,692        38,422
Commercial business loan originations                2,278             -             -              -             -
--------------------------------------------------------------------------------------------------------------------
    Total loans originated for investment          701,595       731,350       617,103        535,305       492,325
--------------------------------------------------------------------------------------------------------------------
Loans purchased for investment:
  Single-family residential loans                  178,104        13,051        97,238        165,140             -
  Commercial real estate loans                           -         8,625           798              -         6,373
  Consumer loans                                         -             -             -            377             -
--------------------------------------------------------------------------------------------------------------------
    Total loans purchased for investment           178,104        21,676        98,036        165,517         6,373
--------------------------------------------------------------------------------------------------------------------
Net loans acquired in the acquisition of           114,287             -             -              -             -
    ACB (4)
Loan principal repayments                        (742,074)     (356,507)     (371,999)      (389,935)     (317,291)
Education loans sold                               (1,334)       (4,800)       (2,165)              -             -
Loans transferred to held for sale
  portfolio (5)                                  (165,583)      (23,743)      (21,283)       (98,718)      (92,573)
Loans swapped into mortgage-backed securities            -     (132,280)             -      (222,260)             -
Loans transferred from held for sale
  portfolio (6)                                          -             -        43,554              -             -
Other changes in loans held for investment (7)     (6,155)       (1,813)       (2,178)        (6,276)         (981)
--------------------------------------------------------------------------------------------------------------------
  Balance at end of period                      $1,851,316    $1,772,477    $1,538,595     $1,177,526    $1,193,893
====================================================================================================================
</TABLE>

(1) Excludes loans originated for sale and loans originated on an agency basis
    for WHEDA and State VA. The latter amounted to $22.6 million, $26.3 million,
    $30.3 million, $38.8 million, and $23.1 million in 2001, 2000, 1999, 1998,
    and 1997, respectively.
(2) Consists of changes in loans in process on single-family, multi-family, and
    non-residential real estate construction loans.
(3) Consists principally of loans secured by mobile homes, recreational and
    household goods, and deposit accounts, as well as unsecured loans.
(4) Consists of $36.9 million in commercial business loans, $36.9 million in
    single-family residential loan, $27.0 million in commercial real estate
    loans, $13.3 million in consumer loans, and $0.2 million in education loans.
(5) Consists of single-family adjustable-rate mortgage loans that converted to
    fixed-rate and were sold in the secondary market.
(6) Consists of fixed-rate mortgage loans transferred from loans held for sale
    at the lower of cost or market to maintain growth in the Corporation's
    earning assets.
(7) Consists principally of real estate foreclosures and changes in allowance
    for loan losses, discounts, premiums, and deferred fees.

         OTHER ASSETS The Corporation's other assets increased from $2.6 million
at December 31, 2000, to $33.3 million at December 31, 2001. A large portion of
this increase resulted from the Corporation's purchase of life insurance on
certain key members of senior and middle management personnel (referred to as
"bank-owned life insurance").

         DEPOSIT LIABILITIES The Corporation's deposit liabilities increased by
$200.4 million or 11.8% during the twelve months ended December 31, 2001
(excluding $129.6 million in deposits assumed in the ACB acquisition).
Management attributes much of this growth to recent volatility in other
financial markets, which has made traditional bank financial offerings more
attractive to consumers, as well as aggressive pricing of certificates of
deposit by the Corporation in its market areas. The Corporation's deposit
liabilities were also impacted by an $87.9 million or over 520% increase in
custodial deposit accounts during 2001. The Corporation maintains borrowers'
principal and interest payments in such accounts on a temporary basis pending
their remittance to the third-party owners of the loans. Balances in these
accounts increased substantially in 2001 due to significant increases in loan
prepayment activity.

                                       31
<PAGE>



         The following table sets forth the composition of the Corporation's
deposit liabilities as of December 31 for each of the years indicated.

<TABLE>
<CAPTION>


Dollars in thousands                              2001                      2000                       1999
---------------------------------------------------------------------------------------------------------------------
                                                        WEIGHTED                 WEIGHTED                   WEIGHTED
                                                         AVERAGE                  AVERAGE                    AVERAGE
                                             AMOUNT         RATE      AMOUNT         RATE      AMOUNT           RATE
--------------------------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>         <C>          <C>          <C>          <C>
Regular savings accounts                   $141,548        1.11%    $103,662        1.49%     $104,511        1.49%
Interest-bearing checking accounts          101,679         0.63      80,594         0.85       72,913         0.75
Non-interest bearing checking accounts      285,591            -     161,602            -      136,700            -
Money market accounts                       214,604         1.80     154,399         4.22      173,596         3.76
Variable-rate IRA accounts                    4,017         1.88       2,827         3.94        3,610         3.63
Certificates of deposit                   1,281,814         5.19   1,196,168         6.45      979,930         5.41
--------------------------------------------------------------------------------------------------------------------
  Total                                  $2,029,254        3.58%  $1,699,252        5.06%   $1,471,259        4.20%
====================================================================================================================
</TABLE>



         At December 31, 2001, certificates of deposit in denominations of
$100,000 or more amounted to $152.3 million and mature as follows: $59.6 million
within three months, $22.3 million over three through six months, $29.6 million
over six through 12 months, $37.3 million over 12 through 24 months, and $3.5
million over 24 months. At December 31, 2001, certificates of deposits issued
through third-party broker-dealers amounted to $22.3 million, all of which was
scheduled to mature within three months.

         FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO
REPURCHASE The Corporation's federal funds purchased and securities sold under
agreement to repurchase declined by $120.0 million or 100% in the aggregate
during the twelve months ended December 31, 2001. This decrease was primarily
funded by an increase in deposit liabilities, as previously described.

         FHLB ADVANCES AND ALL OTHER BORROWINGS The Corporation's FHLB advances
increased by $86.2 million or over 23% during the year ended December 31, 2001
(excluding $13.5 million acquired in the ACB acquisition). Additional FHLB
advances were drawn during 2001 to fund growth in the Corporation's
mortgage-backed and related securities.

         The following table presents certain information regarding the
Corporation's short-term borrowings (original maturity of less than one year) at
or for the years ended December 31, 2001, 2000, and 1999.

<TABLE>
<CAPTION>

Dollars in thousands                                                                 2001         2000         1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>           <C>           <C>

FHLB advances:
  Average balance outstanding (1)                                                 $35,006      $51,828      $84,482
  Maximum amount outstanding at any month-end during the period                   112,080      201,273      204,215
  Balance outstanding at end of period                                             12,500       10,545      201,273
  Average interest rate during the period (2)                                       4.50%        6.42%        5.32%
  Weighted-average interest rate at the end of period                               2.61%        6.74%        5.66%

Securities sold under agreements to repurchase:
  Average balance outstanding (1)                                                 $36,923      $71,154            -
  Maximum amount outstanding at any month-end during the period                   100,000      100,000            -
  Balance outstanding at end of period                                                  -      100,000            -
  Average interest rate during the period (2)                                       6.66%        6.45%            -
  Weighted-average interest rate at the end of period                                   -        6.68%            -

Federal funds purchased:
  Average balance outstanding (1)                                                 $10,769      $15,385       $2,308
  Maximum amount outstanding at any month-end during the period                    20,000       20,000       20,000
  Balance outstanding at end of period                                                  -       20,000       20,000
  Average interest rate during the period (2)                                       5.15%        6.72%        5.74%
  Weighted-average interest rate at the end of period                                   -        6.77%        5.79%

Total short-term borrowings:
  Average balance outstanding (1)                                                 $82,698     $138,367      $86,790
  Maximum amount outstanding at any month-end during the period                   191,155      221,273      221,273
  Balance outstanding at end of period                                           12500.00      130,545      221,273
  Average interest rate during the period (2)                                       5.55%        6.47%        5.33%
  Weighted-average interest rate at the end of period                               2.61%        6.70%        5.67%
====================================================================================================================
</TABLE>

(1) Calculated using month-end balances.
(2) Calculated using month-end average interest rates.


                                       32
<PAGE>


         NON-PERFORMING ASSETS The Corporation's non-performing assets
(consisting of non-accrual loans, real estate acquired through foreclosure or
deed-in-lieu thereof, and real estate in judgement) amounted to $8.5 million or
0.31% of total assets at December 31, 2001, compared to $4.4 million or 0.19% at
December 31, 2000. The increase in non-performing assets in 2001 was due in part
to an overall increase in loans on non-accrual status, particularly consumer
loans and, to a lesser degree, mortgage loans. These increases were principally
caused by a general deterioration in overall economic conditions in 2001. Also
contributing to the increase in non-performing assets in 2001 was $933,000 of
real estate in judgement and real estate acquired through foreclosure related to
three independent builders that experienced problems with a number of small
single-family projects. Although foreclosure on these loans has commenced,
management does not expect to incur significant losses. However, there can be no
assurances.

         The following table contains information regarding the Corporation's
non-performing assets during the five year period ended December 31, 2001.

<TABLE>
<CAPTION>

Dollars in thousands                                             2001       2000        1999       1998        1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>        <C>          <C>         <C>        <C>

Non-accrual loans:
  Single-family mortgage loans                                 $3,078     $2,065        $862       $770        $738
  Commercial real estate loans                                    373          -           -          -       3,000
  Consumer loans                                                2,040      1,069         191        341         672
  Commercial business loans                                       164          -           -          -           -
--------------------------------------------------------------------------------------------------------------------
    Total non-accrual loans                                     5,655      3,134       1,053      1,111       4,410
Real estate owned and in judgement                              2,847      1,222       1,091      1,264         492
--------------------------------------------------------------------------------------------------------------------
    Total non-performing assets                                $8,502     $4,356      $2,144     $2,375      $4,902
====================================================================================================================
Ratio of non-accrual loans to loans held for investment         0.31%      0.18%       0.07%      0.09%       0.37%
====================================================================================================================
Ratio of total non-performing assets to total assets            0.31%      0.19%       0.10%      0.13%       0.32%
====================================================================================================================
Ratio of total allowance for loan and real estate losses
  to total non-performing assets                                 120%       188%        365%       330%        159%
====================================================================================================================
</TABLE>

Note: there were no non-performing education loans as of December 31 for any of
the years presented.

         In addition to non-performing assets, at December 31, 2001, management
was closely monitoring $10.3 million in assets which it had classified as
doubtful, substandard, or special mention. This compares to $2.8 million in such
assets at December 31, 2000. The increase in 2001 was due primarily to the
classification of $4.8 million in commercial real estate and $1.9 million in
commercial loans as substandard in the fourth quarter, the latter attributable
to the ACB acquisition. Although these loans were performing in accordance with
their terms, management of the Corporation deemed their classification prudent
after consideration of factors such as declines in the valuation of associated
collateral, reductions in occupancy rates, and deteriorating economic
conditions. Management does not expect to incur a significant loss on these
loans at this time, although there can be no assurances.

LIQUIDITY AND CAPITAL RESOURCES

         The Corporation's primary sources of funds are deposits obtained
through its branch office network, borrowings from the FHLB and other sources,
amortization, maturity, and prepayment of outstanding loans and investments, and
sales of loans and other assets. During 2001, 2000, and 1999, the Corporation
used these sources of funds to fund loan commitments, purchase investment and
mortgage-related securities, and cover maturing liabilities and deposit
withdrawals. At December 31, 2001, the Corporation had $889.9 million in time
deposits, and $66.8 million in FHLB advances that were scheduled to mature
within one year. In addition, the Corporation had approved loan commitments and
undisbursed commitments on construction loans outstanding as of the same date.
Management believes that the Corporation has adequate resources to fund all of
these obligations or commitments, that all of these obligations or commitments
will be funded by the required date, and that the Corporation can adjust the
rates it offers on certificates of deposit to retain such deposits in changing
interest rate environments. Under FHLB lending and collateralization guidelines,
the Corporation had approximately $356 million in unused borrowing capacity at
the FHLB as of December 31, 2001. The Corporation also had $65 million in unused
lines of credit with other financial institutions as of the same date.

         The Corporation's stockholders' equity ratio as of December 31, 2001,
was 7.08% of total assets. The Corporation's long-term objective is to maintain
a ratio of at least 7.0%.

                                       33

<PAGE>


         The Corporation is also required to maintain specified amounts of
capital pursuant to regulations promulgated by the OTS and the FDIC. The
Corporation's objective is to maintain its regulatory capital in an amount
sufficient to be classified in the highest regulatory capital category (i.e., as
a "well capitalized" institution). At December 31, 2001, the Corporation's
regulatory capital exceeded all regulatory minimum requirements, as well as the
amount required to be classified as a "well capitalized" institution. For
additional discussion, refer to Note 11 of the Corporation's Consolidated
Financial Statements, included herein under Part II, Item 8, "Financial
Statements and Supplementary Data".

         The Corporation paid cash dividends of $8.9 million, $7.7 million, and
$6.3 million during the years ended December 31, 2001, 2000, and 1999,
respectively. These amounts equated to dividend payout ratios of 31.2%, 33.3%,
and 28.0% of the net income in such periods, respectively. It is the
Corporation's objective to maintain its dividend payout ratio in a range of 25%
to 35% of net income. However, the Corporation's dividend policy and/or dividend
payout ratio will be impacted by considerations which include, but are not
limited to, the level of stockholders' equity in relation to the Corporation's
stated goal, as previously described, regulatory capital requirements for the
Corporation, as previously described, and certain dividend restrictions in
effect for the Corporation (for additional discussion refer to Note 11 of the
Corporation's Audited Consolidated Financial Statements, included herein under
Part II, Item 8, "Financial Statements and Supplementary Data"). Furthermore,
unanticipated or non-recurring fluctuations in earnings may impact the
Corporation's ability to pay dividends and/or maintain a given dividend payout
ratio.

         On January 24, 2002, the Corporation's Board of Directors approved a
regular quarterly dividend of $0.12 per share payable on March 7, 2002, to
shareholders of record on February 14, 2002.

         During 2001, the Corporation repurchased 228,800 shares of its common
stock at a cost of $3.2 million under its 1999 and 2000 stock repurchase plans
(the "1999 Plan" and "2000 Plan", respectively). As of December 31, 2001, no
shares remained to be purchased under the 1999 Plan and 904,260 shares remain to
be purchased under the 2000 Plan. In April 2001, the Corporation's Board of
Directors extended the 2000 Plan for another twelve months. The shares may be
repurchased from time to time in open-market transactions during the next twelve
months as, in the opinion of management, market conditions warrant. The
repurchased shares will be held as treasury stock and will be available for
general corporate purposes. For additional discussion, refer to Note 11 of the
Corporation's Audited Consolidated Financial Statements, included herein under
Part II, Item 8, "Financial Statements and Supplementary Data".

         During 2001, the Corporation reissued 1,825,132 shares of common stock
out of its inventory of treasury stock with a cost basis of $18.3 million
(1,685,126 of these shares, plus 250,178 of previously unissued shares, were
issued in connection with the acquisition of ACB). In general, these shares were
otherwise issued upon the exercise of stock options by, or the issuance of
restricted stock to, employees and directors of the Corporation.


ITEM 7A--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Corporation manages the exposure of its operations to changes in
interest rates ("interest rate risk" or "market risk") by monitoring its ratios
of interest-earning assets to interest-bearing liabilities within one- and
three-year maturities and/or repricing dates (i.e., its one- and three-year
"gaps"). Management has sought to control the Corporation's one- and three-year
gaps, thereby limiting the affects of changes in interest rates on its future
earnings, by selling substantially all of its long-term, fixed-rate,
single-family mortgage loan production, investing in adjustable-rate
single-family mortgage loans, investing in consumer, education, and commercial
loans, which generally have shorter terms to maturity and/or floating rates of
interest, and investing in commercial real estate loans, which also tend to have
shorter terms to maturity and/or floating rates of interest. The Corporation
also invests from time-to-time in adjustable-rate and short- and medium-term
fixed-rate CMOs and MBSs. As a result of this strategy, the Corporation's
exposure to interest rate risk is significantly impacted by its funding of the
aforementioned asset groups with deposit liabilities and FHLB advances that tend
to have average terms to maturity of less than one year or carry floating rates
of interest.


                                       34
<PAGE>
         In general, it is management's goal to maintain the Corporation's
one-year gap in a range between 0% and -30% and its three-year gap in a range
between 0% and -10%. Management believes this strategy takes advantage of the
fact that market yield curves tend to be upward sloping, which increases the
spread between the Corporation's earning assets and interest-bearing
liabilities. Furthermore, management of the Corporation does not believe that
this strategy exposes the Corporation to unacceptable levels of interest rate
risk as evidenced by the fact that the Corporation's three-year gap is generally
maintained in a narrow band around zero, which implies that the Corporation is
exposed to little interest rate risk over a three-year horizon. In addition, it
should be noted that for purposes of its gap analysis, the Corporation
classifies its interest-bearing checking, savings, and money market deposits in
the shortest category, due to their potential to reprice. However, it is the
Corporation's experience that these deposits do not reprice as quickly or to the
same extent as other financial instruments, especially in a rising rate
environment. In addition, the Corporation classifies certain FHLB advances that
are redeemable prior to maturity (at the option of the FHLB) according to their
redemption dates, which are earlier than their maturity dates.

         The following table summarizes the Corporation's gap as of December 31,
2001.
<TABLE>
<CAPTION>
                                                          MORE THAN    MORE THAN    MORE THAN
                                              6 MONTHS     6 MONTHS    1 YEAR TO   3 YEARS TO         OVER
Dollars in thousands                           OR LESS    TO 1 YEAR      3 YEARS      5 YEARS      5 YEARS       TOTAL
-----------------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>          <C>          <C>            <C>       <C>
Interest-earning assets:
Mortgage and commercial loans:
  Fixed                                       $146,366      $39,700      $56,408      $32,963       $8,223    $283,660
  Adjustable                                   214,559      209,835      423,119      221,612        3,948   1,073,073
Consumer and education loans                   328,943       67,191      124,713       26,707        6,050     553,604
Mortgage-backed and related securities         127,477       63,248      164,584       59,730       19,831     434,870
Investment securities and other earning
  assets                                       133,233            -            -            -       28,063     161,296
-----------------------------------------------------------------------------------------------------------------------
  Total                                       $950,578     $379,974     $768,824     $341,012      $66,115  $2,506,503
=======================================================================================================================
Interest-bearing liabilities:
Deposits liabilities:
  Regular savings and checking accounts       $243,227            -            -            -            -    $243,227
  Money market deposit accounts                214,604            -            -            -            -     214,604
  Variable-rate IRA accounts                     4,017            -            -            -            -       4,017
  Time deposits                                698,610     $189,146     $365,951      $28,107            -   1,281,814
FHLB advances and other borrowings             256,655       40,419      145,369       25,004            -     467,447
-----------------------------------------------------------------------------------------------------------------------
  Total                                     $1,417,113     $229,565     $511,320      $53,111            -  $2,211,109
=======================================================================================================================
Excess (deficiency) of earning assets
  over interest-bearing liabilities          ($466,535)    $150,409     $257,504     $287,901      $66,115
=======================================================================================================================
Cumulative excess (deficiency) of
  earning assets over interest-bearing
  liabilities                                ($466,535)   ($316,126)    ($58,622)    $229,279     $295,394
=======================================================================================================================
Cumulative excess (deficiency) of earning
  assets over interest-bearing liabilities
  as a percent of total assets                 -17.17%      -11.63%       -2.16%        8.44%       10.87%
=======================================================================================================================
Cumulative earning assets as a percentage
  of interest-bearing liabilities               67.08%       80.80%       97.28%      110.37%      113.36%
=======================================================================================================================
</TABLE>
Note: If redeemable FHLB advances, interest-bearing checking, and regular
savings deposits were deemed to reprice after one year, the Corporation's
one-year funding gap would have been 5.79% as of December 31, 2001, which
compares to -3.25% and -8.58% as of December 31, 2000 and 1999, respectively.

         The Corporation's one-year gap was -11.63% at December 31, 2001,
compared to -20.65% and -21.89% at December 31, 2000 and 1999, respectively. The
decline in the Corporation's negative one-year gap in 2001 was primarily
attributable to an increase in overnight and short-term investments, due to the
temporary investment of proceeds from increased sales of mortgage loans. Also
contributing was an increase in FHLB advances that have a maturity date beyond
December 31, 2002.

         Certain shortcomings are inherent in using gap to quantify exposure to
interest rate risk. For example, although certain assets and liabilities may
have similar maturities or repricings in the table, they may react differently
to actual changes in market interest rates. This is especially true for assets
such as mortgage loans that have embedded prepayment options and liabilities
that have early redemption features. 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. This is especially true in circumstances where management has a certain
amount of control over interest rates, as it does in the case of deposit
liabilities. Additionally, certain assets such as adjustable-rate mortgage loans
have features that restrict changes in interest rates on a short-term basis



                                       35
<PAGE>

and over the life of the asset. Furthermore, the proportion of adjustable-rate
loans in the Corporation's portfolio may change as interest rates change due to
changes in borrowers' preferences.

         Although management believes that its asset/liability management
strategies reduce the potential effects of changes in interest rates on the
Corporation's operations, material and prolonged increases in interest rates may
adversely affect the Corporation's operations because the Corporation's
interest-bearing liabilities which mature or reprice within one year are greater
than the Corporation's interest-earning assets which mature or reprice within
the same period. Alternatively, material and prolonged decreases in interest
rates may benefit the Corporation's operations.

         The Corporation does not use derivative financial instruments such as
futures, swaps, caps, floors, options, interest- or principal-only strips, or
similar financial instruments to manage its interest rate risk. However, the
Corporation does use forward sales of mortgage-backed securities and other
commitments of a similar nature to manage exposure to market risk in its
"pipeline" of single-family residential loans intended for sale. This pipeline
consists of mortgage loans that are held for sale as of the balance sheet date
as well as commitments to originate mortgage loans that are intended for sale,
but are not closed as of the balance sheet date. Loans held for sale are
generally matched against forward sales that require delivery within 30 to 60
days of the balance sheet date. The Corporation's policy is to match
substantially all of its pipeline with forward sales. These forward sales
generally require delivery within 30 to 60 days. Given these policies, as well
as the short-term nature of the Corporation's pipeline and its related forward
sales, management believes these financial instruments pose little market risk
to the Corporation.

         The Corporation is required by the OTS to estimate the sensitivity of
its net portfolio value of equity ("NPV") to immediate and sustained changes in
interest rates and to measure such sensitivity on at least a quarterly basis.
NPV is defined as the estimated net present value of an institution's existing
assets, liabilities, and off-balance sheet instruments at a given level of
market interest rates. Computation of the estimated net present value of assets,
liabilities, and off-balance sheet instruments requires management to make
numerous assumptions with respect to such items. These assumptions include, but
are not limited to, appropriate discount rates, loan prepayment rates, deposit
decay rates, etc., for each interest rate scenario. In general, the Corporation
has used substantially the same assumptions for computing the net present value
of financial assets and liabilities in the base scenario as it uses in preparing
the fair value disclosures required under GAAP (refer to Notes 1 and 12 of the
Corporation's Audited Consolidated Financial Statements, included herein under
Part II, Item 8, "Financial Statements and Supplementary Data"). Computations of
net present values for other interest rate scenarios follow the same basic
approach except that discount rates, loan prepayment rates, and other
assumptions are adjusted accordingly. The net present values of non-financial
assets and liabilities are generally estimated to be equal to their carrying
values under all interest rate scenarios as permitted by OTS regulations. With
respect to off-balance sheet items, the Corporation generally relies on
estimates of value provided by the OTS. The same is true for certain other
financial assets such as mortgage servicing rights and deposit-based
intangibles.

         The following table summarizes as of December 31, 2001 and 2000, the
sensitivity of the Corporation's NPV to immediate and sustained changes in
interest rates, as shown (parallel shifts in the term structure of interest
rates are assumed as permitted by OTS regulations; dollars are presented in
millions).

<TABLE>
<CAPTION>
                                                     Estimated NPV
                                                     -------------
                  Change in Interest Rates         12/31/01   12/31/00
                  ------------------------         --------   --------
<S>                                                <C>        <C>
                  200 basis point increase          $211.4     $166.6
                  Base scenario                      218.2      174.9
                  200 basis point decline            203.3      158.9
</TABLE>












                                       36
<PAGE>

         Certain shortcomings are inherent in using NPV to quantify exposure to
market risk. For example, actual and future values of assets, liabilities, and
off-balance sheet items will differ from those determined by the model for a
variety of reasons to include, but not limited to, differences in actual market
discount rates, differences in actual loan prepayment activity, and differences
in deposit customers' responses to changes in interest rates and the resulting
impact on the Corporation's offering rates. Furthermore, the analysis does not
contemplate future shifts in asset or liability mix or any actions management
may take in response to changes in interest rates. As a result of these
shortcomings, it is unlikely that actual or future values of the Corporation's
assets, liabilities, and off-balance sheet items are or will be equal to those
presented in the NPV analysis.















                                       37
<PAGE>


ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 2001 and 2000

<TABLE>
<CAPTION>
ASSETS                                                                                       2001             2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                <C>
Cash and due from banks                                                               $70,756,705      $25,445,819
Interest-bearing deposits with banks                                                   98,233,160       13,054,493
Investment securities available for sale, at fair value                                35,461,500          817,141
Mortgage-backed and related securities:
  Available for sale, at fair value                                                   305,979,912      331,236,909
  Held for investment, at cost (fair value of $134,937,344 and $76,456,829,
  respectively)                                                                       134,010,248       77,298,853
Loans held for sale                                                                    56,109,442       22,973,887
Loans held for investment, net                                                      1,851,316,436    1,772,476,651
Federal Home Loan Bank stock                                                           28,063,300       25,568,100
Accrued interest receivable, net                                                       19,016,429       19,701,004
Office properties and equipment                                                        30,653,310       26,781,010
Mortgage servicing rights, net                                                         29,908,769       23,280,472
Intangible assets                                                                      24,946,280       11,490,392
Other assets                                                                           33,254,152        2,600,835
------------------------------------------------------------------------------------------------------------------

  Total assets                                                                     $2,717,709,643   $2,352,725,566
==================================================================================================================


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------

Deposit liabilities                                                                $2,029,254,047   $1,699,252,162
Federal funds purchased                                                                         -       20,000,000
Securities sold under agreements to repurchase                                                  -      100,000,000
Federal Home Loan Bank advances                                                       467,415,000      368,205,000
Other borrowings                                                                           32,311        2,641,370
Advance payments by borrowers for taxes and insurance                                   1,640,142        1,023,712
Accrued interest payable                                                                4,063,741        4,047,875
Other liabilities                                                                      22,906,699       11,005,952
------------------------------------------------------------------------------------------------------------------
  Total liabilities                                                                 2,525,311,940    2,206,176,071
------------------------------------------------------------------------------------------------------------------
Preferred stock, $0.10 par value, 5,000,000 shares authorized, none outstanding                 -                -
Common stock, $0.10 par value, 100,000,000 shares authorized, 20,200,829 and
  19,941,630 shares issued and outstanding (including 0 and 1,596,332 shares of
  treasury stock), respectively                                                         2,020,083        1,994,163
Additional paid-in capital                                                             46,607,845       34,540,064
Retained earnings                                                                     141,717,089      122,921,606
Treasury stock, at cost                                                                         -     (15,127,142)
Unearned restricted stock                                                                (87,083)        (142,083)
Accumulated non-owner adjustments to equity, net                                        2,139,769        2,362,887
------------------------------------------------------------------------------------------------------------------
  Total stockholders' equity                                                          192,397,703      146,549,495
------------------------------------------------------------------------------------------------------------------

  Total liabilities and stockholders' equity                                       $2,717,709,643   $2,352,725,566
==================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.


                                       38
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                                                                        2001               2000               1999
------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                <C>                <C>
Interest on loans                                               $144,007,080       $134,454,432       $103,880,028
Interest on mortgage-backed and related securities                24,060,467         24,516,300         23,728,297
Interest and dividends on investments                              3,465,094          2,465,456          2,462,273
------------------------------------------------------------------------------------------------------------------
  Total interest income                                          171,532,641        161,436,188        130,070,598
------------------------------------------------------------------------------------------------------------------
Interest on deposit liabilities                                   83,584,616         73,587,725         60,547,033
Interest on FHLB advances and other borrowings                    24,745,757         28,308,198         15,406,359
------------------------------------------------------------------------------------------------------------------
  Total interest expense                                         108,330,373        101,895,922         75,953,392
------------------------------------------------------------------------------------------------------------------
  Net interest income                                             63,202,268         59,540,266         54,117,206
Provision for loan losses                                          1,763,391          1,008,780            387,021
------------------------------------------------------------------------------------------------------------------
  Net interest income after provision for loan losses             61,438,877         58,531,486         53,730,185
------------------------------------------------------------------------------------------------------------------
Retail banking fees and service charges                           25,445,941         22,460,778         20,229,612
Premiums and commissions                                           3,826,392          2,782,982          2,612,694
Loan servicing fees, net                                         (7,529,972)          3,874,210          2,758,148
Gain on sales of loans                                            24,422,870          2,736,467          7,225,815
Gain on sale of investments                                           13,199                  -                  -
Gain on sale of real estate investments                                    -          1,188,863                  -
Other income                                                       3,348,876          2,589,250          2,351,585
------------------------------------------------------------------------------------------------------------------
  Total non-interest income                                       49,527,306         35,632,550         35,177,854
------------------------------------------------------------------------------------------------------------------
Compensation and employee benefits                                40,152,644         35,246,002         31,512,342
Occupancy and equipment                                            8,721,140          7,827,333          7,381,256
Communications, postage, and office supplies                       5,256,205          4,304,790          4,019,411
ATM and debit card transaction costs                               3,241,996          2,927,597          2,694,203
Advertising and marketing                                          2,588,745          2,377,953          2,275,502
Amortization of intangibles                                        1,084,974          1,027,761          1,031,774
Other expenses                                                     6,073,769          4,538,896          5,384,961
------------------------------------------------------------------------------------------------------------------
  Total non-interest expense                                      67,119,473         58,250,331         54,299,449
------------------------------------------------------------------------------------------------------------------
  Income before income taxes                                      43,846,710         35,913,705         34,608,590
Income tax expense                                                15,398,485         12,769,829         12,167,380
------------------------------------------------------------------------------------------------------------------

  Net income                                                     $28,448,225        $23,143,876        $22,441,210
==================================================================================================================


PER SHARE INFORMATION                                                   2001               2000               1999
------------------------------------------------------------------------------------------------------------------
Diluted earnings per share                                             $1.51              $1.25              $1.17
Basic earnings per share                                                1.52               1.26               1.21
Dividends paid per share                                                0.47               0.42               0.34
==================================================================================================================
</TABLE>

Refer to accompanying Notes to Audited Consolidated Financial Statements.




                                       39
<PAGE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 2001, 2000, and 1999
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                    COMMON
                                 STOCK AND                                               ACCUMULATED
                                ADDITIONAL                                   UNEARNED      NON-OWNER
                                   PAID-IN       RETAINED      TREASURY    RESTRICTED    ADJUSTMENTS
                                   CAPITAL       EARNINGS         STOCK         STOCK      TO EQUITY         TOTAL
------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>            <C>           <C>            <C>           <C>
Balance at December 31, 1998  $ 36,534,227  $  97,291,806  $(12,722,834) $ (1,256,266)  $  2,837,714  $122,684,647
Net income                                     22,441,210                                               22,441,210
Securities valuation
  adjustment, net of income
  taxes                                                                                   (4,045,959)   (4,045,959)
                                                                                                     -------------
Net income and non-owner
  adjustments to equity                                                                                 18,395,251
                                                                                                     -------------
Dividends paid                                 (6,287,822)                                              (6,287,822)
Exercise of stock options                      (6,516,097)   14,264,500                                  7,748,403
Purchase of treasury stock                                  (15,930,336)                               (15,930,336)
Amortization of restricted
  stock                                                                       665,083                      665,083
------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999    36,534,227    106,929,097   (14,388,670)     (591,183)    (1,208,245)  127,275,226
Net income                                     23,143,876                                               23,143,876
Securities valuation
  adjustment, net of income
  taxes                                                                                    3,571,132     3,571,132
                                                                                                     -------------
Net income and non-owner
  adjustments to equity                                                                                 26,715,008
                                                                                                     -------------
Dividends paid                                 (7,699,035)                                              (7,699,035)
Exercise of stock options                        (417,520)      809,879                                    392,359
Restricted stock award                              4,688       160,312      (165,000)                           -
Purchase of treasury stock                                  (1,708,663)                                 (1,708,663)
Amortization of restricted
  stock                                           960,500                     614,100                    1,574,600
------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000    36,534,227    122,921,606   (15,127,142)     (142,083)     2,362,887   146,549,495
Net income                                     28,448,225                                               28,448,225
Securities valuation
  adjustment, net of income
  taxes                                                                                     (214,539)     (214,539)
Reclassification adjustment
  for gain on securities
  included in income, net of
  income taxes                                                                                (8,579)       (8,579)
                                                                                                     -------------
Net income and non-owner
  adjustments to equity                                                                                 28,225,107
                                                                                                     -------------
Common stock issued for
  acquisition                   12,085,017                   16,518,776                                 28,603,793
Dividends paid                                 (8,866,148)                                              (8,866,148)
Exercise of stock options            8,684     (1,508,794)    1,821,742                                    321,632
Purchases of treasury stock                                  (3,213,376)                                (3,213,376)
Amortization of restricted
  stock                                           722,200                      55,000                      777,200
==================================================================================================================
Balance at December 31, 2001   $48,627,928   $141,717,089             -      ($87,083)    $2,139,769  $192,397,703
==================================================================================================================
</TABLE>

Refer to accompanying Notes to Audited Consolidated Financial Statements.


                                       40
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2001, 2000, and 1999
<TABLE>
<CAPTION>
                                                                                  2001           2000          1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>             <C>           <C>
Cash flows from operating activities:
  Net income                                                               $28,448,225    $23,143,876   $22,441,210
  Adjustments to reconcile net income to net cash provided by
    operations:
      Provision for loan and real estate losses, net                         1,807,782      1,069,996       305,852
      Net loan costs deferred                                              (2,740,892)    (1,349,652)     (586,949)
      Amortization (including mortgage servicing rights)                    18,795,379      6,184,715     7,137,777
      Depreciation                                                           2,586,951      2,573,353     2,521,592
      Gains on sales of loans and other investments                       (24,436,069)    (3,925,330)   (7,225,815)
      Decrease (increase) in accrued interest receivable                     1,610,828    (4,280,167)   (1,532,299)
      Increase (decrease) in accrued interest payable                      (1,449,262)      1,531,595       568,457
      Increase in current and deferred income taxes                          3,990,480        351,772     5,678,518
      Other accruals and prepaids, net                                         435,401      (663,059)       356,321
-------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations before loan originations and
        sales                                                               29,048,823     24,637,099    29,664,664
  Loans originated for sale                                            (1,252,070,158)  (142,985,217) (305,345,488)
  Sales of loans originated for sale or transferred from held for
    investment                                                           1,390,901,215    150,876,533   351,254,560
-------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations                                      167,879,880     32,528,415    75,573,736
-------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Decrease (increase) in interest-bearing deposits with banks             (75,614,559)      4,735,769    78,759,513
  Purchases of investment securities                                      (35,553,880)              -     (941,254)
  Sales of investment securities                                            21,823,808              -             -
  Maturities of investment securities                                          100,000        100,000             -
  Purchases of mortgage-backed and related securities available for
    sale                                                                 (167,327,646)              - (144,155,260)
  Purchases of mortgage-backed and related securities held for
    investment                                                           (100,780,023)              -  (51,163,258)
  Principal repayments on mortgage-backed and related securities
    available for sale                                                     193,046,784     58,228,257    90,384,796
  Principal repayments on mortgage-backed and related securities held
    for investment                                                          43,826,047     26,567,249    49,632,447
  Sales of mortgage-backed and related securities available for sale         7,408,541              -             -
  Loans originated for investment                                        (701,594,833)  (731,349,977) (617,103,300)
  Loans purchased for investment                                         (178,103,908)   (21,675,836)  (98,035,581)
  Loan principal repayments                                                742,073,665    356,507,215   371,997,482
  Sales of education loans                                                   1,384,322      4,996,708     2,254,103
  Sales of real estate                                                       2,478,862      2,780,175     1,710,646
  Purchases of office properties and equipment                             (6,388,322)    (4,931,478)   (2,173,855)
  Purchases of mortgage servicing rights                                   (1,100,197)    (1,865,307)             -
  Purchase of net assets of ACB (excluding cash and cash equivalents)     (25,623,980)              -             -
  Purchase of bank-owned life insurance                                   (15,000,000)              -             -
  Other, net                                                              (14,579,244)    (2,594,536)   (9,589,230)
-------------------------------------------------------------------------------------------------------------------
    Net cash used by investing activities                                (309,524,563)  (308,501,761) (328,422,751)
-------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Increase in deposit liabilities                                          202,008,108    227,992,689    11,123,813
  Long-term advances from Federal Home Loan Bank                           162,500,000    185,000,000   142,000,000
  Repayment of long-term Federal Home Loan Bank advances                  (53,245,000)   (95,400,000)  (82,715,000)
  Increase (decrease) in short-term Federal Home Loan Bank borrowings     (23,045,000)  (165,728,000)   198,273,000
  Increase (decrease) in securities sold under agreements to repurchase  (100,000,000)    100,000,000             -
  Increase (decrease) in federal funds purchased                          (20,000,000)              -    20,000,000
  Increase (decrease) in other borrowings                                  (2,609,059)    (2,605,331)     2,243,717
  Increase (decrease) in advance payments by borrowers for taxes and
    insurance                                                                  529,901    (4,384,104)     3,645,626
  Common stock issued for acquisition                                       28,603,793              -             -
  Purchases of treasury stock                                              (3,213,376)    (1,708,663)  (15,930,336)
  Dividends paid                                                           (8,866,148)    (7,699,035)   (6,287,822)
  Other, net                                                                 4,292,350        385,588     2,419,333
-------------------------------------------------------------------------------------------------------------------
    Net cash provided by financing activities                              186,955,569    235,853,144   274,772,331
-------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks                          45,310,886   (40,120,202)    21,923,316
Cash and due from banks at beginning of period                              25,445,819     65,566,021    43,642,705
===================================================================================================================
    Cash and due from banks at end of period                               $70,756,705    $25,445,819   $65,566,021
===================================================================================================================
Supplemental disclosures of cash flow information:
  Interest and dividends received on loans and investments                $173,143,469   $157,156,021  $128,538,299
  Interest paid on deposits and borrowings                                 109,779,635    100,364,327    75,384,935
  Income taxes paid                                                         11,408,441     12,559,751     6,685,320
  Income taxes refunded                                                          1,454        141,693       196,429
  Transfer of loans from held for investment to held for sale              165,583,373     23,743,254    21,283,119
  Mortgage-backed securities swaps                                                   -    132,280,050             -
  Transfer of loans from held for sale to held for investment                        -              -    43,553,563
===================================================================================================================
</TABLE>

Refer to accompanying Notes to Audited Consolidated Financial Statements.


                                       41
<PAGE>

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BUSINESS The Corporation provides a wide range of financial services to
individuals and businesses in Wisconsin and the northern portion of Illinois
through its wholly-owned subsidiary bank. The Corporation is subject to
competition from other financial institutions and markets. The Corporation, the
Bank, and the Bank's subsidiaries are also subject to the regulations of certain
governmental agencies and undergo periodic examinations by those regulatory
authorities.

         BASIS OF FINANCIAL STATEMENT PRESENTATION The accounting and reporting
policies of the Corporation, the Bank, and the Bank's subsidiaries conform to
GAAP and to general practices within the financial services industry. In
preparing the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
date of the balance sheet and revenues and expenses for the period. Actual
results could differ from those estimates.

         PRINCIPLES OF CONSOLIDATION The consolidated financial statements
include the accounts and balances of the Corporation, the Bank, and the Bank's
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

         INVESTMENT SECURITIES, MORTGAGE-BACKED AND RELATED SECURITIES, AND
STOCK HELD FOR REGULATORY PURPOSES Investment securities and mortgage-backed and
related securities, are classified in one of two categories and accounted for as
follows: (1) securities that the Corporation has the positive intent and ability
to hold to maturity are classified as "held for investment" and reported at
amortized cost; (2) securities not classified as "held for investment" are
classified as "available for sale" and reported at fair value, with unrealized
gains and losses excluded from earnings and reported as non-owner adjustments to
equity, net of estimated income taxes. Management determines the appropriate
classification for its securities at the time of purchase. The specific
identification method is used to determine the cost of securities sold. The
Corporation does not maintain a trading account for investment securities or
mortgage-backed and related securities. Stock of the FHLB is owned due to
regulatory requirements and is carried at cost.

         INTEREST ON LOANS Interest income is accrued on loan balances
outstanding. Accrued interest on impaired loans is reversed when management
determines that the collection of interest or principal is considered unlikely.
In general, this occurs when a loan is 90 days past due. Interest income is
subsequently recognized only to the extent cash payments are received. Loans are
restored to accrual status when the obligation is brought current and the
ultimate collectibility of the total contractual principal and interest is no
longer in doubt.

         DISCOUNTS, PREMIUMS, AND DEFERRED LOAN FEES AND COSTS Discounts and
premiums on loans are amortized over the life of the related loans using a
method that approximates the level-yield method. Loan origination fees and
certain direct loan origination costs are deferred and amortized over the life
of the related loans as an adjustment of yield. Such fees and costs are
amortized using a method that approximates the level-yield method.

         LOANS HELD FOR SALE, DERIVATIVE INSTRUMENTS, AND HEDGING ACTIVITIES In
January 2001, the Corporation adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). This standard established new rules for the
recognition and measurement of derivatives and hedging activities and required
all derivatives to be recorded in the Statement of Financial Condition at fair
value. The adoption of this standard did not have a material impact on the
Corporation's financial condition or results of operations.

         The Corporation does not use derivative instruments such as futures,
swaps, caps, floors, options, interest- or principal-only strips, or similar
financial instruments to manage its operations. However, the Corporation does
use forward sales of mortgage-backed securities and other commitments of a
similar nature to manage exposure to market risk in its "pipeline" of
single-family residential loans intended for sale. Forward sales are derivative
instruments and are subject to the rules established by SFAS 133. In addition,
commitments to extend credit that



                                       42
<PAGE>

relate to loans the Corporation intends to sell ("interest rate commitments")
are also considered to be derivative instruments under SFAS 133. The
Corporation's policy is to offset substantially all of its exposure to market
risk in its pipeline of loans intended for sale against forward sales.

         Single-family residential loans held for sale that are matched against
a forward sale are accounted for using the "fair value hedge method".
Accordingly, the loans and the forward sales are valued on a quarterly basis and
net unrealized gains or losses are recorded in the current period's earnings.
Loans held for sale that are not matched against forward sales are carried at
the lower of aggregate cost or market. Net unrealized losses on these loans, if
any, are recorded in the current period's earnings. In general, the Corporation
does not maintain a material amount of loans held for sale that are not matched
against forward sales.

         Interest rate commitments on loans the Corporation intends to sell,
forward sales matched against such commitments, and forward sales that are not
matched against a loan or interest rate commitment are valued on a quarterly
basis. Net unrealized gains or losses associated with such derivative
instruments are recorded in the current period's earnings.

         Net unrealized gains and/or losses on the Corporation's pipeline of
loans intended for sale were not material during any of the periods presented in
the Corporation's Statements of Operations.

         SECURITIZATIONS AND SALES OF MORTGAGE LOANS The Corporation sells
substantially all of the fixed-rate single-family mortgage loans it originates,
including adjustable-rate loans that convert to fixed-rate loans. These sales
are accomplished through cash sales to FHLMC, FNMA, FHLB, and other third-party
investors, as well as through securitizations with FHLMC and FNMA. In general,
MBSs received from FHMLC or FNMA in exchange for fixed-rate mortgage loans are
sold immediately in the securities market. In general, the Corporation continues
to service these mortgage loans after they are sold (refer to "Mortgage
Servicing Rights", below).

         From time to time the Corporation also exchanges adjustable-rate
mortgage loans held for investment for FHLMC or FNMA MBSs backed by the same
loans. The resulting MBSs are classified in the Corporation's Statement of
Financial Condition as "mortgage-backed and related securities available for
sale". The Corporation continues to service the loans underlying these
securities after they are exchanged.

         Sales or securitizations of mortgage loans through FHLMC and FNMA are
generally done under terms that do not provide for any recourse to the
Corporation by the investor. However, in the case of sales to the FHLB, the
Corporation retains the credit risk on the underlying loans in exchange for a
credit enhancement fee. Furthermore, the Corporation sometimes retains an
exposure to credit risk on loans it securitizes into MBSs through FHLMC or FNMA.
In these instances, the Corporation records a recourse liability to provide for
potential credit losses. Because the loans involved in these transactions are
similar to those in the Corporation's loans held for investment, the review of
the adequacy of the recourse liability is similar to the review of the adequacy
of the allowance for loan losses (refer to "Allowance for Loan Losses", below).

         MORTGAGE SERVICING RIGHTS Servicing mortgage loans includes such
functions as collecting monthly payments of principal and interest from
borrowers, passing such payments through to third-party investors, maintaining
escrow accounts for taxes and insurance, and making such payments when they are
due. When necessary, servicing mortgage loans also includes functions related to
the collection of delinquent principal and interest payments, loan foreclosure
proceedings, and disposition of foreclosed real estate. The Corporation
generally earns a servicing fee of 25 basis points or more on the outstanding
loan balance for performing these services as well as fees and interest income
from ancillary sources such as delinquency charges and float.

         The Corporation records originated mortgage servicing rights ("OMSR")
as a component of gain on sale of mortgage loans when the obligation to service
such loans has been retained by the Corporation. The value recorded for OMSR is
based on the relative values of the servicing rights and the underlying loans
without the servicing rights. This value approximates the present value of the
servicing fee adjusted for expected future costs to service the loans, as well
as income and fees expected to be received from ancillary sources, as previously
described. The carrying value of OMSR is amortized against service fee income
over the estimated lives of the loans using the income-forecast method. The
Corporation also purchases mortgage servicing rights ("PMSR") from
third-parties. PMSR is recorded at cost and is also amortized over the estimated
lives of the loans using the income-forecast



                                       43
<PAGE>

method. The Corporation purchases or originates mortgage servicing rights on
single-family residential mortgage loans only.

         The value of OMSR and PMSR (collectively "mortgage servicing rights" or
"MSRs") is subject to impairment because of changes in loan prepayment
expectations and in market discount rates used to value the future cash flows
associated with such assets. In valuing MSRs, the Corporation stratifies the
loans by investor and by the type of remittance program sponsored by the
investor, if applicable. If, based on periodic evaluation, the estimated fair
value of the MSRs related to a particular stratum is determined to be less than
its carrying value, a valuation allowance is recorded against such stratum and
against the Corporation's loan servicing fee income. A valuation allowance is
not recorded if the estimated fair value of a stratum exceeds its carrying
value. Because of this inconsistent treatment, the Corporation may be required
to maintain a valuation allowance against MSRs even though the estimated fair
value of the Corporation's total MSR portfolio exceeds its carrying value in
total. The valuation adjustment is calculated using the current outstanding
principal balance of the related loans, long-term prepayment assumptions as
provided by independent sources, an appropriate discount rate as determined by
management, and other management assumptions related to future costs to service
the loans, as well as ancillary sources of income.

         ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is composed of
specific and general valuation allowances. The Corporation establishes specific
valuation allowances on loans it considers to be impaired. A loan is considered
impaired when the carrying amount of the loan exceeds the present value of the
expected future cash flows, discounted at the loan's original effective interest
rate, or the fair value of the underlying collateral. A specific valuation
allowance is established for an amount equal to the impairment. General
valuation allowances are based on an evaluation of the various risk components
that are inherent in the credit portfolio. The risk components that are
evaluated include past loan loss experience; the level of non-performing and
classified assets; current economic conditions; volume, growth, and composition
of the loan portfolio; adverse situations that may affect borrowers' ability to
repay; the estimated value of any underlying collateral; peer group comparisons;
regulatory guidance; and other relevant factors.

         The allowance is increased by provisions charged to earnings and
reduced by charge-offs, net of recoveries. Management may transfer amounts
between specific and general valuation allowances as considered necessary. The
Corporation's Board of Directors reviews the adequacy of the allowance for loan
losses on a quarterly basis. The allowance reflects management's best estimate
of the amount necessary to provide for the impairment of loans, as well as other
credit risks of the Corporation. The allowance is based on a risk model
developed and implemented by management and approved by the Corporation's Board
of Directors.

         REAL ESTATE Real estate acquired through foreclosure or deed in lieu of
foreclosure and real estate subject to redemption are recorded at the lower of
cost or estimated fair market value, less estimated costs to sell. Costs
relating to the development and improvement of the property are capitalized.
Income and expenses incurred in connection with holding and operating the
property are included in the Corporation's Consolidated Statements of
Operations.

         OFFICE PROPERTIES AND EQUIPMENT Office properties and equipment are
recorded at cost less accumulated depreciation, which is provided over the
estimated useful lives (five to forty years) of the respective assets on a
straight-line basis. The cost of leasehold improvements is being amortized on
the straight-line basis over the lesser of the term of the respective lease or
the estimated economic life. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts and the resulting gain or loss is recorded in income.

         GOODWILL AND INTANGIBLE ASSETS From time-to-time the Corporation has
acquired all or a portion of the assets and liabilities of other financial
institutions and has paid or received amounts for such assets and liabilities
that are not equal to their identifiable fair value. A portion of the resulting
difference was amortized to earnings over the estimated remaining lives of the
deposit liabilities acquired in these transactions. Under new accounting rules
that will take effect in 2002, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the new rules. Other identifiable intangible
assets which include deposit-based intangibles will continue to be amortized
over their useful lives. For additional discussion, refer to "Pending Accounting
Changes", below.



                                       44
<PAGE>

         SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE The Corporation
occasionally enters into sales of securities under agreements to repurchase with
third-party broker-dealers (commonly referred to as "reverse-repurchase
agreements). These arrangements are treated as a financing, and the obligations
to repurchase securities sold are reflected as a liability in the Corporation's
Consolidated Statement of Financial Condition. The securities underlying the
agreements remain in the asset accounts.

         Securities sold under reverse repurchase agreements are physically
delivered to the broker-dealers that arranged the transactions. The
broker-dealers may have sold, loaned, or otherwise disposed of such securities
to other parties in the normal course of their operations. The Corporation is
exposed to risk in these types of transactions in that changes in market prices,
economic losses, or other factors could prevent or delay the counter-party in
the transaction from returning the securities at the maturity of the agreement.
The Corporation limits its exposure to such risk by utilizing standard industry
agreements, limiting counter-parties to large, reputable broker-dealers,
limiting the amount that can be borrowed from an individual counter-party, and
limiting the duration of such agreements (typically one to six months).

         INCOME TAXES The Corporation, the Bank, and all but one of the Bank's
subsidiaries file a consolidated federal income tax return and separate or
consolidated state income tax returns, depending on the state. Income taxes are
accounted for using the "asset and liability" method. Under this method, a
deferred tax asset or liability is determined based on the enacted tax rates
that will be in effect when the differences between the financial statement
carrying amounts and tax bases of existing assets and liabilities are expected
to be reported in the Corporation's income tax returns. The effect on deferred
taxes of a change in tax rates is recognized in income in the period that
includes the enactment date of the change. A valuation allowance is provided for
any deferred tax asset for which it is more likely than not that the asset will
not be realized. Changes in valuation allowances are recorded as a component of
income.

         PENSION COSTS AND OTHER POSTRETIREMENT BENEFITS The Corporation's net
periodic pension cost consists of the expected cost of benefits earned by
employees during the current period and an interest cost on the projected
benefit obligation, reduced by the earnings on assets held by the retirement
plan, by amortization of transitional assets over a period of 15 years
(beginning in 1987), and by amortization of any actuarial gains and losses over
the estimated future service period of existing plan participants. The projected
unit credit actuarial cost method is used to determine expected pension costs.
The Corporation's funding policy is to contribute amounts deductible for federal
income tax purposes.

         The Corporation's cost of postretirement benefits, which consists of
medical reimbursements for retirees, is recognized during the years that the
employees render the necessary service, adjusted for interest costs on the
projected benefit obligation and for the amortization of a transitional
obligation over 20 years (beginning in 1993). The projected unit credit
actuarial cost method is used to determine expected postretirement benefit
costs. The Corporation's postretirement benefit plan is not currently funded.

         FAIR VALUES OF FINANCIAL INSTRUMENTS AND OFF-BALANCE SHEET FINANCIAL
INSTRUMENTS The following methods and assumptions were used by the Corporation
in estimating fair value disclosures for financial instruments (refer to Note 12
for actual fair value amounts).

                  CASH AND DUE FROM BANKS AND INTEREST-BEARING DEPOSITS WITH
BANKS The face amounts presented in the Corporation's Consolidated Statements of
Financial Condition for cash and interest-bearing deposits approximates fair
value for such assets.

                  INVESTMENT SECURITIES AND MORTGAGE-BACKED AND RELATED
SECURITIES Fair values for this group of financial instruments are based on
average quoted market prices obtained from independent pricing sources. If
quoted market prices are not available, fair values are based on quoted market
prices of comparable instruments.

                  LOANS HELD FOR SALE OR FOR INVESTMENT The estimated fair
values of loans held for sale or for investment are determined using discounted
cash flow techniques. Scheduled principal and interest payments are adjusted for
estimated future prepayments as provided by third-party market sources or as
estimated by management using historical prepayment experience. Discount rates
used in the fair value computations are generally based on



                                       45
<PAGE>

interest rates offered by the Corporation on similar loans as of the end of the
period, adjusted for management's estimate of differences in liquidity, credit
risk, remaining term to maturity, etc.

                  The estimated fair value of loans held for sale also includes
an adjustment for the estimated fair value of unfunded interest rate commitments
on loans the Corporation intends to sell, as well as forward commitments to sell
loans. The methods used to value these commitments are described under
"Off-Balance Sheet Financial Instruments", below.

                  FEDERAL HOME LOAN BANK STOCK FHLB stock held in excess of
minimum requirements can be returned to the FHLB for face value. Accordingly,
the fair value of all FHLB stock is estimated to be equal to the face amount
presented in the Corporation's Consolidated Statements of Financial Condition.

                  ACCRUED INTEREST RECEIVABLE AND PAYABLE The fair value of
accrued interest is equal to the face amount presented in the Corporation's
Consolidated Statement of Financial Condition.

                  MORTGAGE SERVICING RIGHTS The fair value of MSRs is estimated
using a discounted cash flow calculation that applies discount rates considered
reasonable by management to a schedule of both contractual and estimated cash
flows. Such cash flows are adjusted for loan prepayment rates deemed appropriate
by management.

                  DEPOSIT LIABILITIES The fair values of demand deposit accounts
(i.e., interest-bearing and non-interest-bearing checking accounts and money
market and regular savings accounts) are equal to the face amount presented in
Note 6. The fair value of fixed-rate time deposits is estimated using a
discounted cash flow calculation that applies interest rates offered by the
Corporation as of the measurement date to a schedule of aggregate contractual
maturities of such deposits as of the same dates.

                  FEDERAL HOME LOAN BANK ADVANCES The fair value of FHLB
advances is estimated using a discounted cash flow calculation that applies
interest rates quoted by the FHLB as of the measurement date to a schedule of
aggregate contractual maturities of such liabilities as of the same date. The
fair value of FHLB advances excludes the effect of any prepayment penalties that
may be incurred if the Corporation were to prepay any of its term advances.

                  SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, FEDERAL FUNDS
PURCHASED, AND OTHER BORROWINGS These funding sources consist principally of
short-term or variable rate borrowings. As such, the Corporation has estimated
the fair value of these funding sources to approximate carrying value.

                  ADVANCE PAYMENTS BY BORROWERS FOR TAXES AND INSURANCE The fair
value of advance payments by borrowers for taxes and insurance is equal to the
face amount presented in the Corporation's Consolidated Statement of Financial
Condition.

                  OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS. The Corporation has
become a party to financial instruments with off-balance-sheet risk in the
normal course of its business in order to meet the financing needs of its
customers and to reduce its own exposure to fluctuations in interest rates.
These financial instruments include commitments to extend credit, standby
letters of credit, lines of credit, forward commitments to sell loans, and
financial guarantees.

                  Off-balance-sheet financial instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amounts
recognized in the Statement of Financial Condition. In the event of
non-performance by the other party to a financial instrument, the Corporation's
exposure to credit loss is represented by the contractual amount of the
instrument. The Corporation uses the same credit policies in granting
commitments, letters and lines of credit, and financial guarantees as it does
for on-balance-sheet financial instruments.

                  The fair values of commitments to extend credit are determined
using discounted cash flow techniques, similar to that which is used for loans
held for sale or for investment, as previously described.

                  The fair values of forward commitments to sell loans are based
on average quoted market prices obtained from independent pricing sources. Other
than credit enhancements on loans sold to the FHLB, the



                                       46
<PAGE>

Corporation does not issue material amounts of financial guarantees or stand-by
letters of credit. Management believes that the Corporation's exposure to loss
on such instruments is insignificant, including its credit enhancements with the
FHLB. Accordingly, management believes the fair value of such financial
instruments approximates zero.

         STOCK-BASED COMPENSATION The Corporation records expense relative to
stock-based compensation using the "intrinsic value method". Since the intrinsic
value of the Corporation's stock options is generally "zero" at the time of the
award, no expense is recorded. With respect to restricted stock awards, the
intrinsic value is generally equal to the fair value of the Corporation's common
stock on the date of the initial contingent award, adjusted retroactively for
any changes in the value of the stock between the initial award date and the
final measurement date. Such value is amortized as expense over the measurement
period of the award.

         As permitted by GAAP, the Corporation has not adopted the "fair value
method" of expense recognition for stock-based compensation awards. Rather, the
effects of the fair value method on the Corporation's earnings have been
disclosed on a pro forma basis. Refer to Note 9 for the appropriate disclosures.

         EARNINGS PER SHARE Basic and diluted earnings per share data are based
on the weighted-average number of common shares outstanding during each period.
Diluted earnings per share is further adjusted for potential common shares that
were dilutive and outstanding during the period. Potential common shares
generally consist of stock options outstanding under the incentive plans
described in Note 9. The dilutive effect of potential common shares is computed
using the treasury stock method. All stock options are assumed to be 100% vested
for purposes of the earnings per share computations. The computation of earnings
per share for the years ended December 31, 2001, 2000, and 1999, is as follows:

<TABLE>
<CAPTION>
                                              2001                        2000                        1999
-------------------------------------------------------------------------------------------------------------------
                                        BASIC       DILUTED         BASIC       DILUTED         BASIC       DILUTED
-------------------------------------------------------------------------------------------------------------------
<S>                               <C>           <C>           <C>           <C>           <C>           <C>
Net income                        $28,448,225   $28,448,225   $23,143,876   $23,143,876   $22,441,210   $22,441,210
===================================================================================================================
Average common shares issued, net
  of actual treasury shares        18,682,407    18,682,407    18,318,197    18,318,197    18,541,464    18,541,464
Potential common shares issued
  under stock options (treasury
  stock method)                             -       188,582             -       153,888             -       596,458
-------------------------------------------------------------------------------------------------------------------
Average common shares and
  potential common shares          18,682,407    18,870,989    18,318,197    18,472,085    18,541,464    19,137,922
===================================================================================================================
Earnings per share                      $1.52         $1.51         $1.26         $1.25         $1.21         $1.17
-------------------------------------------------------------------------------------------------------------------
</TABLE>

         PENDING ACCOUNTING CHANGE In June 2001 the FASB issued Statements of
Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"),
and No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the new statements. Other identifiable intangible assets will continue to
be amortized over their useful lives, which includes deposit-based intangibles.
The new standards are effective for fiscal years beginning after December 15,
2001, and for transactions completed after June 30, 2001.

         The Corporation will adopt SFAS 141 and 142 in January 2002, although
it has already adopted the new accounting rules for its acquisition of ACB,
which was completed on October 31, 2001 (refer to Note 14 for additional
discussion). The Corporation estimates that its annual amortization of
intangible assets will decline by approximately $875,000 in 2002 because of its
adoption of the new accounting rules. However, this estimate excludes any
increase that will result from the Corporation's amortization of identifiable
intangible assets (such as deposit-based intangibles) recorded in connection
with recent or pending transactions (refer to Notes 14 and 15 for additional
discussion).

         CASH AND CASH Equivalents For purposes of the Corporation's
Consolidated Statements of Cash Flows, cash and cash equivalents consists solely
of cash on hand and non-interest-bearing deposits in banks ("cash and due from
banks"). The Corporation is required to maintain a certain amount of cash on
hand and non-interest-bearing account balances at the Federal Reserve Bank of
Minneapolis to meet specific reserve requirements. These requirements
approximated $37.3 million at December 31, 2001.



                                       47
<PAGE>

         RECLASSIFICATION Certain 2000 and 1999 balances have been reclassified
to conform with the 2001 presentation.


NOTE 2--INVESTMENT SECURITIES AND MORTGAGE-BACKED AND RELATED SECURITIES

         Investment securities and mortgage-backed and related securities at
December 31, 2001 and 2000, are summarized as follows:
<TABLE>
<CAPTION>
                                                                                  2001
------------------------------------------------------------------------------------------------------------------
                                                        AMORTIZED       UNREALIZED      UNREALIZED            FAIR
                                                             COST            GAINS          LOSSES           VALUE
------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>             <C>            <C>
Available for sale:

  Investment securities                               $35,360,585         $100,915               -     $35,461,500
  Collateralized mortgage obligations                 221,777,458        1,919,852      ($298,471)     223,398,839
  Mortgage-backed securities                           81,011,417        1,593,939        (24,283)      82,581,073
------------------------------------------------------------------------------------------------------------------
    Total available for sale                          338,149,460        3,614,706       (322,754)     341,441,412
------------------------------------------------------------------------------------------------------------------
Held for investment:
  Collateralized mortgage obligations                 132,755,022        1,058,523       (147,711)     133,665,834
  Mortgage-backed securities                            1,255,226           30,378        (14,094)       1,271,510
------------------------------------------------------------------------------------------------------------------
    Total held for investment                         134,010,248        1,088,901       (161,805)     134,937,344
------------------------------------------------------------------------------------------------------------------
    Total investment and mortgage-related
    securities                                       $472,159,708       $4,703,607      ($484,559)    $476,378,756
==================================================================================================================
<CAPTION>
                                                                                  2000
------------------------------------------------------------------------------------------------------------------
                                                        AMORTIZED       UNREALIZED      UNREALIZED            FAIR
                                                             COST            GAINS          LOSSES           VALUE
------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>             <C>            <C>
Available for sale:

  Investment securities                                  $828,182                -       ($11,041)        $817,141
  Collateralized mortgage obligations                 120,538,485         $183,445     (1,695,739)     119,026,191
  Mortgage-backed securities                           80,703,979        1,905,436               -      82,609,415
  Mortgage-backed securities pledged against
    reverse-repurchase agreements                     126,348,194        3,253,109               -     129,601,303
------------------------------------------------------------------------------------------------------------------
    Total available for sale                          328,418,840        5,341,990     (1,706,780)     332,054,050
------------------------------------------------------------------------------------------------------------------
Held for investment:
  Collateralized mortgage obligations                  75,532,013           24,243       (847,973)      74,708,283
  Mortgage-backed securities                            1,766,840           11,862        (30,156)       1,748,546
------------------------------------------------------------------------------------------------------------------
    Total held for investment                          77,298,853           36,105       (878,129)      76,456,829
------------------------------------------------------------------------------------------------------------------
    Total investment and mortgage-related
    securities                                       $405,717,693       $5,378,095    ($2,584,909)    $408,510,879
==================================================================================================================
</TABLE>

         Accrued interest on investment securities was $437,022 and $13,562 at
December 31, 2001 and 2000, respectively. Accrued interest receivable on
mortgage-backed and related securities was $2,688,617 and $3,542,405 at December
31, 2001 and 2000, respectively.

         Mortgage-backed securities consist of FHLMC and FNMA securities. As of
December 31, 2001, the Corporation had retained the credit risk on $38.9 million
in FHLMC MBSs. Collateralized mortgage obligations consist of securities backed
by the aforementioned agency-backed securities or by whole-loans. As of December
31, 2001, approximately 88% of the Corporation's CMO portfolio consisted of
securities backed by whole loans--all of which were rated triple-A or its
equivalent by the major credit-rating agencies. Approximately 35% of the
Corporation's whole-loan CMOs consisted of loans on properties located in the
state of California. No other geographical location had a material
concentration.

         Realized gains on sales of investment securities were $13,199 in 2001.
There were no realized gains or losses on sales of investment securities in 2000
and 1999. There were no realized gains or losses on sales of mortgage-backed and
related securities during 2001, 2000, and 1999.




                                       48
<PAGE>

NOTE 3--LOANS HELD FOR INVESTMENT

         Loans held for investment at December 31 are summarized as follows:
<TABLE>
<CAPTION>
                                                                                         2001                 2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                  <C>
First mortgage loans:
  Single-family real estate                                                      $669,866,752         $719,670,790
  Non-residential real estate                                                     257,042,756          203,842,456
  Multi-family real estate                                                        252,311,829          236,003,146
  Construction                                                                     83,536,806           77,215,742
Consumer loans:
  Second mortgage and home equity                                                 249,500,788          253,865,639
  Automobile                                                                       75,009,273           64,841,201
  Other consumer                                                                   29,949,607           25,261,518
Education loans                                                                   201,183,233          197,579,143
Commercial business loans                                                          38,735,556              195,266
------------------------------------------------------------------------------------------------------------------
  Subtotal                                                                      1,857,136,600        1,778,474,901
Unearned discount, premiums, and net deferred loan fees and costs                   4,141,413            2,029,276
Allowance for loan losses                                                         (9,961,577)          (8,027,526)
------------------------------------------------------------------------------------------------------------------
  Total                                                                        $1,851,316,436       $1,772,476,651
==================================================================================================================
</TABLE>

         Accrued interest receivable on loans was $15,764,703 and $16,080,986 at
December 31, 2001 and 2000, respectively.

         Loans serviced for investors were $2.7 billion, $2.1 billion, and $1.9
billion at December 31, 2001, 2000, and 1999, respectively. These loans are not
reflected in the Corporation's Consolidated Statements of Financial Condition.
At December 31, 2001, the Corporation had retained the credit risk related to
$1.2 billion in single-family residential loans sold to the FHLB in exchange for
a monthly credit enhancement fee.

         At December 31, 2001 and 2000, loans on non-accrual status were $5.7
million and $3.1 million, respectively. The Corporation has no loans
contractually past due ninety or more days for which interest is being accrued.

         With respect to single-family mortgage loans, it is the Corporation's
general policy to restrict lending to its primary market areas in Wisconsin and
Illinois as well as contiguous counties in Iowa and Minnesota, though from
time-to-time the Corporation will purchase single-family loans originated
outside of its primary market area. It is also the Corporation's general policy
to limit an individual single-family mortgage loan to 80% of the appraised value
of the property securing the loan. The Corporation will occasionally lend more
than 80% of the appraised value of the property, but generally will require the
borrower to obtain private mortgage insurance on the portion of the loan amount
that exceeds 80% of the collateral. Single-family mortgage loans originated or
purchased outside of the Corporation's primary market area were $237.4 million
and $172.1 million at December 31, 2001 and 2000, respectively.

         With respect to multi-family and non-residential real estate loans, it
is the Corporation's policy to restrict its lending area to loans secured by
property located within a 300-mile radius of La Crosse, to include all or a
portion of the states of Wisconsin, Nebraska, Illinois, Iowa, and Minnesota,
although in the past the Corporation originated multi-family and non-residential
real estate loans outside of this area. It is also the Corporation's general
policy to limit loans on multi-family residential complexes, retail shopping
centers, office buildings, and multi-tenant industrial buildings to 80% of the
appraised value of the property securing the loan. Loans on other types of
commercial properties, such as nursing homes, hotels/motels, churches, and
single-tenant industrial buildings are limited to 75% or less of the appraised
value of the property securing the loan. In addition, it is the Corporation's
policy that no more than 20% of its multi-family and non-residential real estate
loans consist of this second category of loans. Multi-family and non-residential
real estate loans originated or purchased outside of the Corporation's market
area were $22.6 million and $23.1 million, at December 31, 2001 and 2000,
respectively.

         With respect to consumer and commercial business loans, it is the
Corporation's policy that such loans be supported primarily by the borrower's
ability to repay the loan and secondarily by the value of the collateral
securing the loan, if any. Furthermore, in the case of second mortgages and home
equity loans, the Corporation does not



                                       49
<PAGE>

generally allow the sum of the first and second mortgage amounts to exceed 100%
of the appraised value of the property securing the loan. Education loans are
substantially guaranteed by the U.S. government.

         A summary of the activity in the allowance for loan losses is as
follows:
<TABLE>
<CAPTION>
                                                                         2001               2000               1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                <C>                <C>
Balance at beginning of period                                     $8,027,526         $7,623,526         $7,623,526
Provision charged to expense                                        1,763,391          1,008,780            387,021
-------------------------------------------------------------------------------------------------------------------
Loans charged-off                                                 (1,189,383)          (664,765)          (433,744)
Recoveries                                                             98,026             59,985             46,723
-------------------------------------------------------------------------------------------------------------------
Charge-offs, net                                                  (1,091,357)          (604,780)          (387,021)
Purchased allowances                                                1,262,017                  -                  -
-------------------------------------------------------------------------------------------------------------------
Balance at end of period                                           $9,961,577         $8,027,526         $7,623,526
===================================================================================================================
</TABLE>

NOTE 4--MORTGAGE SERVICING RIGHTS

         A summary of the activity in mortgage servicing rights is as follows:
<TABLE>
<CAPTION>
                                                              PURCHASED    ORIGINATED      VALUATION
                                                                    MSR           MSR      ALLOWANCE          TOTAL
-------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>          <C>           <C>             <C>
Balance at December 31, 1998                                 $3,319,073   $23,907,322   ($6,122,936)    $21,103,459
Originated servicing                                                        5,333,684                     5,333,684
Amortization charged to earnings                            (1,090,449)   (7,075,006)                   (8,165,455)
Valuation adjustments charged to earnings                                                  3,456,293      3,456,293
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999                                  2,228,624    22,166,000    (2,666,643)     21,727,981
Purchased servicing                                           1,865,307                                   1,865,307
Originated servicing                                                        3,293,776                     3,293,776
Amortization charged to earnings                              (437,834)   (3,168,758)                   (3,606,592)
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000                                  3,656,097    22,291,018    (2,666,643)     23,280,472
Purchased servicing                                           1,100,197                                   1,100,197
Originated servicing                                                       20,183,936                    20,183,936
Originated servicing obtained through acquisition                           1,248,285                     1,248,285
Amortization charged to earnings                            (1,669,661)  (14,301,103)                  (15,970,764)
Valuation adjustments charged to earnings                                                     66,643         66,643
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001                                 $3,086,633   $29,422,136   ($2,600,000)    $29,908,769
===================================================================================================================
</TABLE>

NOTE 5--OFFICE PROPERTIES AND EQUIPMENT

         Office properties and equipment at December 31 are summarized as
follows:
<TABLE>
<CAPTION>
                                                                                             2001              2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>               <C>
Office buildings and improvements                                                     $19,842,841       $19,200,399
Furniture and equipment                                                                22,398,647        20,599,229
Leasehold improvements                                                                  7,152,627         5,924,590
Land and improvements                                                                   4,429,865         4,359,384
Property acquired for expansion                                                           332,864           332,864
Construction in progress                                                                2,963,335         1,784,016
-------------------------------------------------------------------------------------------------------------------
  Subtotal                                                                             57,120,179        52,200,482
Less allowances for depreciation and amortization                                      26,466,869        25,419,472
-------------------------------------------------------------------------------------------------------------------
  Total                                                                               $30,653,310       $26,781,010
===================================================================================================================
</TABLE>

         The Corporation rents office space and land under operating leases at
certain of its locations. These leases have terms expiring between 2001 and 2020
and provide for renewals subject to escalation clauses. Rental expense was
$2,217,502, $1,862,905, and $1,661,345 for the years ended December 31, 2001,
2000, and 1999, respectively.




                                       50
<PAGE>

NOTE 6--DEPOSIT LIABILITIES

         Deposit liabilities at December 31 are summarized as follows:

<TABLE>
<CAPTION>
                                                                                            2001             2000
-----------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>              <C>
Checking accounts:
  Non-interest-bearing                                                              $285,591,265     $161,601,896
  Interest-bearing                                                                   101,679,255       80,593,590
Money market accounts                                                                214,604,134      154,399,192
Regular savings accounts                                                             141,547,813      103,661,933
Variable-rate IRA accounts                                                             4,017,132        2,827,417
Time deposits maturing within...
  Three months                                                                       500,198,795      169,512,703
  Four to six months                                                                 200,025,611      213,218,098
  Seven to twelve months                                                             189,677,794      465,163,919
  Thirteen to twenty-four months                                                     217,244,381      337,981,625
  Twenty-five to thirty-six months                                                   146,742,749        7,770,114
  Thirty-seven to forty-eight months                                                  24,149,896        1,562,563
  Forty-nine to sixty months                                                           3,775,222          959,115
-----------------------------------------------------------------------------------------------------------------
    Total time deposits                                                            1,281,814,448    1,196,168,136
-----------------------------------------------------------------------------------------------------------------
    Total                                                                         $2,029,254,047   $1,699,252,162
=================================================================================================================
</TABLE>

         Accrued interest payable on deposit liabilities was $2,029,395 and
$1,198,471 at December 31, 2001 and 2000, respectively. Time deposits include
$152.3 million and $120.1 million of certificates in denominations of $100,000
or more at December 31, 2001 and 2000, respectively. Time deposits also include
$22.3 million and $40.3 million in deposits obtained through third-party brokers
at December 31, 2001 and 2000, respectively.

         Included in non-interest-bearing checking accounts at December 31, 2001
and 2000, were $104.8 million and $16.9 million, respectively, which represented
amounts held in custody for third-party investors in loans serviced by the
Corporation.

         Interest expense on deposit liabilities for the year ended December 31
is summarized as follows:
<TABLE>
<CAPTION>
                                                                            2001              2000             1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>               <C>              <C>
Checking accounts                                                       $573,484          $571,473         $558,393
Money market savings accounts                                          5,538,599         6,577,913        6,586,892
Regular savings                                                        1,528,534         1,619,063        1,740,722
Time deposits                                                         75,943,999        64,819,276       51,661,026
-------------------------------------------------------------------------------------------------------------------
  Total                                                              $83,584,616       $73,587,725      $60,547,033
===================================================================================================================
</TABLE>

NOTE 7--FEDERAL HOME LOAN BANK ADVANCES AND ALL OTHER BORROWINGS

         Federal Home Loan Bank advances and all other borrowings at December 31
are summarized as follows:
<TABLE>
<CAPTION>
                                                               2001                                 2000
------------------------------------------------------------------------------------------------------------------
                                                                     WEIGHTED                             WEIGHTED
                                                        BALANCE  AVERAGE RATE                BALANCE  AVERAGE RATE
------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                <C>               <C>               <C>
Federal Home Loan Bank advances maturing in...
2001                                                          -             -            $78,245,000         5.82%
2002                                                $66,815,000         3.75%             13,415,000          5.32
2003                                                170,600,000          5.32            116,000,000          5.97
2004                                                125,000,000          5.09             75,000,000          5.60
2005                                                 77,500,000          5.58             50,000,000          6.18
2008                                                 27,500,000          4.96             25,000,000          4.95
Open line of credit                                           -             -             10,545,000          6.74
------------------------------------------------------------------------------------------------------------------
  Total FHLB advances                               467,415,000          5.05            368,205,000          5.82
------------------------------------------------------------------------------------------------------------------
Securities sold under agreements to repurchase                                                                6.68
                                                              -             -            100,000,000

Federal funds purchased                                       -             -             20,000,000          6.81
Other borrowings                                         32,311          9.00              2,641,370          7.75
------------------------------------------------------------------------------------------------------------------
  Total                                            $467,447,311         5.05%           $490,846,370         6.05%
==================================================================================================================
</TABLE>

         Accrued interest payable on FHLB advances and all other borrowings was
$2,034,345 and $2,849,711 at December 31, 2001 and 2000, respectively.








                                       51
<PAGE>

         The Corporation's borrowings at the FHLB are limited to the lesser of
35% of total assets or 60% of the book value of certain mortgage loans and 85%
to 90% of the market value of certain mortgage-backed and related securities.
Interest on the open line of credit is paid monthly at approximately 45 basis
points above the FHLB's daily investment deposit rate or approximately 25 basis
points above the federal funds rate. As of December 31, 2001, $76.3 million,
$75.0 million, $52.5 million, and $27.5 million of the advances maturing in the
years 2003, 2004, 2005, and 2008, respectively, consist of borrowings that are
redeemable quarterly at the option of the FHLB.

         The Corporation has lines of credit with three financial institutions.
These lines, which amount to $60.0 million in the aggregate, permit the
overnight purchase of federal funds. There were no amounts outstanding under
these lines as of December 31, 2001. The Corporation also has a $5.0 million
line of credit with a fourth financial institution under which there was no
amount outstanding as of December 31, 2001. The interest rate on borrowings
under this line is determined on a periodic basis using an index based on the
London Inter-Bank Offered Rate ("LIBOR"). The Corporation has pledged all issued
and outstanding capital stock of the Bank as collateral for this line of credit.


NOTE 8--INCOME TAXES

         Federal and state income tax expense for the years ended December 31 is
summarized as follows:

<TABLE>
<CAPTION>

                                                                                   2001          2000          1999
--------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>           <C>

Current:
  Federal                                                                   $12,819,735   $12,689,599   $10,558,903
  State                                                                         128,750       104,230       159,477
--------------------------------------------------------------------------------------------------------------------
    Total current                                                            12,948,485    12,793,829    10,718,380
====================================================================================================================
Deferred:
  Federal                                                                     2,427,000      (24,000)     1,629,000
  State                                                                          23,000             -     (180,000)
--------------------------------------------------------------------------------------------------------------------
    Total deferred                                                            2,450,000      (24,000)     1,449,000
--------------------------------------------------------------------------------------------------------------------
    Total                                                                   $15,398,485   $12,769,829   $12,167,380
====================================================================================================================


         The significant components of the Corporation's deferred tax expense
for the years ended December 31 are summarized as follows:

                                                                                   2001          2000          1999
--------------------------------------------------------------------------------------------------------------------
Mortgage servicing rights                                                    $3,523,085      $200,744    $1,614,810
Office properties and equipment depreciation                                    118,544      (17,036)      (21,606)
Asset valuation allowances                                                     (76,492)      (43,871)       652,459
Deferred loan fees                                                               68,944       540,898       139,904
Provision for loan and real estate losses, net                                (442,792)     (183,455)     (259,994)
Deferred compensation                                                         (669,402)     (789,847)     (323,690)
FHLB stock dividends                                                            719,313       783,665             -
Purchase acquisition adjustments                                              (402,148)      (46,712)      (98,467)
Other                                                                         (389,052)     (468,386)     (254,416)
--------------------------------------------------------------------------------------------------------------------
  Total deferred                                                             $2,450,000     ($24,000)    $1,449,000
====================================================================================================================

         The income tax provision differs from the provision computed at the
federal statutory corporate tax rate for the years ended December 31 as follows:

                                                                                   2001          2000           1999
---------------------------------------------------------------------------------------------------------------------
Income taxes at federal statutory of 35%                                    $15,346,348   $12,569,797    $12,113,007
State income tax (benefit) net of federal income tax effect                      98,637        67,749       (13,341)
Other                                                                          (46,500)       132,283         67,714
---------------------------------------------------------------------------------------------------------------------
  Income tax provision                                                      $15,398,485   $12,769,829    $12,167,380
=====================================================================================================================
</TABLE>

                                       52



<PAGE>


         The significant components of the Corporation's deferred tax assets and
liabilities as of December 31, are summarized as follows:
<TABLE>
<CAPTION>

                                                                                                2001          2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>            <C>

Deferred tax assets:
  Loan and real estate loss allowances                                                    $4,072,692    $3,102,554
  Deferred compensation                                                                    3,394,793     2,724,252
  Asset valuation allowances                                                                 383,825       307,205
  State tax loss carryforwards, net                                                        2,157,092     1,618,514
  Other                                                                                      262,766       226,744
-------------------------------------------------------------------------------------------------------------------
    Total deferred tax assets                                                             10,271,168     7,979,269
  Valuation allowance                                                                      (670,868)     (631,843)
-------------------------------------------------------------------------------------------------------------------
    Adjusted deferred tax assets                                                           9,600,300     7,347,426
-------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities:
  Mortgage servicing rights                                                                9,357,079     5,294,592
  Securities valuation allowance                                                           1,152,183     1,272,324
  Office properties and equipment depreciation                                               461,249       256,575
  Deferred loan fees                                                                       1,111,289     1,041,909
  FHLB stock dividends                                                                     1,802,054     1,046,541
  Purchase acquisition adjustments                                                           680,505        97,352
  Investment in unconsolidated partnerships                                                  100,749        97,474
  Other                                                                                      366,250       295,186
-------------------------------------------------------------------------------------------------------------------
    Total deferred tax liabilities                                                        15,031,358     9,401,953
-------------------------------------------------------------------------------------------------------------------
    Net deferred tax liabilities                                                        ($5,431,058)  ($2,054,527)
===================================================================================================================

</TABLE>

         The Bank qualifies under provisions of the IRC that prior to 1996
permitted it to deduct from taxable income an allowance for bad debts that
generally exceeded losses charged to income for financial reporting purposes.
Accordingly, no provision for income taxes has been made for $21.1 million of
retained income at December 31, 2001. If in the future the Bank no longer
qualifies as a bank for tax purposes, income taxes may be imposed at the
then-applicable rates. If income taxes had been provided, the deferred tax
liability would have been approximately $8.5 million. At December 31, 2001, the
Corporation had $37.2 million in state net operating loss carryforwards that
expire between 2004 and 2016.


NOTE 9--EMPLOYEE BENEFIT PLANS

         PENSION PLAN The Corporation has established a pension plan for the
benefit of full-time employees that have at least one year of service and have
attained the age of 20. Benefits under the plan are based on the employee's
years of service and compensation during the years immediately preceding
retirement. The following table summarizes the components of pension benefit
obligation and plan assets, the funded status of the plan, the amount recognized
in the Corporation's consolidated financial statements, and the weighted-average
assumptions for the years ended December 31, 2001 and 2000.

                                       53
<PAGE>

<TABLE>
<CAPTION>

                                                                                                 2001          2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                <C>
Reconciliation of benefit obligation:

  Benefit obligation at beginning of year                                             $10,491,473        $8,663,253
  Service costs                                                                           681,215           587,669
  Interest costs                                                                          791,813           696,613
  Plan amendment                                                                           50,395                 -
  Actuarial loss                                                                          602,524           850,200
  Benefit payments                                                                      (280,375)         (306,262)
--------------------------------------------------------------------------------------------------------------------
    Benefit obligation at end of year                                                 $12,337,045       $10,491,473
====================================================================================================================
Reconciliation of fair value of plan assets:
  Fair value of plan assets at beginning of year:                                     $10,986,168       $10,188,484
  Actual return on plan assets                                                          (667,544)           781,848
  Employer contributions                                                                        -           322,098
  Benefit payments                                                                      (280,375)         (306,262)
--------------------------------------------------------------------------------------------------------------------
    Fair value of plan assets at end of year                                          $10,038,249       $10,986,168
====================================================================================================================
Funded status:
  Funding shortfall (excess) at end of year                                            $2,298,796        ($494,695)
  Unrecognized prior service cost                                                         (7,656)            64,913
  Unrecognized net (gain) loss                                                        (1,422,223)           822,106
--------------------------------------------------------------------------------------------------------------------
    Accrued pension expense                                                              $868,917          $392,324
====================================================================================================================
Components of net periodic benefit cost:
  Service costs                                                                          $681,215          $587,669
  Interest costs                                                                          791,813           696,613
  Expected return on plan assets                                                        (974,261)         (921,668)
  Amortization of transition asset                                                              -          (15,474)
  Amortization of prior service costs                                                    (22,174)          (26,686)
  Recognized actuarial loss                                                                     -          (33,677)
--------------------------------------------------------------------------------------------------------------------
    Net periodic benefit cost                                                            $476,593          $286,777
====================================================================================================================
Weighted-average assumptions:
  Discount rate                                                                             7.25%             7.50%
  Expected return on plan assets                                                            9.00%             9.00%
  Rate of compensation increase                                                             5.50%             5.50%
====================================================================================================================
</TABLE>


         POSTRETIREMENT EMPLOYEE BENEFITS The Corporation provides certain
health care insurance benefits to retired employees. Substantially all of the
employees of the Corporation may become eligible for these benefits if they
reach normal retirement age while working for the Corporation. The following
table summarizes the components of postretirement benefit obligation and funded
status, as well as the amounts recognized in the Corporation's consolidated
financial statements for the years ended December 31, 2001 and 2000.
<TABLE>
<CAPTION>


                                                                                              2001            2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>              <C>

Reconciliation of benefit obligation:
  Benefit obligation at beginning of year                                              $2,191,915       $1,930,947
  Service costs                                                                           123,921           79,158
  Interest costs                                                                          205,598          156,931
  Actuarial loss                                                                          589,450          137,279
  Benefit payments                                                                       (97,128)        (112,400)
-------------------------------------------------------------------------------------------------------------------
    Benefit obligation at end of year                                                  $3,013,756       $2,191,915
===================================================================================================================
Funded status:
  Funding shortfall at end of year                                                     $3,013,756       $2,191,915
  Unrecognized transition asset                                                         (376,529)        (410,759)
  Unrecognized net loss                                                                 (923,068)        (362,174)
===================================================================================================================
    Accrued post-retirement benefit expense                                            $1,714,159       $1,418,982
===================================================================================================================
Components of net periodic benefit cost:
  Service costs                                                                          $123,921          $79,158
  Interest costs                                                                          205,598          156,931
  Amortization of transition obligation                                                    34,230           34,230
  Recognized actuarial loss                                                                28,556            4,768
-------------------------------------------------------------------------------------------------------------------
    Net periodic benefit cost                                                            $392,305         $275,087
===================================================================================================================
Weighted-average assumptions:
  Discount rate                                                                             7.25%            7.50%
  Rate of compensation increase                                                             5.50%            5.50%
===================================================================================================================
</TABLE>

                                       54

<PAGE>

         The assumed rate of increase in the per capita cost of covered benefits
was approximately 7% for 2001, declining to approximately 6% in 2004 and
thereafter. This assumption has a significant effect on the amounts reported in
the Corporation's consolidated financial statements. For example, a one
percentage point increase in the assumed trend rate would increase the
accumulated postretirement benefit obligation as of December 31, 2001, by
approximately $870,000 and the aggregate service and interest cost components of
postretirement benefit expense for 2001 by approximately $127,000. A one
percentage point decline would decrease these amounts by approximately $501,000
and $68,000, respectively.

         SAVINGS PLANS The Corporation maintains a 401(k) savings plan for the
benefit of substantially all of its employees. Employees may contribute up to a
certain percentage of their compensation to the plan and the Corporation will
match their contributions within certain limits. In addition, the employee may
also receive discretionary profit sharing contributions from the Corporation.
The Corporation provided matching and discretionary contributions of
approximately $790,000, $551,000, and $490,000 during the years ended December
31, 2001, 2000, and 1999, respectively.

         EMPLOYEE STOCK OWNERSHIP PLAN The Corporation makes annual
discretionary contributions to an Employee Stock Ownership Program ("ESOP") for
the benefit of substantially all of its employees. All contributions are
recorded as compensation expense on the books of the Corporation at the time
they are made. The Corporation recorded approximately $482,000, $373,000, and
$379,000 in ESOP-related compensation expense during the years ended December
31, 2001, 2000, and 1999, respectively.

         SUPPLEMENTAL PENSION PLAN The Corporation makes annual contributions to
a supplemental pension plan for certain members of management. All contributions
are recorded as compensation expense on the books of the Corporation at the time
they are made. The Corporation recorded approximately $285,000, $238,000, and
$346,000 in such expense during the years ended December 31, 2001, 2000, and
1999, respectively.

         STOCK INCENTIVE PLANS The Corporation has adopted a stock incentive
plan designed to attract and retain qualified personnel in key management
positions. The plan provides for the grant of stock options, restricted stock,
and stock appreciation rights. In general, stock options granted under the plan
are exercisable at a price equal to the fair value of the stock on the date of
the grant. Furthermore, the options are subject to three- to five-year graded
vesting requirements and a maximum exercise period of ten years. The plan
currently authorizes the issuance of approximately 4.5 million shares, of which
734,000 shares were unallocated as of December 31, 2001. Activity in these stock
incentive plans for each of the three years ended December 31, 2001, 2000, and
1999, is summarized as follows:

<TABLE>
<CAPTION>

                                                          2001                   2000                  1999
---------------------------------------------------------------------------------------------------------------------
                                                              WEIGHTED               WEIGHTED               WEIGHTED
                                                               AVERAGE                AVERAGE                AVERAGE
                                                     NUMBER      PRICE     NUMBER       PRICE      NUMBER      PRICE
---------------------------------------------------------------------------------------------------------------------
<S>                                               <C>        <C>        <C>         <C>       <C>          <C>

Stock options outstanding at beginning of period    741,770     $10.24    734,060       $9.34   1,685,535      $5.42
Stock options granted                               380,550      14.17     95,000       11.00      76,000      14.01
Stock options exercised                           (107,638)       3.61   (84,290)        3.10 (1,012,475)       3.12
Stock options forfeited                            (17,880)      13.80    (3,000)       14.75    (15,000)         13
---------------------------------------------------------------------------------------------------------------------
Stock options outstanding at end of period          996,802     $12.39    741,770      $10.24     734,060      $9.34
=====================================================================================================================
Fully-vested options outstanding at end of period   498,420     $11.03    569,770       $9.59     457,895      $6.20
=====================================================================================================================

         The following table presents the stock options outstanding as of December 31, 2001, by range of exercise prices.

<CAPTION>
                                                                                   WEIGHTED AVG        WEIGHTED AVG
                                                               STOCK OPTIONS          REMAINING            EXERCISE
RANGE OF EXERCISE PRICES                                         OUTSTANDING               TERM               PRICE
--------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                 <C>                 <C>

$0.00 - $5.00                                                         68,252          0.9 years               $2.57
 5.01 - 10.00                                                         98,500          3.6 years                5.55
10.01 - 15.00                                                        799,050          7.8 years               13.95
15.01 - 20.00                                                         31,000          9.2 years               15.48
--------------------------------------------------------------------------------------------------------------------
Total Options Outstanding                                            996,802          7.0 years              $12.39
====================================================================================================================
</TABLE>


                                       55

<PAGE>


         During the years ended December 31, 2001 and 2000, 68,000 shares and
15,000 shares of restricted stock were granted at weighted-average fair values
of $14.50 and $11.00, respectively. In 1999, no shares of restricted stock were
granted.

         The Corporation has also adopted a stock incentive plan designed to
attract and retain qualified non-employee directors for the Corporation and its
subsidiaries. Under the plan each director receives options to purchase 8,800
shares upon election or re-election to the Board of Directors. In general, the
stock options are exercisable at a price at least equal to the fair value of the
stock on the date of grant and are fully-vested on the date of the grant. These
plans have authorized the issuance of 673,000 shares, of which 145,000 shares
were unallocated as of December 31, 2001. Activity in these stock incentive
plans for each of the three years ended December 31, 2001, 2000, and 1999 is
summarized as follows:

<TABLE>
<CAPTION>

                                                             2001                  2000                   1999
--------------------------------------------------------------------------------------------------------------------
                                                              WEIGHTED               WEIGHTED              WEIGHTED
                                                               AVERAGE                AVERAGE               AVERAGE
                                                       NUMBER    PRICE       NUMBER     PRICE      NUMBER     PRICE
--------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>     <C>          <C>       <C>        <C>      <C>

Stock options outstanding at beginning of period      138,796   $10.42      131,996     $9.09     218,966     $5.95
Stock options granted                                  26,400    14.79       26,400     11.75      26,400     14.88
Stock options exercised                               (8,800)     1.36     (19,600)      3.25   (113,370)      4.37
====================================================================================================================
Stock options outstanding at end of period            156,396   $11.67      138,796    $10.42     131,996     $9.09
====================================================================================================================
</TABLE>

         The following table presents the stock options outstanding as of
December 31, 2001, by range of exercise prices.

<TABLE>
<CAPTION>
                                                                                   WEIGHTED AVG        WEIGHTED AVG
                                                               STOCK OPTIONS          REMAINING            EXERCISE
RANGE OF EXERCISE PRICES                                         OUTSTANDING               TERM               PRICE
--------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                 <C>                <C>

$0.00 - $5.00                                                         17,596          1.8 years               $4.77
 5.01 - 10.00                                                         42,000          4.3 years                7.49
10.01 - 15.00                                                         70,400          8.5 years               13.67
15.01 - 20.00                                                         26,400          6.3 years               17.59
--------------------------------------------------------------------------------------------------------------------
Total Options Outstanding                                            156,396          6.2 years              $11.67
====================================================================================================================
</TABLE>

         As described in Note 1, the Corporation has elected to provide pro
forma disclosure of the effects of its stock incentive plans. If the Corporation
had accounted for its stock incentive plans using the fair value method, the
Corporation's pro forma net income would have been $27.5 million, $22.7 million,
and $21.8 million during the years ended December 31, 2001, 2000, and 1999,
respectively. Pro forma diluted earnings per share would have been $1.46, $1.23,
and $1.14 and pro forma basic earnings per share would have been $1.47, $1.24,
and $1.18 during the same periods, respectively.

         The weighted-average fair value of the options granted in 2001, 2000,
and 1999, were $4.26, $3.91, and $5.23, respectively. The fair values of these
options were estimated as of the dates they were granted using a Black-Scholes
option-pricing model. Weighted-average assumptions for 2001 were 4.6% risk-free
interest rate, 3.2% dividend yield, 30% volatility, and a seven-year expected
life. Weighted-average assumptions for 2000 were 6.0% risk-free interest rate,
3.0% dividend yield, 35% volatility, and a seven-year expected life.
Weighted-average assumptions for 1999 were 5.5% risk-free interest rate, 2.4%
dividend yield, 35% volatility, and a seven-year expected life.

NOTE 10--COMMITMENTS AND CONTINGENCIES

         LEGAL PROCEEDINGS The Corporation and its subsidiaries are engaged in
various routine legal proceedings occurring in the ordinary course of business,
which in the aggregate are believed by management to be immaterial to the
consolidated financial condition of the Corporation.

         OTHER COMMITMENTS AND CONTINGENCIES At December 31, 2001, the
Corporation had commitments to originate mortgage loans at market terms
aggregating approximately $32.5 million, which expire on various dates in 2002.
At December 31, 2001, the Corporation also had commitments to fund $46.7 million
in additional proceeds on construction loans. As of the same date the
Corporation had approximately $4.4 million in commitments



                                       56

<PAGE>


outstanding under standby letters of credit and financial guarantees, $23.4
million in commitments outstanding under unused home equity lines of credit, and
$3.7 million and $5.5 million under commercial real estate lines and commercial
business lines of credit, respectively. Furthermore, the Corporation had
commitments to sell approximately $73.1 million in mortgage loans to FHLMC,
FNMA, and the FHLB at various dates in 2002.

         At December 31, 2001, the Corporation had retained the credit risk
related to $1.2 billion in single-family residential loans sold to the FHLB in
exchange for a monthly credit enhancement fee.


NOTE 11--STOCKHOLDERS' EQUITY

         PREFERRED STOCK The Corporation is authorized to issue up to 5,000,000
shares of preferred stock, $.10 par value per share, although no such stock was
outstanding at December 31, 2001. The Board of Directors of the Corporation is
authorized to establish the voting powers, designations, preferences, or other
special rights of such shares and the qualifications, limitations, and
restrictions thereof. The preferred stock may be issued in distinctly designated
series, may be convertible to common stock, and may rank prior to the common
stock in dividend rights, liquidation preferences, or both.

         SHAREHOLDERS' RIGHTS PLAN The Corporation's Board of Directors has
adopted a shareholders' rights plan (the "Rights Plan"). Under the terms of the
Rights Plan, the Board of Directors declared a dividend of one preferred share
purchase right on each outstanding share of common stock of the Corporation.
However, the rights can only be exercised if a person or group acquires 20% or
more of the common stock or announces a tender or exchange offer that would
result in a 20% or greater position in the stock. Initially, each right will
entitle shareholders to buy one one-hundredth share of the Corporation's
preferred stock at a price of $50.00, subject to adjustment. Under certain
circumstances, including the acquisition of beneficial ownership of 25% or more
of the Corporation's common stock, holders of the Corporation's common stock,
other than the acquirer, will be entitled to exercise the rights to purchase
common stock from the Corporation having a value equal to two times the exercise
price of the right. If the Corporation is acquired in a merger, share exchange,
or other business combination in which the Corporation is not the survivor,
after a person or group's acquisition of beneficial ownership of 20% or more of
the common stock, rights holders will be entitled to purchase the acquirer's
shares at a similar discount. Issuance of the rights has no dilutive effect,
will not affect reported earnings per share, is not taxable to the Corporation
or its shareholders, and will not change the way in which the Corporation's
shares are traded. The rights expire in 2005.

         STOCK REPURCHASE PLANS AND TREASURY STOCK In 2000, 1999, and 1997 the
Corporation's Board of Directors authorized the repurchase of up to 913,554,
905,248, and 919,052 shares of the Corporation's outstanding common stock,
respectively. Under the plans, repurchases may be made from time-to-time in the
open market during the ensuing twelve months as conditions permit (the 1997 Plan
was extended for an additional twelve months in January 1998 and again in
January 1999; the 1999 Plan was extended for an additional twelve months in
April 2000 and again in April 2001; and the 2000 Plan was extended for an
additional twelve months in April 2001). Repurchased shares are held as treasury
stock and are available for general corporate purposes.

         During 2001, 2000, and 1999, the Corporation repurchased 228,800,
143,904, and 1,060,990 shares under the 2000, 1999 and 1997 Plans at an average
cost of $14.04, $11.87, and $15.01 per share, respectively. As of December 31,
2001, no shares remained to be purchased under the 1997 and 1999 Plans, and
904,260 shares remained under the 2000 Plan.

         During 2001, 2000, and 1999 the Corporation reissued 1,825,132, 85,807,
and 1,103,550 shares of common stock out of treasury stock, respectively. These
shares had an average cost basis of $10.05, $11.31, and $12.93 per share,
respectively. In general, these shares were issued upon the exercise of stock
options by, or the issuance of restricted stock to, employees and directors of
the Corporation. In addition, during 2001, 1,685,126 of these shares, plus
250,178 previously unissued shares, were issued in connection with the
acquisition of ACB.

         DIVIDEND RESTRICTIONS The ability of the Corporation to pay dividends
will depend primarily upon the receipt of dividends from the Bank. The Bank may
not declare or pay a cash dividend without regulatory approval if such dividend
would cause its net capital to be reduced below the current risk-based capital
requirements imposed by the OTS. The Bank is a "Tier 1" association under
current OTS regulations. As such, the Bank's dividend


                                       57

<PAGE>


payments are limited to 100% of its net income during the year plus an amount
that would reduce by one-half its excess risk-based regulatory capital as of the
beginning of the year, or 75% of its net income during the most recent
four-quarter period, whichever is greater.

         REGULATORY CAPITAL REQUIREMENTS Financial institutions such as the Bank
are subject to minimum regulatory capital requirements as specified in federal
banking law and supporting regulations. Failure of a financial institution to
meet such requirements may subject the institution to certain mandatory--and
possibly discretionary--actions on the part of its regulators (referred to as
"prompt corrective actions"). Such actions, if undertaken, could severely
restrict the activities of the institution. During each of the years ended
December 31, 2001 and 2000, the Bank's regulatory capital was sufficient under
the prompt corrective action provisions of the federal banking law and
supporting regulations. Accordingly, the Bank is not subject to prompt
corrective actions by its regulators.

         The following table summarizes the Bank's current regulatory capital in
both percentage and dollar terms as of December 31, 2001 and 2000. It also
summarizes the minimum capital levels that must be maintained by the Bank for it
to be classified as "adequately capitalized" and "well capitalized" under the
prompt corrective action provisions of federal banking law and supporting
regulations. As indicated in the table, the Bank is "well capitalized" for
regulatory capital purposes.



<TABLE>
<CAPTION>

                                                                         MINIMUM REQUIREMENTS
                                                                          TO BE CLASSIFIED AS...
                                                                 -----------------------------------
                                                                      ADEQUATELY             WELL
DECEMBER 31, 2001                                                    CAPITALIZED      CAPITALIZED           ACTUAL
-------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                 <C>             <C>

Tier 1 leverage ratio                                                       4.0%             5.0%            5.97%
Tier 1 risk-based capital ratio                                             4.0%             6.0%           10.69%
Total risk-based capital ratio                                              8.0%            10.0%           11.33%

Tier 1 leverage ratio capital                                       $108,232,000     $135,290,000     $161,526,000
Tier 1 risk-based capital                                             60,457,000       90,685,000      161,526,000
Total risk-based capital                                             120,914,000      151,142,000      171,172,000
====================================================================================================================

DECEMBER 31, 2000
-------------------------------------------------------------------------------------------------------------------
Tier 1 leverage ratio                                                       4.0%             5.0%            5.28%
Tier 1 risk-based capital ratio                                             4.0%             6.0%            9.71%
Total risk-based capital ratio                                              8.0%            10.0%           10.29%

Tier 1 leverage ratio capital                                        $95,288,000     $119,111,000     $125,726,000
Tier 1 risk-based capital                                             51,816,000       77,724,000      125,726,000
Total risk-based capital                                             103,632,000      129,540,000      133,325,000
====================================================================================================================
</TABLE>


                                       58
<PAGE>



NOTE 12--FAIR VALUES OF FINANCIAL INSTRUMENTS

         Fair values of financial instruments as of December 31 are as follows:

<TABLE>
<CAPTION>
                                                                      2001                           2000
---------------------------------------------------------------------------------------------------------------------
                                                     CARRYING VALUE     FAIR VALUE   CARRYING VALUE     FAIR VALUE
-------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>             <C>            <C>             <C>
Financial assets:
Cash and due from banks                                 $70,756,705     $70,756,705    $25,445,819     $25,445,819
Interest-bearing deposits with banks                     98,233,160      98,233,160     13,054,493      13,054,493
Investment securities available for sale                 35,461,500      35,461,500        817,141         817,141
Mortgage-backed and related securities:
  Available for sale                                    305,979,912     305,979,912    331,236,909     331,236,909
  Held for investment                                   134,010,248     134,937,344     77,298,853      76,456,829
Loans held for sale                                      56,109,442      56,109,442     22,973,887      23,400,000
Loans held for investment, gross                      1,861,278,013   1,877,400,000  1,780,504,177   1,773,300,000
Federal Home Loan Bank stock                             28,063,300      28,063,300     25,568,100      25,568,100
Accrued interest receivable                              19,016,429      19,016,429     19,701,004      19,701,004
Mortgage servicing rights                                29,908,769      34,600,000     23,280,472      23,280,472

Financial liabilities:
Deposit liabilities                                  $2,029,254,047  $2,044,600,000 $1,699,252,162  $1,707,500,000
Federal Home Loan Bank advances and all other
  borrowings                                            467,447,311     484,500,000    490,846,370     488,800,000
Advance payments by borrowers for taxes and
  insurance                                               1,640,142       1,640,142      1,023,712       1,023,712
Accrued interest payable                                  4,063,741       4,063,741      4,047,875       4,047,875
-------------------------------------------------------------------------------------------------------------------
</TABLE>

         Refer to Note 1 for the methods and assumptions used by the Corporation
in estimating the fair value of financial instruments. The carrying value shown
for loans held for investment excludes the impact of the Corporation's allowance
for loan losses


NOTE 13--SEGMENT INFORMATION

         ORGANIZATIONAL STRUCTURE In 2001, the Corporation completed a
reorganization along functional lines rather than product lines. The principal
components of the Corporation's organization now consist of a Community Banking
Group, which has primary responsibility for the sale and delivery of all the
Corporation's products and services, and a Corporate Administration and
Operations Group, which has primary responsibility for product support, data and
technology management, and property management. The Corporation also has a
Commercial Real Estate Lending Division, which is responsible for the
origination and servicing of commercial real estate loans, a Finance and
Treasury Division, and a Human Resources Division. Each group or division is led
by an executive officer that reports directly to the President of the
Corporation.

         Despite its reorganization along functional rather than product lines,
the Corporation continues to account for its operations along product lines. The
Corporation tracks profitability in four major areas: (i) residential lending,
(ii) commercial real estate lending, (iii) consumer lending, and (iv) investment
and mortgage-related securities. Residential lending is divided into two profit
centers for segment reporting purposes: (i) a mortgage banking profit center
that is responsible for loan origination, sales of loans in the secondary
market, and servicing of residential loans, and (ii) a residential loan
portfolio that consists of loans held by the Corporation for investment purposes
(loans held for sale are included in the mortgage banking profit center). This
profit center also includes mortgage-backed securities that are collateralized
by loans that were originated by the Corporation. Commercial real estate lending
consists of the Corporation's portfolio of multi-family and non-residential
mortgage loans, as well as functions related to the origination and servicing of
such loans. Consumer lending is divided into two profit centers for segment
reporting purposes: (i) a consumer lending portfolio, which consists of the
Corporation's second mortgage, automobile, and other consumer installment loans,
as well as functions related to the origination and servicing of such loans, and
(ii) an education loan portfolio, which also includes functions related to the
origination and servicing of the loans. Finally, the Corporation's investment
and mortgage-related securities portfolio is considered a profit center for
segment reporting purposes. However, mortgage-backed securities collateralized
by loans originated by the Corporation are included in the residential loan
profit center, rather than the investment and mortgage-related securities
portfolio.


                                       59

<PAGE>
         The Corporation's extensive branch network, which delivers checking,
savings, certificates of deposit and other financial products and services to
customers, is considered a support department for segment reporting purposes, as
more fully described in a subsequent paragraph.

         In October 2001, the Corporation completed the acquisition of American
Community Bankshares, Inc. ("ACB"). In addition, in January 2002 the Corporation
announced an agreement to purchase three branch offices in Rochester, Minnesota,
from another financial institution. This purchase includes the customer loans
and deposits at those branches. In addition to offering products and services
similar to the Corporation's existing product lines, these institutions also
deliver commercial loan and deposit products and services to business customers.
This represents a new line of business for the Corporation and a new reportable
segment. The financial results of this new line of business have not been
separately reported in 2001 due to continuing efforts to design these products
on the Corporation's systems, as well as efforts to complete the integration of
the operations of ACB and the three Rochester branches. Refer to Notes 14 and 15
for additional discussion.

         MEASUREMENT OF SEGMENT PROFIT (LOSS) Management evaluates the after-tax
performance of the Corporation's profit centers as if each center were a
separate entity--each with its own earning assets, actual and/or allocated
non-earning assets, and allocated funding resources. Each profit center has its
own interest income, non-interest income, and non-interest expense as captured
by the Corporation's accounting systems. Interest expense is allocated to each
profit center according to its use of the Corporation's funding sources, which
consist primarily of deposit liabilities, FHLB advances, and equity. In general,
all funding sources are allocated proportionately to each profit center.
However, in certain instances specific liabilities may be matched against
specific assets of profit centers.

         The net cost of operating the Corporation's support departments is
allocated to the Corporation's profit centers and to the banking network using a
variety of methods deemed appropriate by management. In general, these net costs
are included in the non-interest expense of each profit center, to include the
branch network. In addition, certain allocations of revenues and expenses are
made between profit centers when they perform services for each other. Such
amounts, however, are not generally material in nature.

         The Corporation's branch network is considered a support department
center for segment reporting purposes. Retail banking fees and revenues are
deducted from the non-interest expense of operating the network (to include an
allocation of net costs from the Corporation's other support departments) to
arrive at net cost for the banking network. This net cost is then allocated to
each profit center based on its use of deposit liabilities to fund its
operations. This amount is reported as "net cost to acquire and maintain deposit
liabilities" and is included as an adjustment to the net interest income of each
profit center.

         For segment reporting purposes, management makes certain non-GAAP
adjustments and reclassifications to the results of operations and financial
condition of the Corporation that, in management's judgement, more fairly
reflect the performance and/or financial condition of certain of the
Corporation's profit centers. Following is a description of the more significant
adjustments:

                  INTEREST INCOME AND EXPENSE Interest income is credited to the
mortgage banking profit center for implied earnings on non-interest-bearing
liabilities such as custodial and escrow accounts. The offsetting interest
expense is charged to each profit center according to their use of these funding
sources, as previously described. Fee income from customers that make their
monthly loan payments late ("late charges") is reclassified from interest income
to non-interest income in the mortgage banking profit center. Income from bank
owned life insurance is reclassified from non-interest income to interest income
in the investment and mortgage-related security profit center.

                  LOAN ORIGINATION FEES AND COSTS In accordance with GAAP,
origination fees earned on residential loans held for investment are deferred
and amortized over the expected life of the loans, as are the direct costs to
originate the loans. In general, these deferrals and their subsequent
amortization are disregarded for segment reporting purposes. As a result, the
mortgage banking profit center receives revenue for loans that it originates for
the portfolio of residential loans held for investment, as well as a full charge
for the costs to originate the loans. These fees and costs are in addition to
the fees it receives and the costs it incurs on loans originated for sale in the
secondary market, which are included in current earnings under GAAP.

                                       60

<PAGE>




                  MORTGAGE SERVICING RIGHTS In accordance with GAAP, mortgage
servicing rights are not recorded on residential loans held for investment.
However, for segment reporting purposes, the mortgage banking profit center
receives an income allocation for the origination of such loans, which
represents the estimated value of the mortgage servicing rights. This allocation
is in addition to the gain from mortgage servicing rights that is recorded on
loans sold in the secondary market, as permitted under GAAP. The amortization of
the mortgage servicing rights created by this allocation is charged-back to the
mortgage banking profit center over the estimated life of the loans.

                  LOAN SERVICING FEES In accordance with GAAP, loan servicing
fee income is not recorded on loans held for investment. However, for segment
reporting purposes, the mortgage banking profit center receives an income
allocation for the services it performs for the Corporation's residential,
commercial real estate, and consumer loan portfolios. This allocation is in
addition to the service fee income that the profit center receives on loans
serviced for third parties, as recorded in the Corporation's Consolidated
Statement of Operations. The aforementioned loan portfolios are charged with the
offsetting servicing cost.

                  PROVISION FOR LOAN AND REAL ESTATE LOSSES For segment
reporting purposes, the Corporation disregards provisions for loan and real
estate losses recorded under GAAP. Rather, actual charge-off (recovery) activity
is charged (credited) to each profit center in the period it occurs.

                  INTANGIBLE ASSETS The amortization of goodwill and certain
other intangible assets is disregarded for segment reporting purposes.

                  INCOME TAXES In general, a standard income tax rate of
approximately 41% is used for segment reporting purposes. However, the income
tax benefit associated with assets held in Nevada by FCHI, the Bank's
wholly-owned investment subsidiary, is allocated to the profit centers that own
such assets. This results in a lower effective income tax rate, or even a
negative rate, for such profit centers.

                  NON-GAAP ADJUSTMENTS TO FINANCIAL CONDITION Allowances for
losses on loans and real estate and security valuation allowances are added to
and/or excluded from assets of the profit centers. In addition, an estimated
value for mortgage servicing rights not recorded under GAAP is estimated and
added to the assets of the mortgage banking profit center. For each of these
adjustments, a corresponding amount is added to or excluded from equity prior to
the proportionate allocation of equity to the profit centers, as previously
described. The amount added to or excluded from equity is net of the estimated
income tax effect.

         SEGMENT PROFIT (LOSS) STATEMENTS AND OTHER INFORMATION The following
tables contain profit (loss) statements for each of the Corporation's reportable
segments for the years ended December 31, 2001, 2000, and 1999 (2000 is
presented on both pages to facilitate its comparison with 2001 and 1999). In
addition to the after-tax performance of profit centers, management of the
Corporation closely monitors the net cost to acquire and maintain deposit
liabilities (as defined elsewhere in this footnote). The net cost to acquire and
maintain deposit liabilities was 1.20%, 1.15%, and 1.13% of average deposit
liabilities outstanding during the years ended December 31, 2001, 2000, and
1999, respectively.

                                       61



<PAGE>

<TABLE>
<CAPTION>

                                                           COMMERCIAL                            INVESTMENT
SEGMENT PROFIT (LOSS) STATEMENTS   MORTGAGE  RESIDENTIAL  REAL ESTATE    CONSUMER    EDUCATION   & MORTGAGE
YEAR ENDED DECEMBER 31, 2001        BANKING        LOANS      LENDING     LENDING      LENDING   SECURITIES
-------------------------------------------------------------------------------------------------------------
<S>                              <C>         <C>          <C>          <C>         <C>          <C>

 Interest income                  $3,257,387  $65,810,100  $39,962,209 $30,359,780  $14,300,051  $17,106,976
 Interest expense                  3,823,851   44,705,517   24,188,333  17,475,196    6,153,219   14,274,353
 Net cost to acquire and
  maintain deposit liabilities       503,629    6,336,321    5,495,949   3,981,966    2,241,482    2,450,646
-------------------------------------------------------------------------------------------------------------
   Net interest income (expense)
     before charge-offs          (1,070,093)   14,768,262   10,277,927   8,902,618    5,905,350      381,977
 Net loan charge-offs
  (recoveries)                             -      (7,563)            -   1,094,829       36,463            -
-------------------------------------------------------------------------------------------------------------
   Net interest income (expense) (1,070,093)   14,775,825   10,277,927   7,807,789    5,868,887      381,977
 Non-interest income              26,888,068            -       38,548   1,689,466       52,590            -
 Non-interest expense             17,085,283    5,405,384    1,328,210   2,703,827      911,555      101,294
-------------------------------------------------------------------------------------------------------------
   Profit (loss) before taxes      8,732,692    9,370,441    8,988,265   6,793,428    5,009,922      280,683
 Income tax expense (benefit)      3,540,234    2,416,789    3,643,842   2,754,056    2,031,023    (857,751)
-------------------------------------------------------------------------------------------------------------
   Segment profit (loss)          $5,192,458   $6,953,652   $5,344,423  $4,039,371   $2,978,899   $1,138,434
-------------------------------------------------------------------------------------------------------------
 BALANCE SHEET INFORMATION
 Dollars in thousands
-------------------------------------------------------------------------------------------------------------
 Average assets                      $85,394     $958,964     $525,031    $378,437     $212,454     $325,935
-------------------------------------------------------------------------------------------------------------
 Total assets at end of period      $101,776     $859,077     $574,208    $384,275     $211,642     $550,770
-------------------------------------------------------------------------------------------------------------

<CAPTION>

                                                   SUPPORT
SEGMENT PROFIT (LOSS) STATEMENTS        OTHER   DEPARTMENT     NON-GAAP
YEAR ENDED DECEMBER 31, 2001         SEGMENTS  ALLOCATIONS  ADJUSTMENTS      CONSOLIDATED
--------------------------------------------------------------------------------------------
<S>                                 <C>        <C>          <C>              <C>



 Interest income                   $408,163                   $327,975 (1)    $171,532,641
 Interest expense                   249,806                (2,539,902)(1)      108,330,373
 Net cost to acquire and
  maintain deposit liabilities       81,359  (21,091,352)                                -
-------------------------------------------------------------------------------------------
   Net interest income (expense)
     before charge-offs              76,998    21,091,352    2,867,877          63,202,268
 Net loan charge-offs
  (recoveries)                            -                    639,662(2)        1,763,391
-------------------------------------------------------------------------------------------
   Net interest income (expense)     76,998    21,091,352    2,228,215          61,438,877
 Non-interest income                285,599    26,748,850  (6,175,815) (3)      49,527,306
 Non-interest expense               512,254    47,840,202  (8,768,536) (3)      67,119,473
-------------------------------------------------------------------------------------------
   Profit (loss) before taxes     (149,657)             -    4,820,936          43,846,710
 Income tax expense (benefit)       (4,515)                  1,874,807          15,398,485
-------------------------------------------------------------------------------------------
   Segment profit (loss)         ($145,142)             -   $2,946,129          28,448,225
-------------------------------------------------------------------------------------------
 BALANCE SHEET INFORMATION
 Dollars in thousands
-------------------------------------------------------------------------------------------
 Average assets                      $7,569             -      ($4,899)(4)      $2,488,884
-------------------------------------------------------------------------------------------
 Total assets at end of period      $42,944                    ($6,982) (4)     $2,717,710
-------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                           COMMERCIAL                            INVESTMENT
SEGMENT PROFIT (LOSS) STATEMENTS   MORTGAGE  RESIDENTIAL  REAL ESTATE    CONSUMER    EDUCATION   & MORTGAGE
YEAR ENDED DECEMBER 31, 2001        BANKING        LOANS      LENDING     LENDING      LENDING   SECURITIES
--------------------------------------------------------------------------------------------------------------
<S>                                <C>       <C>          <C>          <C>          <C>         <C>

 Interest income                      $640,642  $65,906,572  $34,471,809 $26,081,871  $17,129,748  $16,552,193
 Interest expense                    2,092,805   45,748,126   20,929,687  14,991,089    7,730,662   12,878,675
 Net cost to acquire and
   maintain deposit liabilities        384,125    5,062,463    4,771,977   3,421,079    2,173,040    1,854,402
--------------------------------------------------------------------------------------------------------------
   Net interest income (expense)
     before charge-offs            (1,836,288)   15,095,983    8,770,145   7,669,703    7,226,046    1,819,116
 Net loan charge-offs (recoveries)           -       52,920            -     598,249       32,827            -
--------------------------------------------------------------------------------------------------------------
   Net interest income (expense)   (1,836,288)   15,043,063    8,770,145   7,071,454    7,193,219    1,819,116
 Non-interest income                19,735,764            -       52,984   1,614,005      215,988            -
 Non-interest expense               11,794,513    2,972,485    1,245,783   2,364,348      807,099       97,366
--------------------------------------------------------------------------------------------------------------
   Profit (loss) before taxes        6,104,963   12,070,578    7,577,346   6,321,111    6,602,108    1,721,750
 Income tax expense (benefit)        2,474,953    3,705,744    3,071,856   2,562,578    2,676,495    (101,269)
--------------------------------------------------------------------------------------------------------------
   Segment profit (loss)            $3,630,010   $8,364,834   $4,505,490  $3,758,533   $3,925,613   $1,823,019
--------------------------------------------------------------------------------------------------------------
 BALANCE SHEET INFORMATION
 Dollars in thousands
--------------------------------------------------------------------------------------------------------------
 Average assets                        $44,031     $934,451     $457,302    $327,067     $207,454     $264,815
--------------------------------------------------------------------------------------------------------------
 Total assets at end of period         $45,873   $1,015,190     $488,638    $362,561     $205,246     $240,259
--------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                   SUPPORT
SEGMENT PROFIT (LOSS) STATEMENTS        OTHER   DEPARTMENT     NON-GAAP
YEAR ENDED DECEMBER 31, 2001         SEGMENTS  ALLOCATIONS  ADJUSTMENTS      CONSOLIDATED
--------------------------------------------------------------------------------------------
<S>                                 <C>        <C>          <C>              <C>

 Interest income                             -                   $653,353(1)   $161,436,188
 Interest expense                     $363,991                (2,839,113)(1)    101,895,922
 Net cost to acquire and
   maintain deposit liabilities          3,346  (17,670,432)                              -
--------------------------------------------------------------------------------------------
   Net interest income (expense)
     before charge-offs              (367,337)    17,670,432    3,492,466        59,540,266
 Net loan charge-offs (recoveries)           -                    324,784(2)      1,008,780
--------------------------------------------------------------------------------------------
   Net interest income (expense)     (367,337)    17,670,432    3,167,682        58,531,486
 Non-interest income                   (4,546)    22,953,049  (8,934,693)(3)     35,632,550
 Non-interest expense                  294,315    40,623,481  (1,949,058)(3)     58,250,331
--------------------------------------------------------------------------------------------
   Profit (loss) before taxes        (666,198)             -  (3,817,953)        35,913,705
 Income tax expense (benefit)        (218,183)                (1,402,345)        12,769,829
--------------------------------------------------------------------------------------------
   Segment profit (loss)            ($448,015)             - ($2,415,608)       $23,143,876
--------------------------------------------------------------------------------------------
 BALANCE SHEET INFORMATION
 Dollars in thousands
--------------------------------------------------------------------------------------------
 Average assets                           $320             -    ($11,466)(4)     $2,223,974
--------------------------------------------------------------------------------------------
 Total assets at end of period            $633             -     ($5,674)(4)     $2,352,726
--------------------------------------------------------------------------------------------
</TABLE>

(1) Consists principally of interest income and expense adjustments related to
    late charges, implied earnings on custodial and escrow accounts, and
    earnings on bank owned life insurance.
(2) In general, the Corporation records actual loan and real estate charge-off
    (recovery) activity against each profit center for segment reporting
    purposes.
(3) Consists principally of non-GAAP adjustments related to loan origination
    fees and costs, mortgage servicing rights, and loan servicing fees. The
    offsets for the adjustments described in (1), above, are also included in
    non-interest income.
(4) Consists of allowances for loss on loans and real estate and security
    valuation allowances that are disregarded for segment reporting purposes.
    Also includes mortgage servicing rights that are not recorded under GAAP,
    but are recorded for segment reporting purposes.


                                       62
<PAGE>
<TABLE>
<CAPTION>
                                                                 COMMERCIAL                                 INVESTMENT
 SEGMENT PROFIT (LOSS) STATEMENTS      MORTGAGE   RESIDENTIAL   REAL ESTATE      CONSUMER     EDUCATION     & MORTGAGE
 YEAR ENDED DECEMBER 31, 2000           BANKING         LOANS       LENDING       LENDING       LENDING     SECURITIES
----------------------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>           <C>           <C>            <C>
 Interest income                       $640,642   $65,906,572   $34,471,809   $26,081,871   $17,129,748    $16,552,193
 Interest expense                     2,092,805    45,748,126    20,929,687    14,991,089     7,730,662     12,878,675
 Net cost to acquire and maintain
   deposit liabilities                  384,125     5,062,463     4,771,977     3,421,079     2,173,040      1,854,402
----------------------------------------------------------------------------------------------------------------------
   Net interest income (expense)
     before charge-offs             (1,836,288)    15,095,983     8,770,145     7,669,703     7,226,046      1,819,116
 Net loan charge-offs (recoveries)            -        52,920             -       598,249        32,827              -
----------------------------------------------------------------------------------------------------------------------
   Net interest income (expense)    (1,836,288)    15,043,063     8,770,145     7,071,454     7,193,219      1,819,116
 Non-interest income                 19,735,764             -        52,984     1,614,005       215,988              -
 Non-interest expense                11,794,513     2,972,485     1,245,783     2,364,348       807,099         97,366
----------------------------------------------------------------------------------------------------------------------
   Profit (loss) before taxes         6,104,963    12,070,578     7,577,346     6,321,111     6,602,108      1,721,750
 Income tax expense (benefit)         2,474,953     3,705,744     3,071,856     2,562,578     2,676,495      (101,269)
----------------------------------------------------------------------------------------------------------------------
   Segment profit (loss)             $3,630,010    $8,364,834    $4,505,490    $3,758,533    $3,925,613     $1,823,019
----------------------------------------------------------------------------------------------------------------------
 BALANCE SHEET INFORMATION
 Dollars in thousands
----------------------------------------------------------------------------------------------------------------------
 Average assets                         $44,031      $934,451      $457,302      $327,067      $207,454       $264,815
----------------------------------------------------------------------------------------------------------------------
 Total assets at end of period          $45,873    $1,015,190      $488,638      $362,561      $205,246       $240,259
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                        SUPPORT
 SEGMENT PROFIT (LOSS) STATEMENTS         OTHER      DEPARTMENT       NON-GAAP
 YEAR ENDED DECEMBER 31, 2000          SEGMENTS     ALLOCATIONS    ADJUSTMENTS       CONSOLIDATED
-------------------------------------------------------------------------------------------------
<S>                                 <C>            <C>             <C>              <C>
 Interest income                              -                       $653,353 (1)   $161,436,188
 Interest expense                      $363,991                    (2,839,113) (1)    101,895,922
 Net cost to acquire and maintain
   deposit liabilities                    3,346    (17,670,432)                                 -
-------------------------------------------------------------------------------------------------
   Net interest income (expense)
     before charge-offs               (367,337)      17,670,432      3,492,466         59,540,266
 Net loan charge-offs (recoveries)            -                        324,784 (2)      1,008,780
-------------------------------------------------------------------------------------------------
   Net interest income (expense)      (367,337)      17,670,432      3,167,682         58,531,486
 Non-interest income                    (4,546)      22,953,049    (8,934,693) (3)     35,632,550
 Non-interest expense                   294,315      40,623,481    (1,949,058) (3)     58,250,331
-------------------------------------------------------------------------------------------------
   Profit (loss) before taxes         (666,198)               -    (3,817,953)         35,913,705
 Income tax expense (benefit)         (218,183)                    (1,402,345)         12,769,829
-------------------------------------------------------------------------------------------------
   Segment profit (loss)             ($448,015)               -   ($2,415,608)        $23,143,876
-------------------------------------------------------------------------------------------------
 BALANCE SHEET INFORMATION
 Dollars in thousands
-------------------------------------------------------------------------------------------------
 Average assets                            $320               -      ($11,466) (4)     $2,223,974
-------------------------------------------------------------------------------------------------
 Total assets at end of period             $633               -       ($5,674) (4)     $2,352,726
-------------------------------------------------------------------------------------------------
<CAPTION>
                                                                 COMMERCIAL                                 INVESTMENT
 SEGMENT PROFIT (LOSS) STATEMENTS      MORTGAGE   RESIDENTIAL   REAL ESTATE      CONSUMER     EDUCATION     & MORTGAGE
 YEAR ENDED DECEMBER 31, 1999           BANKING         LOANS       LENDING       LENDING       LENDING     SECURITIES
----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>           <C>           <C>           <C>            <C>
 Interest income                     $3,133,892   $47,915,227   $28,001,302   $19,869,080   $14,288,948    $16,274,785
 Interest expense                     3,469,150    29,572,212    15,071,889    10,387,845     6,913,737     12,552,279
 Net cost to acquire and maintain
   deposit liabilities                  438,403     5,556,845     3,757,215     2,593,363     1,958,049      1,646,616
----------------------------------------------------------------------------------------------------------------------
   Net interest income (expense)
     before charge-offs               (773,661)    12,786,170     9,172,197     6,887,872     5,417,162      2,075,890
 Net loan charge-offs (recoveries)            -      (70,508)             -       367,330        26,031              -
----------------------------------------------------------------------------------------------------------------------
   Net interest income (expense)      (773,661)    12,856,678     9,172,197     6,520,542     5,391,131      2,075,890
 Non-interest income                 19,247,738             -        90,903     1,253,961       103,514              -
 Non-interest expense                12,313,093     1,859,878     1,288,957     1,993,125       829,887        111,274
----------------------------------------------------------------------------------------------------------------------
   Profit (loss) before taxes         6,160,984    10,996,800     7,974,144     5,781,378     4,664,758      1,964,616
 Income tax expense (benefit)         2,497,663     3,345,919     3,232,718     2,343,771     1,891,093         17,431
----------------------------------------------------------------------------------------------------------------------
   Segment profit (loss)             $3,663,321    $7,650,881    $4,741,426    $3,437,607    $2,773,665     $1,947,185
----------------------------------------------------------------------------------------------------------------------
 BALANCE SHEET INFORMATION
 Dollars in thousands
----------------------------------------------------------------------------------------------------------------------
 Average assets                         $78,634      $715,142      $372,793      $256,956      $194,008       $279,024
----------------------------------------------------------------------------------------------------------------------
 Total assets at end of period          $41,090      $846,604      $416,192      $286,969      $202,440       $299,767
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                     SUPPORT
 SEGMENT PROFIT (LOSS) STATEMENTS      OTHER      DEPARTMENT       NON-GAAP
 YEAR ENDED DECEMBER 31, 1999       SEGMENTS     ALLOCATIONS    ADJUSTMENTS       CONSOLIDATED
----------------------------------------------------------------------------------------------
<S>                                <C>          <C>             <C>               <C>
 Interest income                           -                       $587,365 (1)   $130,070,598
 Interest expense                   $236,384                    (2,250,103) (1)     75,953,392
 Net cost to acquire and maintain
   deposit liabilities                 4,489    (15,954,980)                                 -
----------------------------------------------------------------------------------------------
   Net interest income (expense)
     before charge-offs            (240,873)      15,954,980      2,837,468         54,117,206
 Net loan charge-offs (recoveries)         -                         64,168 (2)        387,021
----------------------------------------------------------------------------------------------
   Net interest income (expense)   (240,873)      15,954,980      2,773,300         53,730,185
 Non-interest income                 312,958      21,209,088    (7,040,308) (3)     35,177,854
 Non-interest expense                371,693      37,164,068    (1,632,527) (3)     54,299,449
----------------------------------------------------------------------------------------------
   Profit (loss) before taxes      (299,609)               -    (2,634,481)         34,608,590
 Income tax expense (benefit)       (23,536)                    (1,137,679)         12,167,380
----------------------------------------------------------------------------------------------
   Segment profit (loss)          ($276,073)               -   ($1,496,802)        $22,441,210
----------------------------------------------------------------------------------------------
 BALANCE SHEET INFORMATION
 Dollars in thousands
----------------------------------------------------------------------------------------------
 Average assets                         $446               -       ($8,934) (4)     $1,888,069
----------------------------------------------------------------------------------------------
 Total assets at end of period          $308               -       ($8,816) (4)     $2,084,554
----------------------------------------------------------------------------------------------
</TABLE>
(1)  Consists principally of interest income and expense adjustments related to
     late charges, implied earnings on custodial and escrow accounts, and
     earnings on bank owned life insurance.
(2)  In general, the Corporation records actual loan and real estate charge-off
     (recovery) activity against each profit center for segment reporting
     purposes.
(3)  Consists principally of non-GAAP adjustments related to loan origination
     fees and costs, mortgage servicing rights, and loan servicing fees. The
     offsets for the adjustments described in (1), above, are also included in
     non-interest income.
(4)  Consists of allowances for loss on loans and real estate and security
     valuation allowances that are disregarded for segment reporting purposes.
     Also includes mortgage servicing rights that are not recorded under GAAP,
     but are recorded for segment reporting purposes.




                                       63
<PAGE>

NOTE 14--ACQUISITION OF AMERICAN COMMUNITY BANCSHARES, INC.

         On October 31, 2001, the Corporation completed the acquisition of
American Community Bankshares, Inc., ("ACB") the parent company of American
Community Bank, headquartered in Wausau, Wisconsin. As a result of the
acquisition, ACB was merged into the Corporation, with ACB shareholders
exchanging each share of ACB common stock for 4.5 shares of the Corporation's
common stock, or approximately 1.9 million shares. The transaction was tax-free
to ACB shareholders receiving the Corporation's stock. The transaction was
accounted for using the purchase method of accounting in accordance with SFAS
141. The amount of goodwill recorded in connection with this transaction was
$12.5 million. In addition, the Corporation recorded a deposit-based intangible
of $1.9 million in connection with the transaction. The goodwill will not be
amortized, which is in accordance with SFAS 142. The deposit-based intangible
will be amortized using an accelerated method, in accordance with SFAS 142.

         ACB's consolidated net income during the ten-month period ending
October 31, 2001, was $1.3 million, and was $1.5 million and $1.4 million during
the twelve-month periods ending December 31, 2000 and 1999, respectively.

         Following is a summary of the assets acquired and liabilities assumed
in the ACB transaction. The table excludes cash and cash equivalents acquired of
$3.3 million.
<TABLE>
<CAPTION>
ASSETS ACQUIRED AND LIABILITIES ASSUMED                                                                     AMOUNT
------------------------------------------------------------------------------------------------------------------
<S>                                                                                                  <C>
Interest-bearing deposits with banks                                                                    $9,564,108
Investment securities available for sale                                                                28,494,388
Loans held for investment, net                                                                         114,286,918
Federal Home Loan Bank stock                                                                               823,700
Accrued interest receivable, net                                                                           926,253
Office properties and equipment                                                                            975,244
Mortgage servicing rights, net                                                                           1,248,285
Intangible assets                                                                                       14,402,604
Other assets                                                                                               131,492
------------------------------------------------------------------------------------------------------------------
   Total Assets                                                                                        170,852,992
------------------------------------------------------------------------------------------------------------------
Deposit liabilities                                                                                    129,611,777
Federal Home Loan Bank advances                                                                         13,454,000
Advance payments by borrowers for taxes and insurance                                                       86,529
Accrued interest payable                                                                                 1,465,128
Other liabilities                                                                                          611,578
------------------------------------------------------------------------------------------------------------------
   Total liabilities                                                                                   145,229,012
------------------------------------------------------------------------------------------------------------------

      Net assets acquired and liabilities assumed                                                      $25,623,980
==================================================================================================================
</TABLE>

NOTE 15--SUBSEQUENT EVENT

         On January 17, 2002, the Corporation announced an agreement with
another financial institution to purchase three bank offices in Rochester,
Minnesota. The acquisition will include substantially all of the deposits and
loans of the bank offices along with the net book value of related premises and
equipment. At September 30, 2001, the deposit and loan balances were
approximately $125 million and $128 million, respectively. The Corporation has
agreed to pay approximately $27 million for the loans, deposits, and premises
and equipment associated with the Rochester branches. These amounts are subject
to change depending on customer transaction activity between September 30 and
the date of closing. The transaction is subject to approval by the Bank's
regulators and certain other transactional contingencies and currently is
expected to close in the second quarter of 2002.



                                       64
<PAGE>

NOTE 16--PARENT COMPANY ONLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                                                                                 DECEMBER 31
------------------------------------------------------------------------------------------------------------------
CONDENSED STATEMENTS OF FINANCIAL CONDITION:                                                2001              2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>               <C>
Cash in bank                                                                             $17,125           $52,943
Interest-bearing deposits with subsidiary bank                                           573,433         3,120,979
Investment in subsidiary                                                             191,725,269       145,763,550
Other assets                                                                             100,642           248,334
------------------------------------------------------------------------------------------------------------------
  Total assets                                                                      $192,416,469      $149,185,806
==================================================================================================================
Other borrowings                                                                               -        $2,601,542
Other liabilities                                                                        $18,766            34,769
------------------------------------------------------------------------------------------------------------------
  Total liabilities                                                                       18,766         2,636,311
------------------------------------------------------------------------------------------------------------------
Common stock                                                                           2,020,083         1,994,163
Additional paid-in capital                                                            46,607,845        34,540,064
Retained earnings                                                                    141,717,089       122,921,606
Treasury stock, at cost                                                                        -      (15,127,142)
Unearned restricted stock                                                               (87,083)         (142,083)
Non-owner adjustments to equity, net                                                   2,139,769         2,362,887
------------------------------------------------------------------------------------------------------------------
  Total stockholders' equity                                                         192,397,703       146,549,495
------------------------------------------------------------------------------------------------------------------
  Total liabilities and stockholders' equity                                        $192,416,469      $149,185,806
==================================================================================================================
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31
------------------------------------------------------------------------------------------------------------------
CONDENSED STATEMENTS OF OPERATIONS:                                        2001             2000              1999
------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>              <C>               <C>
Other income                                                            $38,989          $40,539           $21,815
Other expense                                                           379,623          750,067           688,173
------------------------------------------------------------------------------------------------------------------
  Loss before income taxes and equity in earnings of                  (340,634)        (709,528)         (666,358)
subsidiary
Income tax benefit                                                      119,222          248,335           233,225
------------------------------------------------------------------------------------------------------------------
  Loss before equity in earnings of subsidiary                        (221,412)        (461,193)         (433,133)
Equity in earnings of subsidiary                                     28,669,637       23,605,069        22,874,343
------------------------------------------------------------------------------------------------------------------
  Net income                                                        $28,448,225      $23,143,876       $22,441,210
==================================================================================================================
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31
------------------------------------------------------------------------------------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS:                                        2001             2000              1999
------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>               <C>
Net income                                                          $28,448,225      $23,143,876       $22,441,210
Equity in earnings of subsidiary                                   (28,669,637)     (23,605,069)      (22,874,343)
Change in income taxes and other accruals and prepaid                   113,110           19,661          (93,025)
------------------------------------------------------------------------------------------------------------------
  Net cash used by operations                                         (108,302)        (441,532)         (526,158)
------------------------------------------------------------------------------------------------------------------
Decrease (increase) in interest-bearing deposits with                 3,782,086      (3,117,730)         3,000,309
subsidiary bank
Dividends received from subsidiary                                    9,900,000       14,600,000        13,500,000
Purchase of net assets of ACB                                      (28,603,959)                -                 -
------------------------------------------------------------------------------------------------------------------
  Net cash (used) provided by investing activities                 (14,921,873)       11,482,270        16,500,309
------------------------------------------------------------------------------------------------------------------
Increase (decrease) in other borrowings                             (2,601,542)      (2,598,458)         2,250,000
Dividends paid to shareholders                                      (8,866,148)      (7,699,035)       (6,287,822)
Purchases of treasury stock                                         (3,213,376)      (1,708,663)      (15,930,336)
Common stock issued for acquisition                                  28,603,793                -                 -
Other, net                                                            1,071,630        1,005,913         3,962,487
------------------------------------------------------------------------------------------------------------------
  Net cash provided (used) by financing activities                   14,994,357     (11,000,243)      (16,005,671)
------------------------------------------------------------------------------------------------------------------
  Net increase (decrease) in cash in bank                              (35,818)           40,495          (31,520)
Cash at beginning of period                                              52,943           12,448            43,968
==================================================================================================================
  Cash in bank at end of period                                         $17,125          $52,943           $12,448
------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       65
<PAGE>

REPORT OF MANAGEMENT

         The management of First Federal Capital Corp has prepared the
accompanying financial statements and is responsible for their integrity and
objectivity. The statements, which include amounts that are based on
management's best estimates and judgements, have been prepared in conformity
with generally accepted accounting principles and are free of material
misstatement. Management also prepared the other information in the annual
report on Form 10-K and is responsible for its accuracy and consistency with the
financial statements.

         The Corporation maintains a system of internal control over financial
reporting, which is designed to provide reasonable assurance to the
Corporation's management and Board of Directors regarding the preparation of
reliable published annual and interim financial statements. The system contains
self-monitoring mechanisms, and actions are taken to correct deficiencies as
they are identified. However, even an effective internal control system, no
matter how well designed, has inherent limitations--including the possibility of
circumvention or overriding of controls--and therefore can provide only
reasonable assurance with respect to financial statement preparation. Further,
because of changes in conditions, internal control system effectiveness may vary
over time.

         The Corporation assessed its internal control system as of December 31,
2001, in relation to criteria for effective internal control over the
preparation of its published annual and interim financial statements described
in "Internal Control--Integrated Framework" issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this assessment,
the Corporation believes that, as of December 31, 2001, its system of internal
control over the preparation of its published annual and interim financial
statements met those criteria.



<TABLE>
<S>                                 <C>                            <C>
/s/Thomas W. Schini                 /s/Jack C. Rusch               /s/Michael W. Dosland
Thomas W. Schini                    Jack C. Rusch                  Michael W. Dosland
Chairman of the Board               President and Chief            Senior Vice President and
                                    Executive Officer              Chief Financial Officer
</TABLE>


REPORT OF INDEPENDENT AUDITORS

We have audited the accompanying consolidated statements of financial condition
of First Federal Capital Corp as of December 31, 2001 and 2000, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of First Federal
Capital Corp at December 31, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.


                                                        /s/ ERNST & YOUNG LLP


Milwaukee, Wisconsin
January 17, 2002



                                       66
<PAGE>

SUPPLEMENTARY DATA

Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
                                                        DEC.     SEPT.      JUNE     MARCH     DEC.    SEPT.     JUNE     MARCH
Dollars in thousands, except for per share amounts      2001      2001      2001      2001     2000     2000     2000      2000
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>       <C>       <C>       <C>      <C>      <C>      <C>       <C>
Interest on loans                                    $35,912   $36,474   $35,741   $35,880  $35,518  $35,146  $33,135   $30,656
Interest on mortgage-backed and related securities     6,163     5,290     6,005     6,602    7,087    6,033    5,548     5,848
Interest and dividends on investments                  1,248       628       851       738      687      647      556       576
-------------------------------------------------------------------------------------------------------------------------------
  Total interest income                               43,323    42,391    42,597    43,221   43,292   41,826   39,239    37,079
-------------------------------------------------------------------------------------------------------------------------------
Interest on deposits                                  20,087    20,911    21,147    21,440   20,933   19,686   17,313    15,656
Interest on borrowings                                 5,955     5,699     5,874     7,219    7,563    7,133    6,926     6,685
-------------------------------------------------------------------------------------------------------------------------------
  Total interest expense                              26,042    26,609    27,021    28,659   28,496   26,819   24,240    22,341
-------------------------------------------------------------------------------------------------------------------------------
  Net interest income                                 17,282    15,782    15,577    14,562   14,796   15,007   14,999    14,738
Provision for loan losses                                578       355       437       394      402      302      112       192
-------------------------------------------------------------------------------------------------------------------------------
  Net interest income after provision                 16,704    15,427    15,140    14,167   14,394   14,704   14,887    14,546
-------------------------------------------------------------------------------------------------------------------------------
Gain on sale of loans                                 12,181     3,959     5,265     3,005    1,129      812      506       290
Gains (losses) from sales of real estate
and investments                                         (25)        38         -         -    1,189        -        -         -
Other non-interest income                              3,870     7,370     6,217     7,686    8,246    8,244    7,961     7,256
-------------------------------------------------------------------------------------------------------------------------------
  Total non-interest income                           16,026    11,329    11,482    10,690   10,565    9,056    8,467     7,545
Total non-interest expense                            18,199    16,439    16,767    15,714   14,991   14,765   14,565    13,930
-------------------------------------------------------------------------------------------------------------------------------
  Income before income taxes                          14,531    10,316     9,855     9,144    9,968    8,996    8,790     8,161
Income tax expense                                     5,071     3,593     3,487     3,247    3,542    3,205    3,124     2,898
-------------------------------------------------------------------------------------------------------------------------------
  Net Income                                          $9,460    $6,724    $6,367    $5,897   $6,426   $5,790   $5,665    $5,262
===============================================================================================================================


===============================================================================================================================
Diluted earnings per share                             $0.49     $0.36     $0.34     $0.32    $0.34    $0.32    $0.30     $0.29
===============================================================================================================================
Dividends paid per share                               $0.12     $0.12     $0.12     $0.11    $0.11    $0.11    $0.11     $0.09
===============================================================================================================================
Stock price at end of period                          $15.70    $14.90    $16.20    $14.00   $14.50   $12.31   $11.06    $11.69
===============================================================================================================================
High stock price during period                        $15.75    $16.35    $16.20    $16.63   $14.88   $12.44   $12.75    $14.63
===============================================================================================================================
Low stock price during period                         $14.27    $14.10    $13.16    $12.75   $10.88   $10.63   $10.13    $10.44
===============================================================================================================================
</TABLE>

ITEM 9--CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         None.





                                       67
<PAGE>

                                    PART III

ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required herein is incorporated by reference from the
sections entitled "Matters to be Voted on at the Annual Meeting--Matter 1.
Election of Directors" and "Executive Officers Who Are Not Directors" in the
Proxy Statement of the Corporation dated March 15, 2002.


ITEM 11--EXECUTIVE COMPENSATION

         The information required herein is incorporated by reference from the
section entitled "Compensation of Executive Officers and Directors" in the Proxy
Statement of the Corporation dated March 15, 2002.


ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required herein is incorporated by reference from the
section entitled "Beneficial Ownership of Common Stock by Certain Beneficial
Owners and Management" in the Proxy Statement of the Corporation dated March 15,
2002.


ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required herein is incorporated by reference from the
section entitled "Indebtedness of Management and Certain Transactions" in the
Proxy Statement of the Corporation dated March 15, 2002.


                                     PART IV

ITEM 14--EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report:

(1) The following financial statements are included herein under Part II, Item
8, "Financial Statements and Supplementary Data":

Consolidated Statements of Condition at December 31, 2001 and 2000

Consolidated Statements of Operations for each of the three years in the period
ended December 31, 2001

Consolidated Statements of Stockholders' Equity for each of the three years in
the period ended December 31, 2001

Consolidated Statements of Cash Flows for each of the three years in the period
ended December 31, 2001

Notes to Audited Consolidated Financial Statements

Report of Management

Report of Independent Auditors

(2) All financial statement schedules required under this item are omitted
because the required information is either not applicable or the required
information is included in the Audited Consolidated Financial Statements or in
the notes thereto.

                                       68
<PAGE>
(3) Exhibit Index.

No.     Exhibit Description

3.1     Articles of Incorporation, as amended (7)
3.2     Bylaws, as amended (6)
4.1     Specimen stock certificate (1)
4.2     Rights Agreement, dated as of January 24, 1995 (5)
10.1    1989 Stock Incentive Plan (1)
10.2    1989 Directors' Stock Option Plan, as amended (2)
10.3    1992 Directors' Stock Option Plan, as amended (7)
10.4    1992 Stock Option and Incentive Plan (3)
10.5    Rock Financial Corp. 1992 Stock Option and Incentive Plan (4)
10.6    1997 Stock Option and Incentive Plan (6)
10.7    Employee Stock Ownership Plan (8)
10.8    Employment agreements, as amended, between the Corporation and the Bank
and the following executive officers:

         a) Jack C. Rusch (8)
         b) Thomas W. Schini (7)
         c) Joseph M. Konradt (8)
         d) Brad R. Price (8)
         e) Robert P. Abell (8)
         f) Michael W. Dosland (8)
         g) Milne J. Duncan (8)

10.9    First Federal of La Crosse Directors' Deferred Compensation Plan (1)
10.10   First Federal of La Crosse Annual Incentive Bonus Plan (1)
10.11   First Federal of La Crosse Incentive Bonus Plan for Group Life
          Insurance (1)
10.12   First Federal of Madison Deferred Compensation Plan for Directors (1)
11.1    Computation of Earnings Per Share--Reference is made to Note 1 of the
          Corporation's Audited Consolidated Financial Statements, included
          herein under Part II, Item 8, "Financial Statements and Supplementary
          Data"
13.1    2002 President's Message (9)
21.1    Subsidiaries of the Registrant--Reference is made to Part I, Item 1,
          "Business--Subsidiaries"
23.1    Consent of Ernst & Young LLP (8)
99.1    2002 Proxy Statement (8)

(1) Incorporated herein by reference to exhibits filed with the Corporation's
    Form S-1 Registration Statement declared effective by the SEC on September
    8, 1989 (Registration No. 33-98298-01).
(2) Incorporated herein by reference to exhibits filed with the Corporation's
    Annual Report on Form 10-K for the year ended December 31, 1989, filed with
    the SEC on March 30, 1990.
(3) Incorporated herein by reference to the Corporation's Proxy Statement dated
    March 11, 1992.
(4) Incorporated herein by reference to exhibits filed with the Corporation's
    Post-Effective Amendment No. 1 on Form S-8 on Form S-4 Registration
    Statement filed with the SEC on December 26, 1993 (Registration
    No. 33-98298-01).
(5) Incorporated herein by reference to the Corporation's Registration Statement
    on Form 8-A filed with the SEC on January 27, 1995.
(6) Incorporated herein by reference to the exhibits filed with the
    Corporation's Annual Report on Form 10-K for the year ended December 31,
    1997, filed with the SEC on March 20, 1998.
(7) Incorporated herein by reference to exhibits filed with the Corporation's
    Annual Report on Form 10-K for the year ended December 31, 2000, as filed
    with the SEC on March 21, 2001.
(8) Filed herewith.
(9) Filed in paper format pursuant to Rule 101(b) of Registration S-T.

(b) During the fourth quarter of 2001, First Federal Capital Corp filed the
following report on Form 8-K:

         Report filed November 1, 2001. The report included a press release
         announcing that First Federal Capital Corp completed the acquisition of
         American Community Bankshares, Inc.

(c) Refer to item (a)(3) above for all exhibits filed herewith.

(d) Refer to items (a)(1) and (2) above for financial statements required under
this item.








                                       69
<PAGE>

                                   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.

                                           FIRST FEDERAL CAPITAL CORP

February 26, 2002                          By: /s/Jack C. Rusch
                                           Jack C. Rusch
                                           President and Chief Executive Officer

         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/ Thomas W. Schini                                           February 26, 2002
Thomas W. Schini
Chairman of the Board


/s/ Dale A. Nordeen                                            February 26, 2002
Dale A. Nordeen
Vice Chairman of the Board


/s/ Jack C. Rusch                                              February 26, 2002
Jack C. Rusch
President, Chief Executive Officer, and
Director (principal executive officer)


/s/ Marjorie A. Davenport                                      February 26, 2002
Marjorie A. Davenport
Director


/s/ John F. Leinfelder                                         February 26, 2002
John F. Leinfelder
Director


/s/ Richard T. Lommen                                          February 26, 2002
Richard T. Lommen
Director


/s/ Patrick J. Luby                                            February 26, 2002
Patrick J. Luby
Director


/s/ David C. Mebane                                            February 26, 2002
David C. Mebane
Director



                                       70
<PAGE>

/s/ Phillip J. Quillin                                         February 26, 2002
Phillip J. Quillin
Director


/s/ Edwin J. Zagzebski                                         February 26, 2002
Edwin J. Zagzebski
Director


/s/ Michael W. Dosland                                         February 26, 2002
Michael W. Dosland
Senior Vice President and
Chief Financial Officer
(principal financial and
accounting officer)













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