<PAGE>

================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K

               Annual report pursuant to section 13 or 15(d) of
                      the Securities Exchange Act of 1934

                     For the year ended December 31, 2000

                        Commission file number 0-18121

                              -------------------

                               MAF Bancorp, Inc.

             Delaware                               36-3664868
      (State of incorporation)             (IRS Employer identification No.)

        55th Street & Holmes Avenue, Clarendon Hills, Illinois 60514-1500
                        Telephone Number (630) 325-7300

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                               (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 for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. 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. _______

Based upon the closing price of the registrant's common stock as of March 7,
2001, the aggregate market value of the voting stock held by non-affiliates of
the registrant was $513,826,901.*

The number of shares of Common Stock outstanding as of March 7, 2001: 22,855,601

--------------------------------------------------------------------------------

                      Documents Incorporated by Reference

PART III - Portions of the Proxy Statement for the Annual Meeting of
Shareholders to be held on April 25, 2001 are incorporated by reference into
Part III hereof.

* Solely for purposes of this calculation, all executive officers and directors
of the registrant are considered to be affiliates. Also included are shares held
by employee benefit plans where trustees are directors or executive officers of
the registrant.

--------------------------------------------------------------------------------

<PAGE>

                      MAF BANCORP, INC. AND SUBSIDIARIES

                                   FORM 10-K

                                     Index
                                     -----

                                     Part I.

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
Item 1.    Business...........................................................................................    3

Item 2.    Properties.........................................................................................    6

Item 3.    Legal Proceedings..................................................................................    8

Item 4.    Submission of Matters to a vote of Security Holders................................................    8

                                              Part II.

Item 5.    Market for the Registrant's Common Stock and Related Stockholders Matters..........................    8

Item 6.    Selected Financial Data............................................................................    9

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operation...............   11

Item 7A.   Quantatative and Qualitative Disclosures about Market Risk.........................................   54

Item 8.    Financial Statements and Supplementary Data........................................................   58

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosures..............   93

                                              Part III.

Item 10.   Directors and Executive Officers of the Registrant.................................................   93

Item 11.   Executive Compensation.............................................................................   93

Item 12.   Security Ownership of Certain Beneficial Owners and Management.....................................   93

Item 13.   Certain Relationships and Related Transactions.....................................................   93

                                              Part IV.

Item 14.   Exhibits, Financial Statements and Reports on Form 8-K.............................................   93

Signature Page................................................................................................   98
</TABLE>

                                       2
<PAGE>

Item 1.  Business

General

     MAF Bancorp, Inc. ("Company"), was incorporated under the laws of the state
of Delaware in 1989. The Company is a registered savings and loan holding
company primarily engaged in the retail banking business through its
wholly-owned subsidiary, Mid America Bank, fsb ("Bank") and, to a lesser extent,
in the residential real estate development business. With over $5.0 billion in
assets, the Bank is one of the largest financial institutions in the Chicago
metropolitan area.

     The Bank is a consumer-oriented financial institution offering various
financial services to its customers through 27 retail banking offices. The
Bank's market area is generally comprised of the western suburbs of Chicago,
including DuPage County, which has the second highest per capita income in
Illinois, as well as the west side of Chicago. It is principally engaged in the
business of attracting deposits from the general public and using such deposits,
along with other borrowings, to make loans secured by real estate, primarily
one- to four-family residential mortgage loans. To a lesser extent, the Bank
also makes multi-family mortgage, residential construction, land acquisition and
development and a variety of consumer loans. The Bank also has a small portfolio
of commercial real estate. Through two wholly-owned subsidiaries, MAF
Developments, Inc. ("MAF Developments") and NW Financial, Inc. ("NW Financial"),
the Company and the Bank are also engaged in real estate development activities,
primarily residential development. Additionally, the Bank operates an insurance
agency, Mid America Insurance Agency, Inc., which provides general insurance
services, a title agency, Centre Point Title Services, Inc., which provides
general title services for the Bank's loan customers, and Mid America Investment
Services, Inc. ("Mid America Investments"), which offers investment services and
securities brokerage primarily to Bank customers through its affiliation with
INVEST, a registered broker-dealer.

     For financial information regarding the Company's two separate lines of
business (retail banking and land development), see "Note 21. Segment
Information" to the audited consolidated financial statements of the Company
included in "Item 8. Financial Statements and Supplementary Data."

     As a federally chartered savings bank, the Bank's deposits are insured up
to the applicable limits by the Federal Deposit Insurance Corporation ("FDIC").
The Bank is a member of the Federal Home Loan Bank ("FHLB") of Chicago, which is
one of the twelve regional banks for federally insured savings institutions
comprising the FHLB system. The Bank is regulated by the Office of Thrift
Supervision ("OTS") and the FDIC. The Bank is further regulated by the Board of
Governors of the Federal Reserve System as to reserves required to be maintained
against deposits and certain other matters.

     The Company's executive offices are located at 55th Street and Holmes
Avenue, Clarendon Hills, Illinois 60514-1500. The telephone number is (630)
325-7300.

Competition

     The Bank is faced with increasing competition in attracting retail customer
business, including deposit accounts and loan originations. Competition for
deposit accounts comes primarily from other savings institutions, commercial
banks, money market mutual funds, and insurance companies (primarily in the form
of annuity products). Factors affecting the attraction of customers include
interest rates offered, convenience of branch locations, ease of business
transactions, and office hours. Competition for loan products comes primarily
from mortgage brokers, other savings institutions, commercial banks and mortgage
banking companies. Factors affecting business include interest rates, terms,
fees, and customer service.

                                       3
<PAGE>

Regulatory Environment

     The Bank is subject to extensive regulation, supervision and examination by
the OTS, as its chartering authority and primary federal regulator, and by the
FDIC, which insures its deposits up to applicable limits. Such regulation and
supervision establish a comprehensive framework of activities in which the Bank
can engage and is designed primarily for the protection of the insurance fund
and depositors. The regulatory structure also gives the regulatory authorities
extensive discretion in connection with their supervisory and enforcement
activities. Any change in such regulation, whether by the OTS, the FDIC or
Congress could have a material impact on the Bank and its operations. See
"Regulation and Supervision - Federal Savings Institution Regulation" for more
information.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

     This report, in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere, contains, and other periodic
reports and press releases of the Company may contain, certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and is including this statement for purposes of
invoking these safe harbor provisions. Forward-looking statements, which are
based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project," "plan," or
similar expressions. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain, and actual results
may differ from those predicted. Factors which could have a material adverse
effect on the operations and future prospects of the Company and the
subsidiaries include, but are not limited to, unexpected changes in interest
rates, general economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the U.S. Treasury
and the Federal Reserve Board, the quality or composition of the Company's loan
or investment portfolios, demand for loan products and secondary mortgage market
conditions, deposit flows, competition, demand for financial services and
residential real estate in the Company's market area, unanticipated problems in
closing pending real estate contracts, delays in real estate development
projects, the possible short-term dilutive effect of potential acquisitions, and
changes in accounting principles, policies and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements. The Company undertakes
no obligation to update forward-looking statements for the effect of future
events.

                                       4
<PAGE>

Executive Officers of the Registrant

     The executive officers of the Company are listed below.

       Name                    Age                    Position(s) Held
       ----                    ---                    ----------------

Allen H. Koranda                54             Chairman of the Board and Chief
                                               Executive Officer of the Company
                                               and the Bank

Kenneth Koranda                 51             President and Director of the
                                               Company and the Bank

David C. Burba                  53             Executive Vice President and
                                               Director of the Company and the
                                               Bank

Jerry A. Weberling              49             Executive Vice President, Chief
                                               Financial Officer and Director of
                                               the Company and the Bank

Gerard J. Buccino               39             Senior Vice President of the
                                               Company and the Bank

William Haider                  49             Senior Vice President of the
                                               Company and the Bank; President
                                               of NW Financial and MAF
                                               Developments

Michael J. Janssen              41             Senior Vice President of the
                                               Company and the Bank

David W. Kohlsaat               46             Senior Vice President of the
                                               Company and the Bank

Thomas Miers                    49             Senior Vice President of the
                                               Company and the Bank

Kenneth Rusdal                  59             Senior Vice President of the
                                               Company and the Bank

Sharon Wheeler                  48             Senior Vice President of the
                                               Company and the Bank

Biographical Information

     Set forth below is certain information with respect to executive officers
of the Company and the Bank. Unless otherwise indicated, the principal
occupation listed for each person below has been their principal occupation for
the past five years.

     Allen H. Koranda has been Chairman of the Board and Chief Executive Officer
of the Company since August, 1989, and of the Bank since May, 1984. He joined
the Bank in 1972. He is also Senior Vice President and a director of Mid America
Investments. Mr. Koranda holds Bachelor of Arts and Juris Doctor degrees from
Northwestern University. Mr. Koranda is the brother of Kenneth Koranda.

     Kenneth Koranda has been President of the Company since August, 1989, and
of the Bank since July 1984. He joined the Bank in 1972. He is also Chairman of
Mid America Investments. Mr. Koranda holds a Bachelor of Arts degree from
Stanford University and a Juris Doctor degree from Northwestern University. Mr.
Koranda is the brother of Allen Koranda.

     David C. Burba joined the Company as Executive Vice President on January 1,
1999 in conjunction with the acquisition of Westco. He had previously served as
Chairman of the Board and President of

                                       5
<PAGE>

Westco since 1992 and President of First Federal Savings and Loan of Westchester
since 1978. Mr. Burba holds a Bachelor of Arts degree from Carthage College.

     Jerry A. Weberling has been Executive Vice President and Chief Financial
Officer of the Company and the Bank since July 1993. He joined the Bank in 1984.
He is a certified public accountant. Mr. Weberling holds a Bachelor of Science
degree from Northern Illinois University.

     Gerard J. Buccino has been Senior Vice President - Risk Management of the
Company and the Bank since July 2000. Prior to that he was Senior Vice President
and Controller of the Company and the Bank since July 1996. He was First Vice
President and Controller of the Company and the Bank from July 1993 to July
1996. He joined the Bank in 1990. He is a certified public accountant. Mr.
Buccino holds a Bachelor of Science degree from Marquette University and a
Master of Business Administration degree from the University of Chicago Graduate
School of Business.

     William Haider has been Senior Vice President of the Company and the Bank
since July 1996. Prior to that he was Vice President of the Company since April
1993. He joined the Bank in 1984. He is President of MAF Developments and NW
Financial, managing the real estate development activities of the Company. Mr.
Haider holds a Bachelor of Science degree from Southern Illinois University.

     Michael J. Janssen has been Senior Vice President - Investor Relations and
Taxation of the Company and the Bank since July 1996. Prior to that he was First
Vice President - Investor Relations and Taxation of the Company and the Bank
from July 1993 to July 1996. He joined the Bank in 1989. He is a certified
public accountant. Mr. Janssen holds a Bachelor of Business Administration
degree from the University of Notre Dame, and a Master of Science in Taxation
degree from DePaul University.

     David W. Kohlsaat has been Senior Vice President - Administration since
July 1996. Prior to that he was First Vice President - Administration of the
Company from July 1993 to July 1996, and is responsible for retail deposit
administration and human resources. He joined the Bank in 1976. Mr. Kohlsaat
holds a Bachelor of Science degree from Southern Methodist University.

     Thomas Miers has been Senior Vice President of the Company since April 1993
and Senior Vice President-Retail Banking of the Bank since January 1992. He
joined the Bank in 1979. Mr. Miers holds a Bachelor of Science degree from
George Williams College.

     Kenneth Rusdal has been Senior Vice President of the Company since April
1993 and Senior Vice President-Operations and Information Systems since January
1992. He joined the Bank in 1987.

     Sharon Wheeler has been Senior Vice President of the Company since April
1993 and has been Senior Vice President - Residential Lending of the Bank since
July 1986. She joined the Bank in 1971.

     Employees

     The Bank employs a total of 1,035 full time equivalent employees as of
December 31, 2000. Management considers its relationship with its employees to
be excellent.

Item 2.   Properties

     The Company's business is conducted through 27 retail banking offices,
including the Company's executive office location in Clarendon Hills, Illinois,
and a 30,000 square foot loan processing and servicing center located in
Naperville, Illinois, which the Bank leases. The Bank has its own data
processing equipment. The data processing equipment primarily consists of
mainframe hardware, network servers, personal computers and ATMs. At December
31, 2000, the data processing equipment owned has a net book value of $4.5
million.

                                       6
<PAGE>

     The following table sets forth information regarding the executive office
and the Bank's 27 branches. At December 31, 2000, the net book value of premises
and related equipment was $48.9 million.

<TABLE>
<CAPTION>
                                                                                  Net Book Value
                                         Date Leased   Date Lease     % of Total    December 31,
              Location                  or Acquired      Expires       Deposits         2000
              --------                  -----------      -------       --------         ----
                                                        (Dollars in thousands)
     <S>                                <C>            <C>             <C>        <C>
     Executive and Home Office
     55th Street and Holmes Avenue
     Clarendon Hills, Illinois             1975/1986       owned           8.23%         $ 4,484
     Branches
     Berwyn, Illinois
     6620 West Ogden Avenue                     1996       owned           1.04            1,386
     6650 West Cermak Road                      1996       owned           2.84              361
     Broadview, Illinois
     800 Broadview Village Square               1997        2012            .13              173
     Burbank, Illinois
     4900 West 87th Street                      2000       owned           1.55              859
     Chicago, Illinois
     2300 North Western Avenue                  1996       owned           4.34            1,654
     3844 West Belmont Avenue                   1996       owned           9.91              310
     6333 North Milwaukee Avenue                1996        2006           4.71                2
     5075 South Archer Avenue                   1996       owned           8.12            2,689
     Cicero, Illinois
     5900/5847 West Cermak Road            1939/1978       owned           9.38            1,436
     4830 West Cermak Road                      1970       owned           1.46              434
     Downers Grove, Illinois
     7351 South Lemont Road                     1997       owned(2)         .97              709
     LaGrange Park, Illinois
     1921 East 31st Street                      1981       owned           3.52            1,099
     Naperville, Illinois
     1001 South Washington                      1974       owned           6.29            1,829
     9 East Ogden Avenue                        1982       owned           1.97            1,186
     1308 South Naper Boulevard                 1987       owned           2.80            1,400
     3135 Book Road                             1997       owned           1.68            1,711
     Norridge, Illinois
     4100 North Harlem Avenue                   1996        2001            .96                8
     4350 North Harlem Avenue                   1998       owned(1)        5.67            2,236
     6401 North Harlem Avenue                   1999        2004           1.14                7
     Riverside, Illinois
     40 East Burlington                         1977       owned           3.49              822
     St. Charles, Illinois
     2600 East Main Street                      1979       owned           2.51            1,949
     Tinley Park, Illinois
     7151 West 159th Street                     2000       owned           1.80            1,296
</TABLE>

                                                    table continued on next page

                                       7
<PAGE>

     continued


<TABLE>
<CAPTION>
                                                                                             Net Book Value
                                              Date Leased    Date Lease        % of Total     December 31,
              Location                        or Acquired      Expires          Deposits          2000
              --------                        -----------    ----------        ----------    --------------
                                                                (Dollars in thousands)
     <S>                                      <C>            <C>               <C>           <C>
     Westchester, Illinois
     2121 South Mannheim Road/                    1998           owned             8.02             2,630
     10551 West Cermak Road

     Western Springs, Illinois
     40 West 47th Street                          1978           owned             2.90               780

     Wheaton, Illinois
     250 East Roosevelt Road                      1977           owned             2.94               776
     161 Danada Square East                       1988            2008             1.63               214
     Other fixed assets                                                               -            16,464
                                                                                -------           -------
        Total                                                                    100.00%          $48,904
                                                                                =======           =======
</TABLE>
     --------------------------------
     (1) Land lease expires in 2006.
     (2) Land lease expires in 2007.

Item 3.  Legal Proceedings

     As of December 31, 2000, there are no outstanding legal proceedings against
the Company. There are various actions pending against the Bank but, in the
opinion of management, these actions are unlikely, individually or in the
aggregate, to have a material adverse effect on the Company's financial
statements.

Item 4.  Submission of Matters to a Vote of Security Holders    None.


                                    PART II

Item 5.  Market for the Registrant's Common Stock and Related Stockholders
Matters

     The Company's common stock trades on the Nasdaq Stock Market under the
symbol "MAFB." As of March 7, 2001, the Company had 1,891 shareholders of
record. The table below shows the reported high and low sales prices of the
common stock during the periods indicated as well as the period end closing
sales prices.

<TABLE>
<CAPTION>
                             December 31, 2000                          December 31, 1999
                   -----------------------------------          ---------------------------------------
                    High     Low     Close    Dividend          High        Low       Close    Dividend
                   ------   ------   ------   --------          -----       ---       -----    --------
<S>                <C>      <C>       <C>        <C>             <C>        <C>       <C>      <C>
First Quarter      $ 21.00   15.50    16.19      .09             27.50      21.75      22.25     .07
Second Quarter       19.94   15.50    18.19      .10             25.13      21.50      24.25     .09
Third Quarter        25.00   17.88    24.88      .10             24.31      18.88      19.88     .09
Fourth Quarter       30.00   20.50    28.44      .10             23.69      19.88      20.94     .09
</TABLE>

     The Company declared $0.39 per share in dividends during the year ended
December 31, 2000, and $0.34 per share in dividends for the year ended December
31, 1999. The Company's ability to pay cash dividends primarily depends on cash
dividends received from the Bank. Dividend payments from the Bank are subject to
various regulatory restrictions. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations-Regulation and
Supervision - Federal Savings Institution Regulation - Limitation on Capital
Distributions."

                                       8

<PAGE>

Item 6.   Selected Financial Data

The following table sets forth certain summary consolidated financial data at or
for the periods indicated. This information should be read in conjunction with
the Consolidated Financial Statements and notes thereto included herein. See
"Item 8. Financial Statements and Supplementary Data."


<TABLE>
<CAPTION>
                                                                            December 31,
                                            -------------------------------------------------------------------------
                                               2000             1999            1998           1997           1996
                                               ----             ----            ----           ----           ----
                                                            (Dollars in thousands, except per share data)
<S>                                         <C>               <C>            <C>            <C>             <C>
Selected Financial Data:
   Total assets                             $ 5,195,588       4,658,065      4,121,087      3,457,664       3,230,341
   Loans receivable, net                      4,328,114       3,884,569      3,319,076      2,707,127       2,430,113
   Mortgage-backed securities                   104,385         133,954        183,603        283,008         359,587
   Interest-bearing deposits                     53,392          51,306         24,564         57,197          55,285
   Federal funds sold                           139,268          35,013         79,140         50,000          24,700
   Investment securities                        271,902         281,129        260,945        177,803         171,818
   Real estate held for development
     or sale                                     12,718          15,889         25,134         31,197          28,112
   Deposits                                   2,974,213       2,699,242      2,656,872      2,337,013       2,262,226
   Borrowed funds                             1,728,900       1,526,363      1,034,500        770,013         632,897
   Subordinated capital notes, net                    -               -              -         26,779          26,709
   Stockholders' equity                         387,729         352,921        344,996        263,411         250,625
   Book value per share                           16.78           14.76          13.81          11.70           10.62
   Tangible book value per share (1)              13.80           12.20          11.32          10.31            9.16

<CAPTION>
                                                                                                         Six Months Ended
                                                                Year Ended December 31,                    December 31,
                                            ---------------------------------------------------------
                                                 2000           1999            1998           1997           1996
                                            -----------       ---------      ---------      ---------       ---------
                                                           (Dollars in thousands, except per share data)
<S>                                         <C>               <C>            <C>            <C>             <C>
Selected Operating Data:
Interest income                             $   343,103         285,092        247,263        238,987         112,827
 Interest expense                               217,173         168,401        150,575        145,216          68,631
                                            -----------       ---------      ---------      ---------       ---------
   Net interest income                          125,930         116,691         96,688         93,771          44,196
Provision for loan losses                         1,500           1,100            800          1,150             700
                                            -----------       ---------      ---------      ---------       ---------
   Net interest income after provision
    for loan losses                             124,430         115,591         95,888         92,621          43,496
Non-interest income:
   Gain (loss) on sale of loans receivable
    and mortgage-backed securities                  408           2,583          3,204            432             (32)
   Gain on sale of investment securities            256           1,776            816            404             251
   Gain on sale of loan servicing rights          4,442               -              -              -               -
   Income from real estate operations             9,536           9,630          4,517          6,876           4,133
   Deposit account service charges               12,715          10,200          8,626          7,217           3,219
   Loan servicing fee income                      1,686           1,761          1,400          2,278           1,249
   Recovery (impairment) of mortgage
    servicing rights                                  -             900         (1,269)             -               -
   Other                                          8,400           7,994          8,256          5,438           3,139
                                            -----------       ---------      ---------      ---------       ---------
    Total non-interest income                    37,443          34,844         25,550         22,645          11,959
Non-interest expense:
   Compensation and benefits                     41,197          37,845         34,494         30,472          14,503
   Office occupancy and equipment                 8,124           7,274          6,645          6,203           2,652
   Federal deposit insurance premiums               604           1,585          1,438          1,468           2,338
   Special SAIF assessment                            -               -              -              -          14,216
   Other                                         23,078          20,976         16,366         16,468           7,369
                                            -----------       ---------      ---------      ---------       ---------
    Total non-interest expense                   73,003          67,680         58,943         54,611          41,078
                                            -----------       ---------      ---------      ---------       ---------
    Income before income taxes
      and extraordinary items                    88,870          82,755         62,495         60,655          14,377
Income taxes                                     32,311          31,210         23,793         22,707           5,602
                                            -----------       ---------      ---------      ---------       ---------
    Income before extraordinary items            56,559          51,545         38,702         37,948           8,775
Extraordinary items (2)                               -               -           (456)             -               -
                                            -----------       ---------      ---------      ---------       ---------
    Net income                              $    56,559          51,545         38,246         37,948           8,775
                                            ===========       =========      =========      =========       =========

Basic earnings per share                    $      2.43            2.13           1.70           1.64             .37
                                            ===========       =========      =========      =========       =========
Diluted earnings per share                  $      2.40            2.07           1.65           1.59             .36
                                            ===========       =========      =========      =========       =========
</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                                                              Six Months Ended
                                                                    Year Ended December 31,                     December 31,
                                                     ------------------------------------------------------
                                                       2000           1999            1998           1997          1996/(3)/
                                                     -------        ---------      ---------      ---------   ----------------
                                                                  (Dollars in thousands, except per share data)
<S>                                                  <C>            <C>            <C>            <C>         <C>
Selected Financial Ratios and
   Other Data:
Return on average assets                                1.14%          1.20%           1.07%          1.14%          1.11%/(4)/
Return on average equity                               15.57          14.98           13.87          14.69          14.18/(4)/
Average stockholders' equity
  to average assets                                     7.34           8.03            7.73           7.79           7.80
Stockholders' equity to total assets                    7.46           7.58            8.37           7.62           7.76
Tangible and core capital to
  total assets (Bank only)                              6.32           6.32            6.67           6.88           6.96
Risk-based capital ratio (Bank only)                   11.98          12.32           13.42          14.34          15.05
Interest rate spread during period                      2.30           2.52            2.47           2.62           2.64
Net yield on average interest-earning assets            2.68           2.88            2.85           2.98           2.96
Average interest-earning assets to average
  interest-bearing liabilities                        108.10         108.56          108.62         107.99         107.98
Non-interest expense to average assets                  1.48           1.58            1.65           1.65           1.70/(4)/
Non-interest expense to average assets
  and average loans serviced for others                 1.22           1.25            1.28           1.26           1.27/(4)/
Efficiency ratio                                       44.56          45.19           48.54          47.07          47.79/(4)/
Ratio of earnings to fixed charges:
  Including interest on deposits                        1.41x          1.48x           1.41x          1.41x          1.41x/(4)/
  Excluding interest on deposits                        1.86x          2.18x           2.11x          2.26x          2.35x/(4)/
Non-performing loans to total loans                      .39%           .40             .43            .39            .55
Non-performing assets to total assets                    .36            .50             .54            .32            .46
Cumulative one-year gap                                (5.18)        (11.47)          (4.23)          (.80)          7.50
Number of deposit accounts                           339,340        314,396         305,411        275,055        259,041
Mortgage loans serviced for others                $  785,350      1,226,874       1,065,126        997,204      1,045,740
Loan originations                                  1,484,220      1,711,337       1,754,009      1,091,824        469,452
Full-service customer service facilities                  27             25              24             22             20

Stock Price and Dividend Information:

High                                              $    30.00          27.50           29.25          24.46          15.67
Low                                                    15.50          18.88           18.75          14.78           9.89
Close                                                  28.44          20.94           26.50          23.58          15.45

Cash dividends declared per share                        .39            .34            .257            .18            .08
Dividend payout ratio                                  16.05%         15.96%          15.12%         10.98%         21.62%
</TABLE>
_______________________
/(1)/In computing tangible book value per share, the Company excludes goodwill
     and core deposit intangible assets from stockholders' equity.

/(2)/The extraordinary items in the year ended December 31, 1998 represent
     charges for the early extinguishment of debt, net of tax benefits.

/(3)/Ratios for the six months ended December 31, 1996 are annualized. The
     Company changed its year end from June 30 to December 31 in 1996.

/(4)/Excludes the effect of the special SAIF assessment of $14.2 million ($8.7
     million after tax) for the six months ended December 31, 1996. Including
     the impact of the special SAIF assessment, the Company's actual ratios were
     as follows: Return on average assets of .56%; Return on average equity of
     7.12%; Non-interest expense to average assets of 2.60%; Non-interest
     expense to average assets and average loans serviced for others of 1.95%;
     Efficiency ratio of 73.09%; Ratio of earnings to fixed charges including
     interest on deposits of 1.20x; and Ratio of earnings to fixed charges
     excluding interest on deposits of 1.67x.

                                       10
<PAGE>

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

     Overview

     Net income for the Company was $56.6 million, or $2.40 per diluted share
($2.43 per basic share) for the year ended December 31, 2000, an increase of 16%
over the prior year. Net income in 1999 was $51.5 million, or $2.07 per diluted
share ($2.13 per basic share) and $38.2 million, or $1.65 per diluted share
($1.70 per basic share) for the year ended December 31, 1998.

     The growth in earnings in 2000 was attributable to increases in various
core business' of the Bank, as well as the recognition of income from the sale
of mortgage servicing rights. This growth was attained despite a flat to
inverted Treasury yield curve, which hampered the growth rate of the Bank's net
interest income. Highlights for 2000 include:

         .  Marketing initiatives in 2000 resulted in a 41% increase in consumer
            loans, primarily home equity loans, with balances totaling $215.3
            million at December 31, 2000 compared to $152.3 million at
            December 31, 1999.

         .  Deposit account service charges increased 25% to $12.7 million for
            the year ended December 31, 2000. Deposit account fee income
            continues to be one of the Company's strongest revenue growth areas
            and is a result of successful initiatives to grow the Bank's
            transaction account base.

         .  Income from real estate operations contributed $9.5 million to pre-
            tax income, primarily due to $8.7 million of gains from record lot
            sales in the Company's Tallgrass residential project.

         .  The Company's non-interest expense to average assets ratio decreased
            more than 6% year over year. The Company's efficiency ratio improved
            to 44.56% from 45.19% a year ago, and 48.54% for December 31, 1998.

         .  During 2000, the Company sold mortgage servicing rights relative to
            approximately $600.0 million of mortgage loans at a pre-tax profit
            of $4.4 million, or $.11 per diluted share on an after tax basis.
            Historically, the Bank has not been a seller of servicing rights and
            does not currently anticipate further bulk sales, but expects to
            continue to service most of the loans it originates for sale into
            the secondary market. This bulk sale took advantage of aggressive
            pricing for loan servicing rights in the marketplace.

     Recent and anticipated future declines in the targeted federal funds rate
are expected to result in a more favorable interest rate environment during
2001. Although management still expects moderate pressure on the net interest
margin during the first half of 2001, it anticipates a higher trending net
interest margin beginning in the second half of 2001 as a result of current
Federal Reserve Board monetary policy. Based on this interest rate outlook and
with the expected continued strong contribution from the Company's retail
banking business and real estate development operations, the Company is
currently projecting results for 2001 in the range of $2.40-$2.45 per diluted
share, which is consistent with the current consensus analysts' estimate of
$2.42 per diluted share.

                                       11
<PAGE>

Acquisitions and Expansion Activity

     The Company's acquisitions and branch purchases during the past three years
are listed as follows:

<TABLE>
<CAPTION>

                                                                                          Intangibles
Selling Entity          Transaction        Date Completed    Deposits        Loans          Recorded
--------------          -----------       ----------------   --------      ---------    --------------
                                                                         (In thousands)
<S>                     <C>               <C>                <C>        <C>             <C>
M&I Bank, FSB           Branch purchases  April 2000         $ 89,800   $    5,292          $ 12,139
Northern Trust Company  Branch purchase   September 1999       22,200          399             3,057
Westco Bancorp          Acquisition       December 1998       259,900      245,189            33,108
</TABLE>

     As it has in recent years, the Company expects to continue to search for
and evaluate potential acquisition opportunities that will enhance franchise
value and may periodically be presented with opportunities to acquire other
institutions, branches or deposits in the market it serves, or which allow the
Company to expand outside its current primary market areas of DuPage County and
the City of Chicago. Management intends to review acquisition opportunities
across a variety of parameters, including the potential impact on its financial
condition as well as its financial performance in the future. It is anticipated
that future acquisitions, if any, will likely be valued at a premium to book
value, and many times at a premium to current market value. As such, management
anticipates that acquisitions made by the Company may include some book value
per share dilution and earnings per share dilution for the Company's
shareholders depending on the Company's success in integrating the operations of
businesses acquired and the level of cost savings and revenue enhancements that
may be achieved.

Net Interest Income

     Net interest income is the principal source of earnings for the Company,
and consists of interest income on loans receivable and mortgage-backed and
investment securities, offset by interest expense on deposits and borrowed
funds. Net interest income fluctuates due to a variety of reasons, most notably
due to the size of the balance sheet, changes in interest rates, and to a lesser
extent asset quality. The Company seeks to increase net interest income without
materially mismatching maturities of the interest-earning assets it invests in
compared to the interest-bearing liabilities that fund such investments.

     Net interest income before the provision for loan losses was $125.9 million
in 2000, $116.7 million in 1999 and $96.7 million in 1998. The net interest
margin (net interest income divided by average interest-earning assets) for the
same periods was 2.68%, 2.88%, and 2.85%, respectively.

     During 2000, the yield curve was primarily flat, to inverted with short-
term rates increasing throughout most of the year and long-term (10-year) rates
decreasing almost 100 basis points. This yield curve provided decreased net
interest spread on asset growth in 2000, which led to a 20 basis point decline
in the Bank's net interest margin. The rising short-term rates and inverted
yield curve, along with increased competition for retail deposits increased the
cost of funding by 49 basis points in 2000. As the yield curve moved more
inverted throughout 2000, mortgage customers continued to favor adjustable rate
ARM loans, most of which the Bank kept in portfolio, despite tightening spreads
to incremental funding costs. Not until the end of 2000, when long-term rates
rallied quickly, did the Bank begin to see a shift toward long-term fixed rate
mortgages. The Bank originated $1.5 billion in loan volume in 2000, down from
$1.7 billion in 1999. Production in 2000 was 60.6% adjustable, which helped the
Bank grow interest-earning assets. Based on the decline in long-term interest
rates, the Bank expects loan originations to favor fixed-rate loans in 2001,
which will hamper its ability to grow earning assets in 2001.

                                       12
<PAGE>

Rate/Volume Analysis

     The table below describes the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Bank's interest income and interest expense on a
fully taxable equivalent basis during the periods indicated. Information is
provided in each category with respect to (i) changes attributable to changes in
volume (changes in volume multiplied by prior rate), (ii) changes attributable
to changes in rate (changes in rates multiplied by prior volume), and (iii) the
net change. Changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes due
to rate.

<TABLE>
<CAPTION>

                                     Year Ended                    Year Ended                     Year Ended
                              December 31, 2000 vs. 1999   December 31, 1999 vs. 1998      December 31, 1998 vs. 1997
                              --------------------------   -----------------------------  ---------------------------
                                Total        Due To          Total        Due To           Total        Due To
                                        ---------------              ----------------             -----------------
                               Change    Volume   Rate      Change    Volume    Rate      Change    Volume    Rate
                              --------  ------ --------    -------   -------  -------   --------  --------  -------
                                                                  (In thousands)
<S>                         <C>         <C>      <C>       <C>       <C>      <C>        <C>       <C>      <C>
Interest-earning assets:
Loans receivable             $  50,850   43,613   7,237     41,072    50,259   (9,187)    13,550    22,083   (8,533)
Mortgage-backed securities      (1,476)  (2,173)    697     (4,542)   (4,029)    (513)    (8,131)   (6,660)  (1,471)
Investment securities            3,231      579   2,652      2,943     2,951       (8)     2,982     4,231   (1,249)
Interest-bearing deposits          498      384     114       (437)     (358)     (79)    (2,191)   (2,656)     465
Federal funds sold               4,908    4,805     103     (1,215)   (1,227)      12      1,952     1,591      361
                               -------  -------  ------    -------   -------   ------    -------   -------  -------
  Total interest income         58,011   47,208  10,803     37,821    47,596   (9,775)     8,162    18,589  (10,427)
                               -------  -------  ------    -------   -------   ------    -------   -------  -------

Interest-bearing liabilities:
Deposits                        15,844    5,974   9,870      3,877    12,380   (8,503)    (2,793)    1,294   (4,087)
Borrowed funds                  32,928   28,358   4,570     13,949    17,955   (4,006)     8,152    11,244   (3,092)
                               -------  -------  ------    -------    ------ --------   --------  -------- --------
  Total interest expense        48,772   34,332  14,440     17,826    30,335  (12,509)     5,359    12,538   (7,179)
                                ------  -------  ------    -------    ------  -------   --------  -------- --------
Net change                   $   9,239   12,876  (3,637)    19,995    17,261    2,734      2,803     6,051   (3,248)
                                ======  =======  ======    =======    ======  =======   ========  ======== ========
</TABLE>

     Interest income on loans receivable increased $50.9 million in 2000 to
$304.3 million, while increasing $41.1 million in 1999 and $13.6 million in
1998. The increase in interest income on loans receivable over the last three
years is primarily attributable to growth in the Bank's loan portfolio through
loan originations and acquisitions. Average loans receivable increased $599.1
million in 2000, to $4.2 billion, primarily as a result of originated ARM loans
held for investment purposes. Prepayments slowed during 2000 due to trending
higher interest rates during the first six months of 2000. Average loans
receivable increased $702.4 million in 1999, including $245.0 million due to the
acquisition of Westco that closed on December 31, 1998.

     The average yield on loans receivable increased 20 basis points in 2000 to
7.31%, after falling 31 basis points during 1999. The average yield on loans
receivable was 7.42% in 1998. The increase in yield in 2000 is a result of
increases in short-term rates and a shift of loan customers' preference to
adjustable rates loans. Current year ARM originations were consistently higher
than the overall loan portfolio rate. Additionally, due to the expansion of the
Bank's consumer loan portfolio, the overall yield on loans receivable was
enhanced, as the Bank's consumer loans are generally based on prime plus a small
margin.

                                       13
<PAGE>

Average Balance Sheets

The following table sets forth certain information relating to the Company's
consolidated statements of financial condition and reflects the average yield on
assets and average cost of liabilities for the periods indicated. Such yields
and costs are derived by dividing income or expense, on a tax equivalent basis,
by the average balance of assets or liabilities. Average balances are derived
from average daily balances, and include non-performing loans. The yield/cost at
December 31, 2000 includes fees which are considered adjustments to yield.

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                         -------------------------------------------------------------------------------------------
                                                        2000                           1999                        1998
                                         -------------------------------  ------------------------------ ---------------------------
                                                                 Average                         Average                     Average
                                                                 Yield/                          Yield/                       Yield/
                                           Balance     Interest   Cost      Balance   Interest    Cost    Balance    Interest  Cost
                                         ----------    --------  -------  ----------  --------   ------- ----------  -------- ------
                                                                               (Dollars in thousands)
<S>                                      <C>           <C>        <C>     <C>         <C>        <C>     <C>         <C>     <C>
Assets:
Interest-earning assets:
Loans receivable                         $4,164,443     304,349    7.31%  $3,565,375   253,499    7.11%  $2,862,954   212,427  7.42%
Mortgage-backed securities                  118,200       7,957    6.73      151,119     9,433    6.24      215,377    13,975  6.49
Investment securities/(1)/                  274,021      19,782    7.22      265,011    16,551    6.25      217,757    13,608  6.25
Interest-bearing deposits                    33,212       2,459    7.40       27,969     1,961    7.01       33,042     2,398  7.26
Federal funds sold                          115,857       8,704    7.51       51,860     3,796    7.32       68,621     5,011  7.30
                                         ----------     -------           ----------  --------           ----------  --------
  Total interest-earning assets           4,705,733     343,251    7.29    4,061,334   285,240    7.02    3,397,751   247,419  7.28
Non-interest earning assets                 242,499                          222,357                        171,764
                                         ----------                       ----------                     ----------
  Total assets                           $4,948,232                       $4,283,691                     $3,569,515
                                         ==========                       ==========                     ==========

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Deposits                                  2,701,476     115,509    4.28    2,553,732    99,665    3.90    2,247,306    95,788  4.26
Borrowed funds and subordinated debt      1,651,852     101,664    6.15    1,187,262    68,736    5.79      880,872    54,787  6.22
                                         ----------     -------           ----------  --------           ----------  --------
Total interest-bearing liabilities        4,353,328     217,173    4.99    3,740,994   168,401    4.50    3,128,178   150,575  4.81
Non-interest bearing deposits               131,807                          112,760                         92,790
Other liabilities                            99,886                           85,831                         72,713
                                         ----------                       ----------                     ----------
Total liabilities                         4,585,021                        3,939,585                      3,293,681
Stockholders' equity                        363,211                          344,106                        275,834
                                         ----------                       ----------                     ----------
Liabilities and stockholders' equity     $4,948,232                       $4,283,691                     $3,569,515
                                         ==========                       ==========                     ==========

Net interest income/interest rate spread               $126,078    2.30%              $116,839    2.52%              $ 96,844  2.47%
                                                       ========    ====               ========    ====               ========  ====

Net earning assets/net yield on average
   interest-earning assets               $  352,405                2.68%  $  320,340              2.88%  $  269,573            2.85%
                                         ==========                ====   ==========              ====   ==========            ====

Ratio of interest-earning assets to
   interest-bearing liabilities                          108.10%                        108.56%              108.62%
                                                       ========                       ========               ======
<CAPTION>
                                                          At December 31,
                                                               2000
                                                      ---------------------
                                                                     Yield/
                                                        Balance       Cost
                                                      ----------     ------
<S>                                                   <C>            <C>
Assets:
Interest-earning assets:
Loans receivable                                       4,346,372      7.50%
Mortgage-backed securities                               104,385      6.79
Investment securities/(1)/                               271,902      6.96
Interest-bearing deposits                                 53,392      6.30
Federal funds sold                                       139,268      6.42
                                                      ----------
  Total interest-earning assets                        4,915,319      7.41
Non-interest earning assets                              280,269
                                                      ----------
  Total assets                                         5,195,588
                                                      ==========

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Deposits                                               2,833,270      4.55
Borrowed funds and subordinated debt                   1,728,900      6.24
                                                      ----------
Total interest-bearing liabilities                     4,562,170      5.19
Non-interest bearing deposits                            140,943
Other liabilities                                        104,746
                                                      ----------
Total liabilities                                      4,807,859
Stockholders' equity                                     387,729
                                                      ----------
Liabilities and stockholders' equity                   5,195,588
                                                      ==========

Net interest income/interest rate spread

                                                                      2.22%
Net earning assets/net yield on average
   interest-earning  assets                           $  353,149
                                                      ==========
Ratio of interest-earning assets to
   interest-bearing  liabilities                          107.74%
                                                      ==========
</TABLE>

/(1)/ Includes average balances of $81.0 million, $57.7 million, and $39.4
      million stock in Federal Home Loan Bank of Chicago for the years ended
      December 31, 2000, 1999 and 1998, respectively. At December 31, 2000, the
      Bank owned $84.8 million of FHLB stock. Income on a tax equivalent basis
      is computed assuming an effective tax rate of approximately 40%.

                                       14
<PAGE>

     Interest income from mortgage-backed securities decreased $1.5 million in
2000 to $8.0 million, from $9.4 million in 1999, and $14.0 million in 1998. Due
to the ability to originate mortgage loans for its own portfolio, the Bank has
reduced its holdings of mortgage-backed securities generally through normal
amortization and prepayments over the past three years. Average mortgage-backed
securities were $118.2 million in 2000, compared to $151.1 million in 1999 and
$215.4 million in 1998.

     Interest income from investment securities increased $3.2 million in 2000
to $19.6 million, while increasing $3.0 million in 1999 and $3.1 million in
1998. The average balance of investment securities has been steadily rising over
the past two years, to $274.0 million in 2000 from $217.8 million in 1998. The
increase has been primarily in FHLB stock, which increased $33.9 million during
the past two years. The average yield on investment securities increased 97
basis points in 2000, after remaining relatively steady from 1998 to 1999. This
large increase in yield is primarily due to increases in the average yield on
FHLB stock which was 7.5%, 6.8% and 6.6% for the years ended December 31, 2000,
1999 and 1998 respectively.

     Interest income from federal funds sold and interest-bearing deposits
increased $6.4 million in 2000 while decreasing $1.7 million in 1999. The
average balance of liquid investments were $149.1 million, $79.8 million and
$101.7 million in 2000, 1999 and 1998, respectively. These fluctuations were
moving in line with levels of short-term interest rates which declined in 1999
and increased in 2000. The Bank carried higher levels of liquidity in 2000 due
to the larger balance sheet, higher level of short-term interest rates, and
lower volume of mortgage loan originations and purchases.

     The average cost of deposits increased 38 basis points in 2000 compared to
1999, primarily due to upward repricing of maturing certificates of deposit in
2000 and competitive pricing on new certificate of deposit products, as well as
the introduction of a high rate money market product. In 2000, average deposits
increased $147.7 million, $89.8 million of which is attributable to branch
purchases. The average cost of deposits in 1999 declined 36 basis points due to
lower repricing on certificate of deposit accounts and increased checking
balances that carry little or no interest rate. With the recent decreases in
interest rates, as well as the expectation of further reductions in the targeted
federal funds rate, management expects the cost of deposits to peak in the first
quarter of 2001 and trend down for the balance of the year.

     Interest expense on borrowed funds increased $32.9 million to $101.7
million in 2000, while increasing $13.9 million in 1999, compared to 1998.
Average borrowings increased $464.6 million in 2000 and $306.4 million in 1999,
in conjunction with the Bank increasing its loans receivable portfolio. The
Bank's advance portfolio is primarily fixed-rate, some of which are callable at
par by the FHLB of Chicago at their discretion. The average cost of borrowings
increased 36 basis points in 2000 due to maturing lower rate advances replaced
by higher cost borrowings.

     Recent decreases in U. S. Treasury rates and anticipated additional Federal
Reserve Board interest rate decreases, are expected to have a favorable impact
on the Bank's net interest margin in 2001. At December 31, 2000, the Bank has
$735.5 million of prepayment protected long-term fixed-rate mortgage loans in
its portfolio, or 16.9% of total loans at an average interest rate of 6.87%.
During a period of declining interest rates, these loans prepay at a slower pace
and help mitigate the risk of reinvesting prepayments into lower yielding assets
as rates decrease. Management expects additional moderate pressure on the net
interest margin during the first half of 2001, with the net interest margin
stabilizing and trending higher in the second half of 2001. Offsetting the
higher expected net interest margin is the prospect of slower asset growth due
to the expected increase in fixed-rate mortgage loans which the Bank expects to
sell.

                                       15
<PAGE>

Provision for loan losses

     The provision for loan losses is recorded to provide coverage for probable
losses inherent in the Bank's loan portfolio. The Company recorded a provision
for loan losses of $1.5 million in 2000, compared to $1.1 million in 1999, and
$800,000 in 1998. Net chargeoffs were $518,000, $594,000 and $351,000 in 2000,
1999 and 1998, respectively. The allowance for loan losses is based on
management's continuous evaluation of the risk inherent in the Bank's loan
portfolio, including its composition of loans and economic conditions that may
affect the borrowers ability to make payments. In assessing its provision for
loan losses in 2000, management took into account the growth in the loan
portfolio and charge-off experience. At December 31, 2000, the Bank's allowance
for loan losses was $18.3 million, or 109.3% of non-performing loans and .42% of
total loans, compared to $17.3 million, or 110.4% of non-performing loans and
 .44% of total loans at December 31, 1999.

Non-interest income

     Non-interest income is another significant source of revenue for the
Company. It consists of fees earned on products and services, gains and losses
from asset sale activity and income from real estate operations. Although
changes in interest rates can have an impact on revenues from these sources, the
impact is generally not nearly as dramatic as the impact on net interest income.
Non-interest income was $37.4 million, $34.8 million, and $25.6 million for the
years ended December 31, 2000, 1999 and 1998, respectively.

     The table below shows the composition of non-interest income for the
periods indicated.

<TABLE>
<CAPTION>
                                                                                                   Percentage
                                                                Year Ended  December 31,       Increase (Decrease)
                                                             -------------------------------  ---------------------
                                                               2000        1999       1998    2000/1999  1999/1998
                                                             --------    --------   --------  ---------  ----------
                                                                   (In thousands)
<S>                                                          <C>        <C>        <C>       <C>        <C>
Gain (loss) on sale and writedown of:
   Loans receivable                                          $  1,108       2,583      3,204     (57.1)%    (19.4)%
   Mortgage-backed securities                                    (700)          -          -     100.0          -
   Investment securities                                          256       1,776        816     (85.6)     117.6
   Foreclosed real estate                                         258         (57)       212     552.6     (126.9)
   Loan servicing rights                                        4,442           -          -     100.0          -
Income from real estate operations                              9,536       9,630      4,517      (1.0)     113.2
Deposit account service charges                                12,715      10,200      8,626      24.7       18.2
Brokerage commissions                                           2,322       2,566      2,812      (9.5)      (8.7)
Mortgage loan related fees                                      1,738       2,040      2,302     (14.8)     (11.4)
Loan servicing fee income                                       1,686       1,761      1,400      (4.3)      25.8
Recovery (impairment) of mortgage servicing rights                  -         900     (1,269)   (100.0)     170.9
Insurance commissions                                             594         527        456      12.7       15.6
Safe deposit box fees                                             446         405        311      10.1       30.2
Bank owned life insurance                                       1,320       1,210        458       9.1      164.2
Real estate owned operations, net                                (246)       (216)       (43)    (13.9)    (402.3)
Other                                                           1,968       1,519      1,748      29.6      (13.1)
                                                             --------    --------   --------   -------    -------
                                                             $ 37,443      34,844     25,550       7.5%      36.4%
                                                             ========    ========   ========   =======    =======
</TABLE>

     Gain on sale of loans and mortgage-backed securities. The Bank recorded a
net gain on the sale of loans receivable of $1.1 million in 2000, compared to
$2.6 million in 1999, and $3.2 million in 1998. Loan sales were $335.7 million,
$402.9 million, and $437.5 million, in 2000, 1999, and 1998, respectively. The
decrease in gains since 1998 is primarily due to less loan sale volume, as well
as lower loan sale margins, due to generally rising interest rates during the
periods. The Company believes that if the recent trend toward lower interest
rates continues, and consumers continue to favor fixed-rate loan

                                       16
<PAGE>

products, profit from loan sales in 2001 will likely substantially exceed 2000
results. The $700,000 loss on mortgage-backed securities in 2000 is the result
of a sale of a $9.3 million floating rate CMO which was more appropriate for a
positively sloped yield curve environment. The security was sold to redeploy the
proceeds into higher yielding assets.

     Gains and losses on loans receivable include gains and losses from the sale
of loans originated by the Bank and swapped into mortgage-backed securities
prior to sale. The Bank swapped and sold $9.3 million in 2000, compared to $62.6
million in 1999, and $26.6 million in 1998. Sales of swaps versus whole loans to
FNMA or FHLMC are primarily determined by price differences at the time of sale,
and are executed in a manner to maximize profit to the Bank. The Bank has
generally held few of its own mortgage-backed securities in portfolio.

     Gain on sale of investment securities. The Company had net gains on the
sale of investment securities of $256,000 in 2000, compared to $1.8 million in
1999, and $816,000 in 1998. Net gains in these periods have been generated
primarily from the sale of equity securities. During 2000 and 1999 management
elected to sell portions of its equity holdings in light of market conditions,
as well as generate funds for its stock buyback program. The 1998 results
included a $375,000 writedown required on certain equity securities and $76,000
in net gains from the sale of the Bank's 100% beneficial interests in two
special purpose finance subsidiaries.

     Income from real estate operations. Income from real estate operations was
$9.5 million in 2000, $9.6 million in 1999 and $4.5 million in 1998. Continued
strong lot sale activity resulted in strong profits and margins in 2000. The
large increase in 1999 was primarily attributable to the sale of three
commercial parcels. A summary of income from real estate operations is as
follows:

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                            --------------------------------------------------------------
                                                   2000                  1999                  1998
                                            ------------------    ------------------    ------------------
                                              Lots      Income      Lots      Income      Lots      Income
                                              Sold      (Loss)      Sold      (Loss)      Sold      (Loss)
                                              ----    ---------     ----    ---------     ----     -------
                                                                (Dollars in thousands)
         <S>                                 <C>    <C>            <C>    <C>           <C>      <C>
         Tallgrass of Naperville               306   $   8,699       252   $   3,457        20   $     114
         Woodbridge                              -         418         -       5,163        15         153
         Reigate Woods                          10         210        11         509        20         930
         Harmony Grove                           -         104         7         479       184       2,851
         Creekside of Remington                 75         105        42         172        12          29
         Ashbury                                 -           -         -        (150)        -         297
         Clow Creek Farm                         -           -         -           -         6         260
         Woods of Rivermist                      -           -         -           -         2           5
         Fields of Ambria                        -           -         -           -         6        (122)
                                             -----    --------    ------    --------     -----    --------
                                               391   $   9,536       312   $   9,630       265   $   4,517
                                             =====    ========    ======    ========     =====    ========
</TABLE>

     During the current year, 306 lots were sold in the 951-lot Tallgrass of
Naperville development generating $8.7 million in income. Additionally, the
average profit margin per lot increased dramatically in 2000 due to higher lot
sale prices, without any corresponding increase in the estimated cost of each
lot. To date, 578 lots have been sold, and an additional 103 lots are under
contract at December 31, 2000. Management currently expects strong sales from
the Tallgrass subdivision in 2001 that will result in pre-tax income from real
estate development in the range of $8.0-$9.5 million.

                                       17
<PAGE>

     Current year sales in the Woodbridge project represent the sale of two
small commercial parcels. At December 31, 2000, there are two commercial parcels
remaining, which are under contract and expected to be sold at a pre-tax profit
of approximately $500,000. The Reigate Woods subdivision had 10 lot sales in
2000, completing the 85-lot project. The lot sale activity in Creekside of
Remington represents a bulk sale of the final 75 lots of this project.

     The $5.2 million in income in 1999 recorded in the Woodbridge project
reflects the sale of three commercial parcels. All of the residential lots in
Woodbridge had been sold previous to 1999. The 252 lots sold in Tallgrass in
1999 represent the first full year of sales efforts of the project. The Harmony
Grove subdivision was the largest contributor to income from real estate
operations in 1998 and the final lots were sold in 1999. The Tallgrass of
Naperville project sold its first 20 lots in December 1998. The Company
completed four projects in 1998: Clow Creek Farm, Woods of Rivermist, Fields of
Ambria and Ashbury.

     Deposit account service charges. Deposit account service charges increased
$12.7 million in 2000, compared to $10.2 million in 1999, and $8.6 million in
1998. The primary source of these fees is from checking account charges for
insufficient funds, service charges, sustained overdraft fees, debit card usage,
and automated teller machine services. Increases are a function of a higher
number of checking accounts, new fees charged for services, as well as increases
in existing fee schedules. The number of checking accounts maintained by the
Bank was 116,000, 103,000, and 94,000 at December 31, 2000, 1999, and 1998,
respectively.

     Brokerage commissions. Through the Bank's affiliation with INVEST, the Bank
offers non-traditional investment products to its customers such as mutual
funds, annuities and other brokerage services. Commission revenue decreased to
$2.3 million in 2000, compared to $2.6 million in 1999, and $2.8 million in
1998. The trending decline in revenue is attributable to broker turnover in 1999
and early 2000, stock market declines in 2000, as well as continued competition
for brokerage services from discount and internet brokerage companies.

     Mortgage loan related fees. Mortgage loan related fees include late charge
income on loans owned and serviced by the Bank, inspection fee income for
construction loans and loan modification income for refinance transactions.
Income from these sources was $1.7 million in 2000, $2.0 million in 1999, and
$2.3 million in 1998. The primary reason for the decrease in 2000 was a
reduction of loan modification fee income due to the reduction in refinance
activity. The Bank introduced the loan modification option in 1998 to allow a
customer to lower the interest rate and/or modify other loan terms for a fee, in
lieu of processing a new loan. The Bank treats the modified loan as if it was
paid off, and amortizes any remaining deferred fees or expenses as interest
income. With the current trend toward lower interest rates, management
anticipates an increase in loan modification fee income in 2001.

     Loan servicing fee income. Loan servicing fee income is generated from
loans that the Bank has originated and sold, or from purchased servicing, and
includes fees for the collection and remittance of mortgage payments, insurance
policies and real estate taxes. Typically, the Bank receives a servicing fee for
performing the aforementioned services equal to at least 1/4 of 1% for
fixed-rate mortgages and 1/4 to 3/8 of 1% for ARM loans on the outstanding
principal balance of the sold loan being serviced. Loan servicing fee income is
reduced by the amortization of capitalized mortgage servicing rights, and
impairment valuations against recorded values of mortgage servicing rights.

     Loan servicing fee income, including the recovery of prior period valuation
allowances and/or impairment writedowns recognized, was $1.7 million in 2000,
compared to $2.7 million in 1999, and $131,000 in 1998. The following table
shows the components of loan servicing fee income in dollars and as a percentage
of loans serviced for others for the periods indicated:

                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                      ------------------------------------------
                                                                         2000             1999           1998
                                                                      -----------      ----------    -----------
                                                                                 (Dollars in thousands)
<S>                                                                <C>                 <C>           <C>
Gross servicing revenue                                                $    2,724           3,032          2,708
Amortization of mortgage servicing rights                                  (1,038)         (1,271)        (1,308)
Impairment of mortgage servicing rights                                         -               -         (1,269)
Impairment recovery of mortgage servicing rights                                -             900              -
                                                                       ----------         -------      ---------
Loan servicing fee income, net                                         $    1,686           2,661            131
                                                                       ==========       =========      =========

As a percentage of average loans serviced for others:

Gross servicing revenue                                                      .259%           .264%          .265%
Amortization of mortgage servicing rights                                   (.099)          (.111)         (.128)
Impairment of mortgage servicing rights                                         -               -          (.124)
Impairment recovery of mortgage servicing rights                                -            .078              -
                                                                       ----------       ---------      ---------
Loan servicing fee income                                                    .160%           .231%          .013%
                                                                       ==========       =========      =========
Average balance of loans serviced for others                           $1,050,287       1,148,514      1,020,919
Loans serviced for others                                                 785,350       1,226,874      1,065,126
Loan sales for the year                                                   335,665         402,891        437,549
                                                                       ==========       =========      =========
</TABLE>

     The Bank's average balance of loans serviced for others decreased 8.6%
during 2000 primarily due to the third quarter sale of $600.0 million in
servicing rights at a gain of $4.4 million. Historically, the Bank has not been
a seller of bulk servicing rights, but made the sale to take advantage of
aggressive pricing for servicing rights, and as a hedge against lower interest
rates. While the Bank generally intends to grow its servicing portfolio,
management may periodically review opportunities to sell servicing rights in the
future. This transaction also led to lower loan servicing fee income for 2000
compared to 1999. Management expects income in 2001 to remain below 2000
results, despite expected increases in the loan serviced for others portfolio.
During 1999, an increase in interest rates led to a $900,000 recovery of
previously established impairment valuation in 1998 on the loans serviced for
others portfolio due to a lowering of management's estimated prepayment
assumptions. At December 31, 2000, 1999, and 1998, the weighted-average coupon
rate on the loans serviced for others portfolio was 7.55%, 7.28%, and 7.39%,
respectively.

     Income from Bank owned life insurance. The Bank invested $20.0 million in
bank owned life insurance ("BOLI") to help fund the cost of certain employee
benefit plan expenses. The Bank's BOLI investment consists of the purchase of
life insurance on the lives of certain employees from an insurance carrier with
a Standard and Poors rating of AA+. The Company is the sole beneficiary of the
life insurance policies. Income is recorded on this investment based on
increases in the cash surrender value ("CSV") of the life insurance policies. To
the benefit of the Company, this income is free from income taxes. Death
benefits paid to the Company will be revenue in the periods received, if any. In
2000, CSV income recognized on these life insurance policies totaled $1.3
million compared to $1.2 million in 1999.

     Other non-interest income. Other non-interest income includes various
miscellaneous fees charged to customers for money orders, savings bonds,
travelers checks, wire transfers and the preferred return on limited partnership
investments in residential real estate projects. The primary reason for the
increase in other income in 2000 was due to additional limited partnership
investments made in 2000.

                                       19
<PAGE>

Non-interest expense

     Non-interest expense was $73.0 million in 2000, compared to $67.7 million
in 1999, and $58.9 million in 1998. The table below shows the composition of
non-interest expense for the periods indicated.

<TABLE>
<CAPTION>
                                                                                                    Percentage
                                                              Year Ended December 31,          Increase (Decrease)
                                                        ---------------------------------    ----------------------
                                                           2000        1999         1998      2000/1999   1999/1998
                                                        --------     -------      -------    ----------   ---------
                                                                  (In thousands)
<S>                                                  <C>             <C>          <C>        <C>          <C>
Compensation                                            $ 32,181      29,435       26,892         9.3%         9.5%
Employee benefits                                          9,016       8,410        7,602         7.2         10.6
                                                        --------     -------      -------      ------      -------
     Total compensation and benefits                      41,197      37,845       34,494         8.9          9.7
Occupancy expense                                          5,610       4,929        4,649        13.8          6.0
Furniture, fixture and equipment expense                   2,514       2,345        1,996         7.2         17.5
Federal deposit insurance premiums                           604       1,585        1,438       (61.9)        10.2
Advertising and promotion                                  3,569       3,149        2,281        13.3         38.1
Data processing                                            3,034       2,611        2,267        16.2         15.2
Professional fees                                          1,583       1,657        1,166        (4.5)        42.1
Stationery, brochures and supplies                         1,340       1,236        1,153         8.4          7.2
Postage                                                    1,281       1,423        1,148       (10.0)        24.0
Telephone                                                  1,200       1,158          775         3.6         49.4
ATM network fees                                             562         518          546         8.5         (5.1)
OTS assessment fees                                          661         577          512        14.6         12.7
Correspondent banking services                               608         500          432        21.6         15.7
Insurance costs                                              492         485          432         1.4         12.3
Other                                                      4,273       3,778        3,243        13.1         16.5
Amortization of goodwill                                   3,118       2,648        1,336        17.7         98.2
Amortization of core deposit intangible                    1,357       1,236        1,075         9.8         15.0
                                                        --------     -------      -------      ------      -------
                                                        $ 73,003      67,680       58,943         7.9%        14.8%
                                                        ========     =======      =======      ======      =======
</TABLE>

     Compensation expense. Compensation expense was $32.2 million for the year
ended December 31, 2000, compared to $29.4 million for the year ended December
31, 1999, primarily attributable to increased personnel at two acquired branch
operations as well as normal year end salary increases. Compensation expense in
1999 increased 9.5% from 1998 due primarily to increased personnel from the
Westco acquisition.

     Employee benefits expense. Employee benefits expense increased $606,000 to
$9.0 million in 2000. The increase is primarily attributable to increased
medical expense of $385,000 as well as a $120,000 increase in the Bank's
contribution to its ESOP and profit sharing plans. Employee benefits expense
increased $808,000 in 1999 from 1998 due to a $650,000 increase in employer FICA
taxes resulting from increased compensation expense and taxes due to stock
option exercises, $320,000 due to increased contributions to the Bank's ESOP and
profit sharing plans, as well as increased medical insurance costs.

     Occupancy and equipment expense. Occupancy expenses increased $681,000, or
13.8%, during 2000 due to increased operating costs related to current year
branch purchases, as well as higher real estate taxes throughout the Bank's
branch network. Occupancy expenses increased $280,000 between 1999 and 1998
primarily due to the Westco acquisition. Furniture and equipment costs increased
$169,000 in 2000 due to the addition of new branches and remodeled branch
locations. During 1999, furniture and equipment costs increased $349,000
primarily due to increased depreciation from interior renovation work done at
various branch locations.

                                       20
<PAGE>

     FDIC insurance expense. FDIC insurance decreased $981,000 to $604,000 in
2000 primarily due to a 67% decrease in its insurance assessment rate effective
January 1, 2000. The increase of $147,000 in 1999 resulted from an increase in
deposits from the Westco acquisition. The Bank has paid the lowest rate allowed
by regulation for savings institutions over the past three years and expects to
continue to qualify for the most favorable rate. On January 1, 2000, the lowest
rate allowed by regulation decreased to approximately .021% per $100 of deposits
from approximately .064% per $100 of deposits.

     Advertising and promotion expense. Advertising and promotion expenses
increased $420,000 to $3.6 million in 2000. The primary reason for the increase
is higher newspaper and billboard advertising expenses related to the Bank's
efforts in promoting its brand recognition strategy. This advertising initiative
began in May 1999 and is also the primary reason for an $868,000 increase in
advertising and promotion expense in 1999.

     Data processing expense. Data processing expenses increased $423,000 to
$3.0 million in 2000 primarily due to costs related to new and upgraded
equipment. Data processing expenses were $2.6 million in 1999, or 15.2% more
than in 1998, due to costs associated with implementation of the Bank's Year
2000 plan, as well as upgrading the Company's communication network.

     Other non-interest expenses. Other non-interest expense includes costs
related to the day-to-day operations of the Company. Correspondent banking
service charges increased 21.6% to $608,000 in 2000 due to price increases and
higher volumes related to currency and coin services. During 2000, the Company
incurred increased costs for security and its internet banking program.
Professional fees decreased 4.5% from 1999 to 2000 primarily due to legal and
accounting expenses related to the formation of a mortgage real estate
investment trust in connection with a new tax planning initiative in 1999.

     Amortization of core deposit intangible. Amortization of core deposit
intangibles increased $121,000 to $1.4 million in 2000 primarily due to the
branch purchases offset by lower amortization from the Northwestern and Westco
acquisitions. Amortization of core deposit intangibles totaled $1.2 million in
1999, compared to $1.1 million for the year ended December 31, 1998. The Bank is
amortizing its core deposit intangible on an accelerated method over 10 years.

     Amortization of goodwill. Amortization of goodwill increased $470,000 to
$3.1 million in 2000, primarily due to branch purchases. Amortization of
goodwill in 1999 increased $1.3 million from 1998 primarily due to the
acquisition of Westco. The Bank amortizes goodwill over a period not to exceed
25 years using the straight-line method.

Income taxes

     Income tax expense from continuing operations was $32.3 million in 2000,
(effective income tax rate of 36.4%) compared to $31.2 million (effective income
tax rate of 37.7%) in 1999. The lower effective income tax rate in the current
year compared to a year ago was primarily the result of proactive tax planning
involving the transfer of Bank portfolio assets to an operating subsidiary in
the second half of 1999. The effect of having this structure in place for all of
2000 compared to only one-half of 1999 resulted in the lower effective income
tax rate in the current period. Income tax expense from continuing operations
was $23.8 million in 1998, equal to an effective income tax rate of 38.1%.

Extraordinary Item

     During the year ended December 31, 1998, the Company incurred an
extraordinary charge of $456,000, or $.02 per diluted share, net of income tax
benefits of $294,000, related to the early call of its $27.6 million, 8.32%
subordinated capital notes due September 2005. The call provision in the
indenture allowed for early redemption at par plus accrued interest.

                                       21
<PAGE>

Review of Financial Condition

     Total assets increased $537.5 million, or 11.5%, to $5.2 billion at
December 31, 2000, compared to $4.66 billion at December 31, 1999, due primarily
to an increase in loans receivable funded with borrowed funds and to a lesser
extent an increase in deposit balances. Management expects more moderate balance
sheet growth in 2001 compared to 2000, primarily due to recent declines in
long-term interest rates. Management currently expects lower long-term interest
rates to lead to an increase in refinance activity, coupled by a shift in
consumers' preference to fixed rate mortgages which the Bank generally sells in
the secondary market.

     Cash, interest-bearing deposits and federal funds sold increased a combined
$112.5 million to $271 million at December 31, 2000. The increase is due to
deposit inflows experienced at the end of the current year. The excess cash is
expected to be redeployed into investment securities, adjustable-rate mortgages,
or to repay maturing borrowings.

     Investment securities classified as held to maturity increased $634,000 to
$12.6 million as of December 31, 2000. As of January 1, 2001, upon the adoption
of and as permitted under Statement of Financial Accounting Standards ("SFAS")
No. 133, "Accounting for Derivative Instruments and Hedging Activities," the
Bank transferred all of the held to maturity portfolio to available for sale.
The $9.8 million increased investment in FHLB of Chicago stock was required due
to the growth in the Bank's FHLB of Chicago advance portfolio, as well as
current year dividends on FHLB stock being paid in stock.

     Investment securities available for sale decreased $19.6 million to $174.5
million at December 31, 2000. The Company purchased a total of $22.0 million of
investment securities, which consisted primarily of asset-backed securities,
U.S. Agency securities, corporate debt securities and equity securities, offset
by maturities of securities totaling $47.5 million. The Company also sold $2.2
million of equity securities, for gains of $256,000. At December 31, 2000, this
portfolio had net unrealized gains of $2.2 million, compared to net unrealized
losses of $5.5 million at December 31, 1999, reflecting the positive impact of
lower interest rates.

     Mortgage-backed securities classified as held to maturity decreased $14.0
million to $80.3 million as of December 31, 2000. The decrease is primarily due
to amortization and prepayments of $18.7 million offset by purchases of $4.8
million. Subsequent to December 31, 2000, the Bank transferred all of its held
to maturity portfolio to available for sale as allowed under SFAS No. 133.

     Mortgage-backed securities classified as available for sale decreased $15.6
million to $24.1 million at December 31, 2000. The decrease is primarily due to
amortization and prepayments of $6.3 million and the sale of a $9.3 million CMO
security at a loss of $700,000. At December 31, 2000, net unrealized gains in
the available for sale portfolio were $169,000, compared to an unrealized loss
of $550,000 at December 31, 1999.

     Included in total mortgage-backed securities at December 31, 2000 are $51.4
million of CMO's with a weighted average life of 5.4 years that are primarily
collateralized by the Federal National Mortgage Association ("FNMA"), the
Federal Home Loan Mortgage Corporation ("FHLMC") and the Government National
Mortgage Association ("GNMA") mortgage-backed securities, and to a lesser extent
by whole loans.

     Investment securities and mortgage-backed securities acquired and
classified as available-for-sale represent a secondary source of liquidity to
the Bank and the Company. The market value of these securities fluctuates with
interest rate movements. Net interest income in future periods may be adversely
impacted to the extent interest rates increase and these securities are not sold
with the proceeds reinvested at the higher market rates. The decision whether to
sell the available for sale securities or not, is based on a number of factors,
including but not limited to projected funding needs,

                                       22
<PAGE>

reinvestment alternatives and the relative cost of alternative liquidity
sources. Investments and mortgage-backed securities classified as held to
maturity cannot be sold except under extraordinary and very restrictive
circumstances. Generally, these investments are acquired for investment after
taking into account the Bank's cash flow needs, the investment's projected cash
flows, the Bank's overall interest rate and maturity structure of the liability
base used to fund these investment's and the net interest spread obtained.

     Loans receivable increased 11.4%, or $443.5 million to $4.33 billion at
December 31, 2000. The Bank originated $1.5 billion of mortgage loans during the
current year, including $924.6 million of adjustable-rate loans that are
typically held in portfolio. This volume was offset by amortization and
prepayments of $704.4 million, and sales of $335.7 million. The loans sold
represent primarily long-term conforming fixed-rate mortgages, and certain
hybrid ARM loans, which are sold as a means of limiting interest-rate risk.
Loans held for sale increased to $41.1 million at December 31, 2000 compared to
$12.6 million at December 31, 1999 due to lower interest rates increasing the
production of long-term fixed-rate mortgage loans near the end of the year.

     The allowance for loan losses increased $982,000 to $18.3 million as of
December 31, 2000. The increase is due to a provision for loan losses of $1.5
million, offset by net charge-offs of $518,000. As of December 31, 2000, the
Bank's ratio of the allowance for loan losses to total non-performing loans was
109.3%, compared to 110.4% as of December 31, 1999. The ratio of the allowance
for loan losses to total loans decreased to .42% at December 31, 2000, compared
to .44% at December 31, 1999. Management believes that the current allowance for
loan losses is adequate.

     Real estate held for development or sale decreased $3.2 million to $12.7
million at December 31, 2000. A summary of real estate held for development or
sale is as follows:

<TABLE>
<CAPTION>
                                                                     December 31,
                                                              --------------------------
                                                                2000              1999
                                                              --------          --------
                                                                    (In thousands)
       <S>                                                    <C>                 <C>
       Tallgrass of Naperville                                $  8,041            11,720
       Plainfield project                                        4,387                 -
       Woodbridge                                                  290               400
       Reigate Woods                                                 -             2,112
       Creekside of Remington                                        -             1,657
                                                              --------          --------
                                                              $ 12,718            15,889
                                                              ========          ========
</TABLE>

     The decrease in the 951-lot Tallgrass of Naperville project is primarily
due to strong lot sales in the project during the current year. The Company sold
306 lots during 2000 and has an additional 103 lots under contract at December
31, 2000. Land for a new planned development of approximately 365 lots in
Plainfield, Illinois was acquired in 2000 with development expected to begin in
late 2001. The Company entered into a contract for the purchase of an additional
123 acres of land for another residential project of approximately 183 lots in
Sugar Grove, Illinois, with lots sales expected to begin in late 2002.

     The increase in the Woodbridge project is due to the improvements made in
the remaining two commercial parcels in this project. The remaining three acres
are currently expected to be sold during 2001 at approximately $500,000 of
pre-tax profit. The Reigate Woods subdivision decreased due to the sale of the
remaining 10 homesites in 2000. The Harmony Grove project was sold out in 1999.
The final 75 lots of Creekside of Remington were sold in bulk in 2000.

     Premises and equipment increased $6.4 million to $48.9 million at December
31, 2000. The increase is primarily due to purchases of $8.4 million and $2.5
million related to two branch purchases, offset by depreciation and amortization
of $4.4 million. The Company's purchases in 2000 related to data processing
equipment as well as branch facility upgrades and expansion, and branch
purchases.

                                       23
<PAGE>

     Foreclosed real estate decreased to $1.8 million at December 31, 2000,
compared to $7.4 million at December 31, 1999. The decrease is primarily due to
the sale of a $6.1 million commercial office complex in June 2000. As part of
the sale, the buyer assumed a $6.0 million industrial revenue bond previously
assumed by the Bank as part of other borrowings. The Bank continues to maintain
a $6.5 million standby letter of credit against this borrowing.

     Other assets increased $10.8 million to $60.5 million at December 31, 2000.
The increase is primarily attributable to a $3.1 million increase in the cash
surrender value of life insurance policies maintained in conjunction with the
Company's Bank owned life insurance program ("BOLI"), and deferred compensation
plans. The Bank has $35.4 million in cash surrender value of life insurance at
December 31, 2000.

     Intangible assets increased by $7.7 million, to $68.9 million at December
31, 2000. The increase is primarily due to the addition of $12.1 million of
goodwill and core deposit intangibles from the Bank's branch acquisition offset
by amortization of intangibles totaling $4.4 million.

     Deposits increased $275.0 million to $2.97 billion as of December 31, 2000.
The increase is primarily due to the branch acquisition that increased deposits
by $89.8 million, net savings inflows of $76.2 million and interest credited to
deposits of $109.7 million.

     Borrowed funds increased $202.5 million, or 13.3%, to $1.7 billion at
December 31, 2000. The Bank funded its increase in loans receivable primarily
with FHLB of Chicago advances, which increased $215.0 million during the current
year. As of December 31, 2000, the Bank had $1.7 billion of FHLB of Chicago
advances at a weighted average rate and term to maturity of 6.21% and 3.4 years,
respectively, compared to $1.5 billion at a weighted average rate and term to
maturity of 6.01% and 4.2 years, respectively, as of December 31, 1999. Of the
FHLB advances at December 31, 2000, $500.0 million of advances, with a weighted
average term to maturity of 6.7 years, contain various call provisions, with a
weighted average term to call of 2.2 years. The calls are most likely exercised
by the issuer in a period of rising interest rates. The average rate on these
borrowings is 5.61% at December 31, 2000. Reverse repurchase agreements
decreased by $10.0 million due to $39.2 million in maturities offset by new
fundings of $29.2 million.

     Stockholders' equity of the Company grew to $387.7 million at December 31,
2000, compared to $352.9 million at December 31, 1999, an increase of $34.8
million. The increase in stockholders' equity is primarily due to comprehensive
income of $61.7 million, offset by the payment of cash dividends of $9.1 million
and the repurchase of $21.3 million of common stock.

                                       24
<PAGE>

Lending Activities

     General. The Bank's lending activities reflect its focus as a retail
banking institution serving its local market area by concentrating on
residential mortgage lending. The Bank is one of the largest originators of
residential mortgages in its market area. The Bank has traditionally held the
origination of adjustable-rate or shorter-term loans for its portfolio and sold
a portion of its long-term fixed-rate loans directly into the secondary market.
The Bank originates and purchases long-term fixed-rate mortgage loans in
response to customer demand; however, the Bank sells selected conforming
long-term fixed-rate mortgage loans and a limited amount of ARM loans in the
secondary market, primarily to the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). The volume of
current loan originations sold into the secondary market varies over time based
on the Bank's available cash or borrowing capacity, as well as in response to
the Bank's asset/liability management strategy.

     During the year ended December 31, 2000, the Bank originated and purchased
$470.1 million in fixed-rate one- to four-family residential mortgage loans, of
which $360.1 million, or 76.6%, conformed to the requirements for sale to FNMA
and FHLMC and $110.0 million, or 23.4%, did not conform to the requirements of
these agencies. During the year ended December 31, 2000, the Bank sold $335.7
million of these loans in the secondary market. The Bank's "nonconforming" loans
are generally designated as such because the principal loan balance exceeds
$252,700 ($275,000 as of January 1, 2001), which is the FHLMC and FNMA purchase
limit, and not because the loans present increased risk of default to the Bank.
Generally, nonconforming loans are held in the Bank's loan portfolio. Loans with
such excess balances generally carry interest rates from one-eighth to
three-eighths of one percent higher than similar, conforming fixed-rate loans.

                                       25
<PAGE>

       Loan Portfolio Composition. The following table sets forth the
       composition of the Bank's loan and mortgage-backed securities portfolio
       in dollar amounts and in percentages at the dates indicated:

<TABLE>
<CAPTION>
                                                                          December 31,
                                           ----------------------------------------------------------------------------
                                                   2000                       1999                      1998
                                           ---------------------      --------------------      -----------------------
                                                         Percent                    Percent                     Percent
                                                           of                         of                           of
                                              Amount      Total         Amount       Total           Amount      Total
                                           ----------------------------------------------------------------------------
                                                                        (Dollars in thousands)
<S>                                        <C>           <C>         <C>            <C>        <C>            <C>
       Real estate loans:
         One- to four-family:
           Held for investment             $3,807,980     87.50%      $3,479,425    89.05%      $2,877,482    86.07%
           Held for sale                       41,074       .94           12,601      .32           89,406     2.67
         Multi-family                         173,072      3.98          164,878     4.22          137,254     4.11
         Commercial                            41,223       .95           38,817      .99           43,069     1.29
         Construction                          29,566       .67           27,707      .71           28,429     0.85
         Land                                  40,497       .93           28,602      .73           24,765     0.74
                                           ----------   -------       ----------   ------       ----------   ------
              Total real estate loans       4,133,412     94.97        3,752,030    96.02        3,200,405    95.73
                                           ----------   -------       ----------   ------       ----------   ------
       Other loans:
         Consumer loans:
           Equity lines of credit             146,020      3.36           99,099     2.54           91,915     2.75
           Home equity loans                   64,465      1.48           48,397     1.24           42,398     1.27
           Other                                4,783       .11            4,757      .12            6,015     0.18
                                           ----------   -------       ----------   ------       ----------   ------
              Total consumer loans            215,268      4.95          152,253     3.90          140,328     4.20
         Commercial business loans              3,528       .08            3,132      .08            2,356     0.07
                                           ----------   -------       ----------   ------       ----------   ------
              Total other loans               218,796      5.03          155,385     3.98          142,684     4.27
                                           ----------   -------       ----------   ------       ----------   ------
              Total loans receivable        4,352,208    100.00%       3,907,415   100.00%       3,343,089   100.00%
                                                        =======                    ======                    ======

       Less:
         Loans in process                      12,912                     11,893                    10,698
         Unearned discounts, premiums
           and deferred loan fees, net         (7,076)                    (6,323)                   (3,455)
         Allowance for loan losses             18,258                     17,276                    16,770
                                           ----------                 ----------                ----------
       Loans receivable, net               $4,328,114                 $3,884,569                $3,319,076
                                           ==========                 ==========                ==========

       Mortgage-backed securities:
         GNMA held to maturity             $      744                      1,115                     1,782
         FHLMC held to maturity                31,523                     37,804                    53,750
         FHLMC available for sale               2,229                      2,716                     3,976
         FNMA held to maturity                 15,479                     13,385                    17,421
         FNMA available for sale                2,891                      3,711                     6,133
         CMOs held to maturity                 32,555                     41,947                    55,585
         CMOs available for sale               18,964                     33,276                    44,956
                                           ----------                 ----------                ----------
       Total mortgage-backed securities    $  104,385                 $  133,954                $  183,603
                                           ==========                 ==========                ==========

<CAPTION>
                                           ----------------------------------------------
                                                    1997                    1996
                                           ----------------------   ---------------------
                                                          Percent                 Percent
                                                             of                      of
                                                Amount     Total        Amount     Total
                                            -----------  -------    -----------  -------
<S>                                        <C>           <C>        <C>          <C>
       Real estate loans:
          One-to four-family:
           Held for investment              $2,408,393     88.27%   $2,160,525     87.93%
           Held for sale                         6,537      0.24         6,495      0.26
         Multi-family                          105,051      3.85        92,968      3.78
         Commercial                             35,839      1.31        46,313      1.89
         Construction                           17,263      0.63        17,263      0.70
         Land                                   24,425      0.90        25,685      1.05
                                            ----------   -------    ----------    ------
              Total real estate loans        2,597,508     95.20     2,349,249     95.61
                                            ----------   -------    ----------    ------
       Other loans:
         Consumer loans:
           Equity lines of credit               88,106      3.23        86,614      3.53
           Home equity loans                    34,447      1.26        14,251      0.58
           Other                                 5,793       .21         5,009      0.20
                                            ----------   -------    ----------    ------
              Total consumer loans             128,346      4.70       105,874      4.31
         Commercial business loans               2,659      0.10         1,871      0.08
                                            ----------   -------    ----------    ------
              Total other loans                131,005      4.80       107,745      4.39
                                            ----------   -------    ----------    ------
              Total loans receivable         2,728,513    100.00%    2,456,994    100.00%
                                                         =======                  ======

       Less:
         Loans in process                        6,683                   7,620
         Unearned discounts, premiums
           and deferred loan fees, net            (772)                  1,347
         Allowance for loan losses              15,475                  17,914
                                            ----------              ----------
       Loans receivable, net                $2,707,127              $2,430,113
                                            ==========              ==========

       Mortgage-backed  securities:
         GNMA held to maturity                   2,442                   3,248
         FHLMC held to maturity                108,037                 138,963
         FHLMC available for sale                5,706                   7,425
         FNMA held to maturity                  22,796                  29,343
         FNMA available for sale                 9,610                  12,029
         CMOs held to maturity                  82,174                  95,104
         CMOs available for sale                52,243                  73,475
                                            ----------              ----------
       Total mortgage-backed securities     $  283,008              $  359,587
                                            ==========              ==========
</TABLE>

                                       26
<PAGE>

     The following table shows the composition of the Bank's fixed- and
adjustable-rate loan portfolio as well as the Bank's mortgage-backed securities
portfolio as of the dates indicated.

<TABLE>
<CAPTION>
                                                                                   December 31,
                                                  -------------------------------------------------------------------------
                                                          2000                        1999                     1998
                                                  ----------------------    ---------------------    ----------------------
                                                     Amount      Percent       Amount     Percent       Amount      Percent
                                                  -----------    -------    -----------   -------    -----------    -------
                                                                            (Dollars in thousands)
<S>                                               <C>            <C>        <C>           <C>        <C>            <C>
Adjustable-rate loans:
 Real estate:
  One-to four-family                              $ 1,950,183     44.81%    $ 1,614,377    41.33%    $ 1,261,915     37.74%
  Multi-family                                        111,660      2.57         102,112     2.61          77,270      2.32
 Commercial                                            22,175       .51          19,889      .51          19,384       .58
  Construction                                         15,456       .35          27,399      .70          28,121       .84
  Land                                                 24,997       .57          19,220      .48          17,319       .52
                                                  -----------    ------     -----------   ------     -----------    ------
    Total adjustable-rate real estate loans         2,124,471     48.81       1,782,997    45.63       1,404,009     42.00
 Consumer                                             148,005      3.40         100,936     2.59          96,867      2.90
 Commercial business                                    3,434       .08           2,303      .05           1,009       .03
                                                  -----------    ------     -----------   ------     -----------    ------
    Total adjustable-rate loans receivable          2,275,910     52.29       1,886,236    48.27       1,501,885     44.93
                                                  -----------    ------     -----------   ------     -----------    ------
Fixed-rate loans:
 Real estate:
  One- to four-family                               1,857,797     42.69%      1,865,048    47.72       1,615,567     48.33%
  One- to four-family held for sale                    41,074       .94          12,601      .32          89,406      2.67
  Multi-family                                         61,412      1.41          62,766     1.61          59,984      1.79
  Commercial                                           19,048       .44          18,928      .48          23,685       .71
  Construction                                         14,110       .32             308      .01             308       .01
  Land                                                 15,500       .36           9,382      .25           7,446       .22
                                                  -----------    ------     -----------   ------     -----------    ------
    Total fixed-rate real estate loans              2,008,941     46.16       1,969,033    50.39       1,796,396     53.73
 Consumer                                              67,263      1.55          51,317     1.31          43,461      1.30
 Commercial business                                       94         -             829      .03           1,347       .04
                                                  -----------    ------     -----------   ------     -----------    ------
    Total fixed-rate loans receivable               2,076,298     47.71       2,021,179    51.73       1,841,204     55.07
                                                  -----------    ------     -----------   ------     -----------    ------
    Total loans receivable                          4,352,208    100.00%      3,907,415   100.00%      3,343,089    100.00%
                                                                 ======                   ======                    ======
Less:
 Loans in process                                      12,912                    11,893                   10,698
 Unearned discounts, premiums and
  deferred loan fees, net                              (7,076)                   (6,323)                  (3,455)
 Allowance for loan losses                             18,258                    17,276                   16,770
                                                  -----------               -----------              -----------
    Loans receivable, net                         $ 4,328,114               $ 3,884,569              $ 3,319,076
                                                  ===========               ===========              ===========
Mortgage-backed securities:
 Adjustable-rate                                  $    62,853     60.31%    $    78,446    58.68%    $    94,493     51.59%
 Fixed-rate held by the Bank                           41,372     39.69          55,245    41.32          88,686     48.41
                                                  -----------    ------     -----------   ------     -----------    ------
    Total mortgage-backed securities                  104,225    100.00%        133,691   100.00%        183,179    100.00%
                                                                 ======                   ======                    ======
Unamortized premiums                                      160                       263                      424
                                                  -----------               -----------              -----------
    Mortgage-backed securities, net               $   104,385               $   133,954              $   183,603
                                                  ===========               ===========              ===========

Summary:
 Adjustable rate loans:
  Loans receivable                                $ 2,275,910     51.07%    $ 1,886,236    46.67%    $ 1,501,885    42.59%
  Mortgage-backed securities                           62,853      1.41          78,446     1.94          94,493     2.68
                                                  -----------    ------     -----------   ------     -----------   ------
    Total adjustable-rate loans                     2,338,763     52.48       1,964,682    48.61       1,596,378    45.27
 Fixed-rate loans:
  Loans receivable                                  2,076,298     46.59       2,021,179    50.02       1,841,204    52.21
  Mortgage-backed securities                           41,372       .93          55,245     1.37          88,686     2.52
                                                  -----------    ------     -----------   ------     -----------   ------
    Total fixed-rate loans                          2,117,670     47.52       2,076,424    51.39       1,929,890    54.73
                                                  -----------    ------     -----------   ------     -----------   ------
    Total loan portfolio                          $ 4,456,433    100.00%    $ 4,041,106   100.00%    $ 3,526,268   100.00%
                                                  ===========    ======     ===========   ======     ===========   ======
</TABLE>

                                      27

<PAGE>

Loan Maturity

     The following table shows the contractual final maturity of the Bank's loan
portfolio at December 31, 2000. The loan amounts do not reflect scheduled
monthly principal repayment amounts. Principal repayments and prepayments on
mortgage loans totaled $704.4 million, $737.0 million, and $942.1 million, for
the years ended December 31, 2000, 1999 and 1998, respectively.

<TABLE>
<CAPTION>
                                                                    At December 31, 2000
                                   ---------------------------------------------------------------------------------------------
                                               Real Estate Mortgage Loans                          Other loans
                                   -----------------------------------------------    -------------------------------------------
                                    One- to                                                                    Comm-
                                     Four-        Multi-       Comm-      Con-                                 ercial
                                    Family        Family      ercial    struction      Land      Consumer     Business    Total
                                   ---------    ---------    --------  ----------     ------   -----------   ---------   -------
                                                      (In thousands)
Amount due:
<S>                              <C>           <C>            <C>         <C>         <C>         <C>         <C>       <C>
   One year or less              $     2,518       2,075         118      23,213       1,256        6,700       250        36,130
                                 -----------     -------    --------    --------    --------    ---------     -----   -----------
   After one year
     1 year to 2 years                 3,883         720         420       1,349       2,325        8,346     2,244        19,287
     2 years to 3 years               34,432       2,185       5,996       5,004      29,444       11,828       204        89,093
     3 years to 5 years              140,998      12,582       2,282           -          18       30,276       517       186,673
     5 years to 10 years             257,741      27,551       9,229           -         237      157,905       313       452,976
     10 years to 20 years            471,273      67,059      18,488           -       4,081          213         -       561,114
     Over 20 years                 2,897,135      60,900       4,690           -       3,136            -         -     2,965,861
                                 -----------     -------    --------    --------    --------    ---------     -----   -----------
       Total after 1 year          3,805,462     170,997      41,105       6,353      39,241      208,568     3,278     4,275,004
                                 -----------     -------    --------    --------    --------    ---------     -----   -----------
       Total amount due          $ 3,807,980     173,072      41,223      29,566      40,497      215,268     3,528     4,311,134
                                 ===========     =======    ========    ========    ========    =========     =====
Less:
   Loans in process                                                                                                        12,912
   Deferred yield adjustments                                                                                              (7,076)
   Allowance for loan losses                                                                                               18,258
                                                                                                                      -----------
   Total loans receivable, net                                                                                          4,287,040
Mortgage loans held for sale                                                                                               41,074
                                                                                                                      -----------
   Total loans, net                                                                                                   $ 4,328,114
                                                                                                                      ===========
</TABLE>

     The following table sets forth at December 31, 2000 the dollar amount of
loans receivable held for investment due after one year, and whether such loans
have fixed or adjustable interest rates.

                                                  Due after one year
                                       ---------------------------------------
                                         Fixed       Adjustable        Total
                                       ---------     ----------     ----------
                                                   (In thousands)
Real estate loans:
   One- to four-family               $ 1,843,452      1,962,010      3,805,462
   Multi-family                           55,469        115,528        170,997
   Commercial                             17,289         23,816         41,105
   Construction                                -          6,353          6,353
   Land                                   15,229         24,012         39,241
Consumer                                  64,358        144,210        208,568
Commercial business                        2,195          1,083          3,278
                                     -----------    -----------    -----------
   Total loans receivable            $ 1,997,992      2,277,012      4,275,004
                                     ===========    ===========    ===========

                                       28
<PAGE>

     The Bank also offers fixed-rate mortgage loans with terms to maturity of
10, 15, 20 and 30 years and fixed-rate balloon loans that mature after seven
years. The Bank's fixed-rate loan products generally offer a monthly repayment
option and some loans carry a prepayment penalty for the first five years of the
loan. Interest rates charged on fixed-rate loans are competitively priced on a
daily basis based on secondary market prices and market conditions. The Bank
generally originates its fixed-rate and adjustable-rate mortgage loans in a form
consistent with secondary market standards.

     The Bank offers a mortgage loan modification program that allows the
borrower to receive a reduced interest rate, change in term, or a change in loan
program, in lieu of refinancing the original loan. The borrower is charged a fee
that varies based upon the modifications made, including an appraisal fee when
the Bank requires a reappraisal of the collateral. The program has been
advantageous to the Bank during periods of heavy refinance activity such as 1998
and anticipated in 2001, by limiting the disruption to its loan operations, as
well as reducing the costs associated with refinance activity of existing
borrowers.

     The Bank's residential mortgage loans customarily include due-on-sale
clauses giving the Bank the right to declare the loan immediately due and
payable in the event, among other things, the borrower sells or otherwise
disposes of the property subject to the mortgage and the loan is not repaid. The
Bank has enforced due-on-sale clauses in its mortgage contracts for the purpose
of increasing its loan portfolio yield, often through the authorization of
assumptions of existing loans at higher rates of interest and the imposition of
assumption fees. ARM loans may be assumed provided homebuyers meet the Bank's
underwriting standards and the applicable fees are paid.

     Loan applications are reviewed in accordance with the underwriting
standards approved by the Bank's Board of Directors and which generally conform
to FNMA standards. Loans in excess of $1.5 million must be approved by the Loan
Committee of the Board of Directors. In underwriting residential real estate
loans, the Bank evaluates both the borrower's ability to make monthly payments
and the value of the property securing the loan. Potential borrowers are
qualified for ARM loans and fixed-rate loans based on the initial or stated rate
of the loan, except for one-year ARM loans with a loan-to-value ratio in excess
of 70% and a term greater than 15 years, in which case the borrower is qualified
at 2% above the initial note rate.

     Upon receipt of a completed loan application from a prospective borrower,
credit reports are ordered and income, employment and financial information is
verified in accordance with underwriting standards. An appraisal of the real
estate intended to secure the proposed loan is undertaken by a Bank appraiser or
an independent appraiser previously approved by the Bank. It is the Bank's
policy to obtain title insurance on all mortgage loans. Borrowers also must
obtain hazard (including fire) insurance prior to closing. The Bank requires
flood insurance on a property located in special flood hazard areas. Borrowers
are generally required to advance funds on a monthly basis together with each
payment of principal and interest through a mortgage escrow account from which
the Bank makes disbursements for items such as real estate taxes and hazard
insurance premiums as they become due. The Bank has adopted a policy of limiting
the loan-to-value ratio on originated loans and refinanced loans to 97% and
requiring that loans exceeding 80% of the appraised value of the property or its
purchase price, whichever is less, generally be insured by a mortgage insurance
company approved by the FNMA in an amount sufficient to reduce the Bank's
exposure to no greater than the 75% level. The Bank has originated approximately
$45 million in loans with loan-to-value ratios greater than 80% where, based on
certain underwriting criteria, it has charged a higher interest rate and not
required or obtained private mortgage insurance. Despite the benefits of ARM
loans to the Bank's asset/liability management program, they do pose potential
additional risks, primarily because as interest rates rise, the underlying
payment requirements of the borrower rise, thereby increasing the potential risk
of default.

                                       29
<PAGE>

     Construction and Land Lending. The Bank originates loans to finance the
construction of one- to four-family residences, primarily in its market area. At
December 31, 2000, the Bank had $29.6 million of loans to finance the
construction of one- to four-family residences. The Bank also originates loans
for the acquisition and development of unimproved property to be used primarily
for residential purposes in cases where the Bank is to provide the construction
funds to improve the properties. At December 31, 2000, the Bank's construction
and land loans totaled $70.1 million, or 1.6%, of total loans receivable.

     The Bank uses underwriting and construction loan guidelines for financing
primarily individual, owner-occupied houses where qualified contractors are
involved. Construction loans are structured either to be converted to permanent
loans at the end of the construction phase or to be paid off upon receiving
financing from another financial institution. Construction loans are based on
the appraised value of the property, as determined by an independent appraiser,
and an analysis of the potential marketability and profitability of the project.
Construction loans generally have terms of up to 12 months, with extensions as
needed. Loan proceeds are disbursed in increments as construction progresses and
as inspections warrant.

     Land loans include loans to developers for the development of residential
subdivisions in the Bank's market area. At December 31, 2000, the Bank had land
loans to developers totaling $17.8 million. At December 31, 2000, the largest
aggregate amount of land acquisition and development loans to a single developer
amounted to $17.4 million. Loans to developers are generally short-term loans
with terms of three to five years. By policy, the loan-to-value ratio may not
exceed 80% and generally is less than 75%. The majority of such loans are based
on the prime rate, or the London interbank offering rate ("LIBOR"). Loans
generally are made to customers of the Bank and developers with whom the Bank
has had long-standing relationships. The Bank requires an independent appraisal
of the property and feasibility studies may be required to determine the profit
potential of the development project.

     Land loans are also made to local builders for the purchase of improved
lots. At December 31, 2000, the Bank had land loans outstanding to local
builders totaling $11.6 million. Such loans are generally for terms of up to
three years and are generally granted at rates similar to rates quoted for ARM
residential mortgage loans. The loan-to-value ratio on such loans is limited to
75%. Land loans for the purchase of fully improved lots are also made to
individuals. At December 31, 2000, the Bank had land loans to individuals
totaling $11.1 million. Such loans are made for up to 15-year terms with
adjustable or fixed interest rates which are made at the prevailing rates for
one- to four-family residential loans.

     Construction and land development loans afford the Bank the opportunity to
increase the interest rate sensitivity of its loan portfolio and to receive
yields higher than those obtainable on ARM loans secured by existing residential
properties. These higher yields correspond to the higher risks associated with
construction lending. Construction and land development loans involve additional
risks attributable to the fact that loan funds are advanced upon the security of
the project under construction, which is of uncertain value prior to its
completion. Because of the uncertainties inherent in estimating construction
costs as well as the market value of the completed project and the effects of
governmental regulation of real property, it is relatively difficult to evaluate
accurately the total funds required to complete a project and the related
loan-to-value ratio. As a result of the foregoing, construction and land
development lending often involves the disbursement of substantial funds with
repayment dependent, in part, on the success of the ultimate project rather than
the ability of the borrower or guarantor to repay principal and interest. If the
Bank is forced to foreclose on a project prior to or at completion due to a
default, there can be no assurance that the Bank will be able to recover all of
the unpaid balance of, and accrued interest on, the loan as well as related
foreclosure and holding costs. In addition, the Bank may be required to fund
additional amounts to complete the project and may have to hold the property for
an unspecified period of time. The Bank has attempted to address these risks
through its underwriting procedures and its limited amount of construction
lending on multi-family and commercial real estate properties.

                                       30
<PAGE>

     Multi-family Lending. The Bank originates multi-family residential mortgage
loans in its market area. At December 31, 2000, the Bank had multi-family loans
of $173.1 million, including a portfolio of purchased participating interests of
$2.2 million related to low-income housing. Multi-family loans represent 4.0% of
total loans receivable at December 31, 2000. ARM loans represented 64.5% of the
multi-family residential loan portfolio at December 31, 2000. Such loans are
offered with initial fixed-rate periods of one, three, five, seven and ten
years. Multi-family residential mortgage loans are made for terms to maturity of
up to 25 years and carry a loan-to-value ratio not greater than 80%. The Bank
requires a positive net operating income to debt service ratio for loans secured
by multi-family residential property. Loans secured by properties of five or
more units are qualified on the basis of rental income generated by the
property.

     Commercial Real Estate Lending. In connection with the Bank's policy of
maintaining an interest-rate sensitive loan portfolio, the Bank has originated
loans secured by commercial real estate, which generally carry a higher yield
and are made for a shorter term than fixed-rate one- to four-family residential
loans. At December 31, 2000, the Bank had $41.2 million of commercial real
estate loans. The Bank's policy has been to originate additional commercial real
estate loans on a limited basis. Commercial real estate loans are generally
granted in amounts up to 80% of the appraised value of the property, as
determined by an independent appraiser previously approved by the Bank. The
Bank's commercial real estate loans are secured by improved properties located
in the Chicago metropolitan area. The Bank often requires borrowers to provide
their personal guarantees on loans made for commercial real estate.

     Loans secured by commercial real estate properties are generally larger and
involve a greater degree of risk than residential mortgage loans. Because
payments on loans secured by commercial real estate properties are often
dependent on the successful operation or management of the properties, repayment
of such loans may be subject to adverse conditions in the real estate market or
the economy. The Bank seeks to minimize these risks by lending primarily on
existing income-producing properties and generally restricting such loans to
properties in the Chicago area. The Bank analyzes the financial condition of the
borrower and the reliability and predictability of the net income generated by
the security property in determining whether to extend credit. In addition, the
Bank generally requires a net operating income to debt service ratio of at least
1.15 times.

     A loan with an outstanding balance of $5.0 million at December 31, 2000,
represents the Bank's largest single commercial real estate loan to one
borrower. The loan is on a shopping center located in Carol Stream, Illinois and
is current as to the payment of principal and interest at December 31, 2000. At
December 31, 2000, the Bank's ten largest commercial real estate loans totaled
$17.8 million, all of which are current and performing in accordance with their
original terms.

     Other Lending. The Bank's other lending activities consist of consumer
lending, primarily home equity loans, fixed-rate second mortgage loans, and to a
lesser extent, commercial business lending. On December 31, 2000, outstanding
balances on home equity lines represented $146.0 million or 3.4% of the Bank's
total loan portfolio. Home equity lines of credit are generally extended up to
85% of the appraised value of the property, less existing liens, generally at
interest rates which range from the designated prime rate minus .50% to plus
 .50%, based on balances drawn. To a lesser extent, the Bank offers home equity
lines of credit at greater than 85% of the appraised value of the property. The
interest rate on 85%-100% loan-to-value lines of credit is the designated prime
rate plus 1.50% to 3.50%. The Bank uses the same underwriting standards for home
equity lines of credit as it uses for residential mortgage loans. Other home
equity loans consist of $64.5 million of primarily fixed-rate second mortgage
loans that generally amortize over a three to ten year period.

                                       31
<PAGE>


     Environmental Issues. The Bank encounters certain environmental risks in
its lending activities. Under federal and state environmental laws, lenders may
become liable for the costs of cleaning up hazardous materials found on security
property. Although environmental risks are usually associated with industrial
and commercial loans, risks may be substantial for residential lenders like the
Bank if environmental contamination makes the security property unsuitable for
use. This could also have an effect on nearby property values. In accordance
with FNMA and FHLMC guidelines, appraisals for single-family residences on which
the Bank lends include comments on environmental influences. The Bank attempts
to control its risk by training its appraisers and underwriters to be cognizant
of signs indicative of environmental hazards. No assurance can be given,
however, that the values of properties securing loans in the Bank's portfolio
will not be adversely affected by unforeseen environmental risks, although the
Bank is unaware of any environmental issues which would subject it to liability
at this time.

     Originations, Purchases, Sales, Swaps of Mortgage Loans and Mortgage-Backed
Securities. The Bank originates and purchases both ARM and fixed-rate loans. Its
ability to originate loans is dependent upon the relative customer demand for
fixed-rate or ARM loans in the origination and purchase market, which is
affected by the term structure (short-term compared to long-term) of interest
rates as well as the current and expected future level of interest rates. The
Bank sells selected conforming fixed-rate and ARM mortgage loans in the
secondary mortgage market to manage its interest rate risk exposure.
Substantially all of these loans are sold without recourse. These loan sales
also allow the Bank to continue to make loans when deposit flows decline or
funds are not otherwise available for lending. Generally, the loans are sold for
cash or securitized and sold in the secondary mortgage market to investors such
as FNMA and FHLMC, as well as investment banks and other financial institutions.

     The Bank has also exchanged or swapped loans out of its portfolio for
mortgage-backed securities primarily with FNMA and FHLMC. Generally, the
mortgage-backed securities are used to collateralize borrowings and deposits or
are sold in the secondary market to raise additional funds. Swap activity by the
Bank is governed by pricing levels in the secondary mortgage market for whole
mortgage loans versus securitized mortgage loans, as well as the level of rates
for collateralized borrowings. During the current year, the Bank swapped and
sold $9.3 million, compared to $62.6 million for the year ended December 31,
1999.

     All of the mortgage-backed securities and CMOs in the Bank's portfolio are
issued by or have collateral backed by FNMA, FHLMC or GNMA, or are backed with
whole loan collateral and have an investment grade rating. Coupon rates at
December 31, 2000, ranged from 4.76% to 16.25%. At December 31, 2000,
mortgage-backed securities, totaled $104.4 million, or 2.0% of total assets. At
December 31, 2000, the Bank's mortgage-backed securities portfolio had a market
value of $103.2 million.

                                       32
<PAGE>

     The following table sets forth the Bank's originations, purchases, sales,
swaps and principal repayments of loans receivable and mortgage-backed
securities for the periods indicated.

<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                                          ------------------------------------------
                                                             2000             1999          1998
                                                          -----------     ----------     -----------
                                                                         (In thousands)
<S>                                                       <C>             <C>            <C>
Loans receivable:
  Loans originated:
  Adjustable-rate loans originated:
    One- to four-family                                   $   638,097        432,649         213,038
    Multi-family                                               22,005         34,129          18,557
    Commercial                                                  6,585          4,620             906
    Construction                                               25,702         31,366          31,397
    Land                                                       26,195         14,389           8,335
    Commercial business                                           118          1,030             459
    Consumer                                                  135,947         76,252          67,041
                                                          -----------     ----------     -----------
     Total adjustable-rate loans originated                   854,649        594,435         339,733
  Fixed-rate loans originated:
    One- to four-family                                       466,913        712,942       1,012,400
    Multi-family                                                6,014          9,229          13,087
    Commercial                                                  1,982            938           1,015
    Construction                                               14,759              -               -
    Land                                                       15,952         10,589           7,387
    Consumer                                                   50,393         38,579          33,672
                                                          -----------     ----------     -----------
     Total fixed-rate loans originated                        556,013        772,277       1,067,561
                                                          -----------     ----------     -----------
     Total loans originated                                 1,410,662      1,366,712       1,407,294
  Loans purchased:
    Fixed-rate one- to four-family real estate                  3,220         36,521         186,584
    Adjustable-rate one- to four-family real estate            69,669        307,567         159,607
    Other                                                         669            537             524
                                                          -----------     ----------     -----------
     Total loans purchased                                     73,558        344,625         346,715
                                                          -----------     ----------     -----------
     Total loans originated and purchased                   1,484,220      1,711,337       1,754,009
                                                          -----------     ----------     -----------
  Loans acquired through acquisitions                           5,292            399         245,245
  Loans sold:
    One- to four-family                                       326,375        340,308         410,944
    Consumer loans                                                596          1,023           1,164
                                                          -----------     ----------     -----------
     Total loans sold                                         326,971        341,331         412,108
Mortgage loan swaps (fixed rate)                                9,290         62,583          26,605
Transfer to foreclosed real estate and charge-offs              4,038          6,540           3,864
Amortization and prepayments                                  704,420        736,956         942,101
                                                          -----------     ----------     -----------
     Total loans sold, loan swaps, transfers,
     amortization and prepayments                           1,044,719      1,147,410       1,384,678
                                                          -----------     ----------     -----------
Net increase                                              $   444,793        564,326         614,576
                                                          ===========     ==========     ===========

Mortgage-backed securities:
  Mortgage-backed securities purchased                    $     4,825              -          16,218
  Mortgage-backed securities swaps                              9,290         62,583          26,605
  Mortgage-backed securities sold                             (19,290)       (62,583)        (26,605)
  Sale of residual interests in finance subsidiaries                -              -         (30,160)
  Amortization and prepayments                                (25,010)       (49,142)        (84,956)
                                                          -----------     ----------     -----------
Net decrease                                              $   (30,185)       (49,142)        (98,898)
                                                          ===========     ==========     ===========
</TABLE>

                                       33
<PAGE>

Asset Quality and Allowance for Loan Losses

     When a borrower fails to make a required payment by the end of the month in
which the payment is due, the Bank generally institutes collection procedures.
The Bank will send a late notice, and in most cases, delinquencies are cured
promptly; however, if a loan has been delinquent for more than 60 days, the Bank
contacts the borrower in order to determine the reason for the delinquency and
to effect a cure, and, where appropriate, reviews the condition of the property
and the financial circumstances of the borrower. Based upon the results of any
such investigation, the Bank may: (1) accept a repayment program for the
arrearage from the borrower; (2) seek evidence, in the form of a listing
contract, of efforts by the borrower to sell the property if the borrower has
stated that he is attempting to sell; (3) request a deed in lieu of foreclosure;
or (4) initiate foreclosure proceedings. When a loan payment is delinquent for
three or more monthly installments, the Bank will initiate foreclosure
proceedings. Interest income on loans is reduced by the full amount of accrued
and uncollected interest on loans that are in process of foreclosure or
otherwise determined to be uncollectible.

     Delinquent Loans. At December 31, 2000, 1999, and 1998, delinquencies in
the Bank's portfolio were as follows:

<TABLE>
<CAPTION>
                                                       61-90 Days                           91 or More Days
                                          ----------------------------------   ---------------------------------------
                                                       Principal                               Principal
                                            Number    Balance of     Percent      Number      Balance  of    Percent
                                              of      Delinquent       of           of        Delinquent        of
                                             Loans       Loans     Total/(1)/     Loans          Loans      Total/(1)/
                                          ---------   ---------   ----------   ------------    ---------    ----------
                                                                  (Dollars in thousands)
<S>                                       <C>         <C>         <C>          <C>           <C>            <C>
December 31, 2000                             50        $4,084       .10%           115      $ 14,764           .34%
December 31, 1999                             63        $6,280       .16%           130      $ 13,224           .34%
December 31, 1998                             41        $4,259       .13%           109      $ 13,163           .41%
                                              ==         =====       ===            ===        ======           ===
</TABLE>

_____________________
/(1)/ Percentage represents principal balance of delinquent loans to total loans
outstanding.

     Non-Performing Loans. A loan is considered impaired when, based on current
information and events, it is probable that a creditor will be unable to collect
all amounts due according to the contractual terms of the loan. For loans that
are not individually significant (i.e. loans under $1.0 million), and represent
a homogeneous population, the Bank evaluates impairment collectively based on
management reports on the level and extent of delinquencies, as well as
historical loss experience for these types of loans. The Bank uses these
criteria on one- to four-family residential loans, consumer loans, multi-family
residential loans, and land loans. Impairment for loans considered individually
significant and commercial real estate loans are measured based on the present
value of expected future cash flows discounted at the loan's effective interest
rate, or the fair value of the collateral if the loan is collateral dependent.
Charge-offs of principal occur when a loss has occurred as a result of the book
value exceeding the fair value.

     A loan (whether considered impaired or not) is classified as non-accrual
when collectibility is in doubt, and is normally analyzed upon the borrower
becoming 90 days past due on contractual principal or interest payments. When a
loan is placed on non-accrual status, or in the process of foreclosure,
previously accrued but unpaid interest is reversed against interest income.
Income is subsequently recorded to the extent cash payments are received, or at
a time when the loan is brought current in accordance with its original terms.

                                       34
<PAGE>

      The following table sets forth information regarding non-accrual loans,
loans which are 91 days or more delinquent but on which the Bank is accruing
interest, non-accrual investment securities, and foreclosed real estate held by
the Bank at the dates indicated.

<TABLE>
<CAPTION>
                                                                                   December 31,
                                                               ----------------------------------------------------
                                                                 2000       1999       1998       1997      1996
                                                               --------   --------   --------   --------  ---------
                                                                              (Dollars in thousands)
<S>                                                          <C>          <C>        <C>        <C>       <C>
One- to four-family and multi-family loans:
  Non-accrual loans /(1)/                                      $ 14,023     12,548     10,641      7,039      7,680
  Accruing loans 91 or more days overdue                          1,732        771      1,381      2,071        896
                                                               --------   --------   --------   --------   --------
     Total                                                       15,755     13,319     12,022      9,110      8,576
                                                               --------     ------   --------   --------   --------
Commercial real estate, construction and land loans:
  Non-accrual loans /(1)/                                           269        607      1,284      1,240      3,762
  Accruing loans 91 or more days overdue                              -          -          -          -        699
                                                               --------   --------   --------   --------   --------
     Total                                                          269        607      1,284      1,240      4,461
                                                               --------   --------   --------   --------   --------
Other loans:
  Non-accrual loans /(1)/                                           683      1,683        721        181        353
  Accruing loans 91 or more days overdue                              2         41         22        124         74
                                                               --------   --------   --------   --------   --------
     Total                                                          685      1,724        743        305        427
                                                               --------   --------   --------   --------   --------
Total non-performing loans:
  Non-accrual loans /(1)/                                        14,975     14,838     12,646      8,460     11,795
  Accruing loans 91 or more days overdue                          1,734        812      1,403      2,195      1,669
                                                               --------   --------   --------   --------   --------
     Total                                                     $ 16,709     15,650     14,049     10,655     13,464
                                                               ========   ========   ========   ========   ========

Non-accrual loans to total loans                                    .35%       .38%       .39%       .31%       .48%
Accruing loans 91 or more days overdue to total loans               .04        .02        .04        .08        .07
                                                                -------    -------    -------    -------    -------
     Non-performing loans to total loans                            .39%       .40%       .43%       .39%       .55%
                                                                =======    =======    =======    =======    =======

Foreclosed real estate:
  One- to four-family                                          $  1,762      1,220      1,736        489      1,257
  Commercial real estate                                             46      6,195      6,621          -          -
                                                               --------   --------   --------   --------   --------
     Total foreclosed real estate, net of related reserves     $  1,808      7,415      8,357        489      1,257
                                                               ========   ========   ========   ========   ========
Total non-performing assets                                    $ 18,517     23,065     22,406     11,144     14,721
                                                               ========   ========   ========   ========   ========
Total non-performing assets to total assets                         .36%       .50%       .54%       .32%       .46%
                                                               ========   ========   ========   ========   ========
</TABLE>

/(1)/ Consists of loans in the process of foreclosure or for which interest is
otherwise deemed uncollectible.

      For the years ended December 31, 2000, 1999 and 1998, the amount of
interest income that would have been recorded on non-accrual loans amounted to
$768,000, $703,000 and $699,000 respectively, if the loans had been current. For
the year ended December 31, 2000, interest income on non-accrual loans that was
recorded amounted to $350,000.

      Classified Assets. The federal regulators have adopted a classification
system for problem assets of insured institutions that covers all problem
assets. Under this classification system, problem assets of insured institutions
are classified as "substandard," "doubtful" or "loss." An asset is considered
"substandard" if it is inadequately protected by the current net worth and
paying capacity of the obligor or of the collateral pledged, if any.
"Substandard" assets include those characterized by the "distinct possibility"
that the insured institution will sustain "some loss" if the deficiencies are
not corrected. Assets classified as "doubtful" have all of the weaknesses
inherent in those classified "substandard," with the added characteristic that
the weaknesses present make "collection or liquidation in full," on the basis of
currently existing facts, conditions, and values, "highly questionable and
improbable." Assets classified as "loss" are those considered "uncollectible"
and of such little value that their continuance as assets without the
establishment of a specific loss reserve is not warranted.

                                       35
<PAGE>

     When an insured institution classifies problem assets as either substandard
or doubtful, it is required to establish general allowances for loan losses in
an amount deemed prudent by management. General allowances represent loss
allowances that have been established to recognize the inherent risk associated
with lending activities, but, unlike specific allowances, have not been
allocated to particular problem assets. When an insured institution classifies
problem assets as "loss," it is required either to establish a specific
allowance for losses equal to 100% of the amount of the asset so classified or
to charge off such an amount. An institution's determination as to the
classification of its assets and the amount of its valuation allowances is
subject to review by the institution's Principal Supervisory Agent of the OTS,
who can order the establishment of additional general or specific loss
allowances.

     In connection with the filing of its periodic reports with the OTS, the
Bank regularly reviews the problem loans in its portfolio to determine whether
any loans require classification in accordance with applicable regulations. At
December 31, 2000 and 1999, all of the Bank's non-performing loans were
classified as substandard.

     Allowance for Loan Losses. The allowance for loan losses is established
through a provision for loan losses based on management's evaluation of the risk
inherent in its loan portfolio and changes in the nature and volume of its loan
activity. Such evaluation, which includes a review of all loans of which full
collectibility may not be reasonably assured, considers among other matters, the
estimated fair value of the underlying collateral, economic conditions,
historical loan loss experience and other factors that warrant recognition in
providing for an adequate loan loss allowance.

     The following table sets forth the Bank's allowance for loan losses at the
dates indicated.

<TABLE>
<CAPTION>
                                                                                                              Six
                                                                                                         Months Ended
                                                                Year Ended December 31,                  December 31,
                                                ----------------------------------------------------
                                                  2000            1999          1998          1997           1996
                                                ----------      --------      --------       -------       --------
                                                                       (Dollars in thousands)
<S>                                            <C>              <C>           <C>            <C>            <C>
Balance at beginning of period                  $   17,276        16,770        15,475        17,914         17,254
Charge-offs:
  One- to four-family                                 (136)         (522)         (290)         (637)           (49)
  Commercial                                             -           (88)          (25)       (2,994)             -
  Multi family                                        (275)            -             -             -              -
  Consumer                                            (120)         (101)          (87)          (81)           (17)
                                                ----------      --------      --------       -------       --------
                                                      (531)         (711)         (402)       (3,712)           (66)
                                                ----------      --------      --------       -------       --------
Recoveries:
  One- to four-family                                    9           105             1           106             25
  Commercial                                             -             -             -             5              -
  Consumer                                               4            12            50            12              1
                                                ----------      --------      --------       -------       --------
                                                        13           117            51           123             26
                                                ----------      --------      --------       -------       --------
Charge-offs, net of recoveries                        (518)         (594)         (351)       (3,589)           (40)
Provision for loan losses                            1,500         1,100           800         1,150            700
Balance related to acquisition                           -             -           846             -              -
                                                ----------      --------      --------       -------       --------
Balance at end of period                        $   18,258        17,276        16,770        15,475         17,914
                                                ==========      ========      ========       =======       ========
Net charge-offs to average
 loans outstanding                                     .01%          .02           .01           .14              -
Allowance for loan losses
 to total loans receivable                             .42           .44           .52           .57            .73
Allowance for loan losses
 to total non-performing loans                      109.27        110.39        119.37        145.24         133.05
Allowance for loan losses
 to total non-performing assets                      98.60         74.90         74.85        138.86         121.69
                                                ==========      ========      ========       =======       ========
</TABLE>

                                       36
<PAGE>

     At December 31, 2000, the Bank maintained no specific reserves on its loan
portfolio, and is unaware of any specifically identifiable charge-offs in its
loan portfolio. The following table sets forth the Company's allocation of its
allowance for loan losses. This allocation is based on management's subjective
estimates. The amount allocated to a particular category should not be
interpreted as the only amount available for future charge-offs that may occur
within that category: it may not be indicative of future charge-off trends and
it may change from year to year based on management's assessment of the risk
characteristics of the loan portfolio.

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                 ----------------------------------------------------------------------------------
                                           2000                        1999                       1998
                                 -------------------------   -------------------------   --------------------------
                                             Loan category               Loan category                Loan category
                                               as a % of                   as a % of                   as a % of
                                 Allowance    Total Loans     Allowance   Total Loans         Allowance Total Loans
                                 ---------    ------------    ---------   -----------         --------- -----------
                                                              (Dollars in thousands)

<S>                               <C>             <C>
One- to four-family residential    $ 9,803      88.44 %      $    8,705       89.37 %    $    8,302        88.74 %
Multi-family                         1,480       3.98             1,235        4.22           1,025         4.11
Commercial real estate               1,978        .94             2,078        0.99           2,354         1.29
Construction                           401        .68               256        0.71             256         0.85
Land                                   606        .93               346        0.73             296         0.74
Consumer                             1,575       5.03             1,085        3.98             854         4.27
Unallocated portion                  2,415         NA             3,571          NA           3,683           NA
                                   -------   --------       -----------    --------      ----------     --------
     Total                         $ 18,258    100.00 %     $    17,276      100.00 %    $   16,770       100.00 %
                                   ========  ========       ===========    ========      ==========     ========
</TABLE>

     At December 31, 2000, the Bank's loan portfolio consisted of 88.4% of one-
to four-family real estate loans, with an additional 5.0% being equity lines of
credit or home equity loans on one- to four-family real estate and other
consumer loans. Based on the Bank's historically high asset quality, low
charge-off experience and concentration on one- to four-family lending in its
market area, management considers the risk of loss due to these loans as
minimal. The remaining 6.6% of the Bank's portfolio, or $287.9 million, consists
of multi-family mortgage, commercial real estate, construction, land, and other
loans. These loans generally tend to exhibit greater risk of loss than do one-
to four-family loans, primarily because such loans typically carry higher loan
balances and repayment is dependent, in large part, on sufficient income to
cover operating expenses. In addition, economic events and government
regulations, which are outside the control of the Bank and the borrower, could
impact the security of the loan or the future cash flow of affected properties.
Management has addressed these risks through its underwriting standards.

     With respect to multi-family loans, the Bank has traditionally limited its
lending to small apartment buildings (less than 36 units) which management
believes have lower risk than larger properties. At December 31, 2000, in the
Bank's $173.1 million multi-family portfolio, 13 loans are on properties greater
than 36 units and the average multi-family loan size is $310,000. In addition,
almost all of the Bank's construction and land loans are on one- to four family
residential properties. All of the Bank's multi-family, construction and land
loans are secured by properties located in the Chicago metropolitan area.

                                      37
<PAGE>

Investment Activities

     Federally chartered savings institutions have the authority to invest in
various types of liquid assets, including United States Treasury obligations,
securities of various federal agencies, certain certificates of deposit of
insured banks and savings institutions, certain bankers' acceptances, repurchase
agreements and federal funds. Subject to various restrictions, federally
chartered savings institutions may also invest their assets in commercial paper,
investment grade corporate debt securities and mutual funds whose assets conform
to the investments that a federally chartered savings institution is otherwise
authorized to make directly.

     Generally, the investment policy of the Bank is to invest funds among
various categories of investments and maturities based upon the Bank's
asset/liability management policies, investment quality and marketability,
liquidity needs and performance objectives.

     The Bank is required to maintain liquid assets at minimum levels. See
"Regulation and Supervision - Federal Savings Institution Regulation -
Liquidity." The Bank's liquid investments include interest-bearing deposits,
primarily at the Federal Home Loan Bank of Chicago, federal funds sold and U.S.
Government and federal agency obligations. The Bank invests overnight federal
funds with two large commercial banks in Chicago, based upon periodic review of
these institutions' financial condition. The Bank generally limits overnight
federal funds sold investments to $75.0 million at any one institution.

     The following table sets forth certain information regarding the book value
of the Company's and the Bank's liquidity and investment securities portfolio at
the dates indicated. At December 31, 2000 and 1999, the fair value of the
investment securities portfolio was $187.8 million and $206.4 million,
respectively.

<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                     -----------------------------------------
                                                                       2000             1999            1998
                                                                     --------         ---------      ---------
                                                                                   (In thousands)

<S>                                                               <C>                 <C>            <C>
Interest-bearing deposits                                         $     53,392           51,306         24,564
                                                                     =========        =========      =========
Federal funds sold                                                $    139,268           35,013         79,140
                                                                     =========        =========      =========
Investment securities:
  Available for sale:
     U.S. Government and agency securities                        $     81,255           78,618        119,261
     Equity securities                                                  12,625           10,246         15,042
     Other investment securities                                        80,614          105,241         64,657
                                                                     ---------        ---------      ---------
       Total investments available for sale                            174,494          194,105        198,960
                                                                     ---------        ---------      ---------
  Held to maturity:
     U.S. Government and agency securities                               9,986            9,983          9,980
     Other investment securities                                         2,647            2,016          1,127
                                                                   -----------        ---------     ----------
       Total investments held to maturity                               12,633           11,999         11,107
                                                                   -----------        ---------     ----------
       Total investment securities                                $    187,127          206,104        210,067
                                                                     =========       ==========     ==========
</TABLE>

     The classification of investments as held to maturity, available for sale,
or for trading purposes is made at the time of purchase based upon management's
intent at that time. At December 31, 2000, $174.5 million of investment
securities were classified as available for sale and recorded at fair value
(cost basis of $172.3 million). Subsequent to year end, the Bank transferred all
of the held to maturity portfolio to available for sale as allowed under SFAS
No. 133. At December 31, 1999, $194.1 million were classified as available for
sale (cost basis of $199.6 million). All balances exclude the Bank's required
investment of stock in the Federal Home Loan Bank of Chicago, which was $84.8
million and $75.0 million at December 31, 2000, and 1999, respectively.

                                       38
<PAGE>

     The table below sets forth information regarding the carrying value,
weighted average yields and maturities of the Company's investment securities.

<TABLE>
<CAPTION>
                                                                       At December 31, 2000
                                    --------------------------------------------------------------------------------------------
                                          One Year                 1 to                    5 to                  More than
                                          or Less                 5 Years                10 Years                 10 Years
                                    -------------------     -------------------     -------------------     --------------------
                                               Weighted                Weighted                Weighted                 Weighted
                                    Carrying    Average     Carrying    Average     Carrying    Average      Carrying    Average
                                      Value      Yield        Value      Yield        Value      Yield         Value      Yield
                                      -----      -----        -----      -----        -----      -----         -----      -----
<S>                                 <C>        <C>          <C>        <C>          <C>        <C>           <C>        <C>
                                                                       (Dollars in thousands)
U.S. Government and agency
 securities:
  Held to maturity                  $     -        -        $ 9,986      7.22%      $     -          -%     $      -          -%
  Available for sale                      -        -         27,080      6.11        49,373       6.80         4,802       6.81
Equity securities /(1)/
  Common stock                            -        -              -       -               -        -           4,304       2.68
  Preferred stock                         -        -              -       -               -        -           8,321       7.04
Other investment securities:
  Held to maturity                        -        -            481     50.00         2,166      12.29             -          -
  Available for sale                      -        -         24,082      6.59        19,746       7.00        36,786       7.45
                                     ------                  ------                  ------                   ------
      Total                         $     -         -%      $61,629      6.82%      $71,285       7.02%     $ 54,213       6.95%
                                     ======    ======        ======     =====        ======      =====        ======      =====

<CAPTION>
                                                     At December 31, 2000
                                        --------------------------------------------

                                                 Total Investment Securities
                                        --------------------------------------------
                                           Average                         Weighted
                                            Life      Carrying     Market    Average
                                          in Years      Value       Value    Yield
                                          --------      -----       -----    -----
<S>                                     <C>          <C>        <C>        <C>
U.S. Government and agency
 securities:
  Held to maturity                          3.37     $  9,986    $ 10,643     7.22%
  Available for sale                        6.74       81,255      81,255     6.57
Equity securities (1)
  Common stock                               -          4,304       4,304     2.68
  Preferred stock                            -          8,321       8,321     7.04
Other investment securities:
  Held to maturity                          4.53        2,647       2,647    19.14
  Available for sale                       12.06       80,614      80,614     7.08
                                                      -------     -------
      Total                                 9.11     $187,127    $187,784     6.93%
                                           =====      =======     =======    =====
</TABLE>

-----------------------
/(1)/ Marketable equity securities with no stated maturity are included in the
"More than 10 Years" category, and are categorized as available for sale.

                                       39
<PAGE>

Sources of Funds

     The Bank's primary sources of funds are deposits, amortization and
prepayment of loan principal (including mortgage-backed securities), borrowings,
sales of mortgage loans, sales or maturities of investment securities,
mortgage-backed securities and short-term investments, and funds provided from
operations.

     Deposits. The Bank offers a variety of deposit accounts having a wide range
of interest rates and terms. The Bank's deposits consist of passbook accounts,
NOW and checking accounts, money market and certificate accounts. The Bank only
solicits deposits from its market area and does not use brokers to obtain
deposits. The Bank relies primarily on competitive pricing policies,
advertising, and customer service to attract and retain these deposits. The flow
of deposits is influenced significantly by general economic conditions, changes
in money market and prevailing interest rates and competition.

     The following table presents the deposit activity of the Bank for the
periods indicated:

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                ---------------------------------------------
                                                                     2000              1999             1998
                                                                ------------       ------------    -----------
                                                                                  (In thousands)
<S>                                                             <C>               <C>              <C>
Deposit transactions                                            $  11,243,334         9,323,669      7,603,609
Withdrawal transactions                                           (11,167,166)       (9,399,302)    (7,636,545)
                                                                -------------         ---------      ---------
Net deposit (withdrawal) transactions                                  76,168           (75,633)       (32,936)
Interest credited on deposits                                         109,684            97,510         90,651
                                                                -------------         ---------      ---------
  Net transaction activity                                            185,852            21,877         57,715
Deposits acquired, net                                                 90,147            22,195        262,144
Amortization of premiums                                               (1,028)           (1,702)             -
                                                                -------------         ---------      ---------
   Net increase in deposits                                     $     274,971            42,370        319,859
                                                                =============         =========      =========
</TABLE>

     The following table presents, by various rate categories, the amount of
certificate accounts outstanding at December 31, 2000, 1999, and 1998, and the
periods to maturity of the certificate accounts outstanding at December 31,
2000:

<TABLE>
<CAPTION>
                                                                          Period to Maturity December 31, 2000
                                          December 31,               ---------------------------------------------
                             -----------------------------------       Within      1 to 3        Over
                                 2000        1999        1998         One Year     Years       3 Years      Total
                             -----------  ----------  ----------     ----------   -------     ---------    -------
                                                            (In thousands)
<S>                          <C>          <C>         <C>            <C>          <C>         <C>          <C>
Certificate accounts:
     Less than 5.00%         $    71,102     525,916     425,242         58,971       5,844       6,287     71,102
     5.00% to 5.99%              693,431     774,505     823,619        576,643      97,952      18,836    693,431
     6.00% to 6.99%              806,635     130,976     167,371        386,121     398,095      22,419    806,635
     7.00% and greater            43,664      37,945      38,471          2,547      40,810         307     43,664
                             -----------   ---------   ---------      ---------     -------     -------  ---------
        Total                $ 1,614,832   1,469,342   1,454,703      1,024,282     542,701      47,849  1,614,832
                             ===========   =========   =========      =========     =======     =======  =========
</TABLE>

     At December 31, 2000, the Bank had outstanding $266.7 million in
certificate accounts in amounts of $100,000 or more maturing as follows:

<TABLE>
<CAPTION>
                  Period to Maturity                                                         Amount
                  ------------------                                                         ------
                                                                                         (In thousands)
<S>                                                                                      <C>
              Three months or less                                                          $  56,498
              Over three through six months                                                    45,706
              Over six through 12 months                                                       53,365
              Over 12 months                                                                  111,156
                                                                                            ---------
                  Total                                                                     $ 266,725
                                                                                            =========
</TABLE>

                                       40
<PAGE>

Deposit Portfolio. The following table sets forth the distribution and the
weighted average nominal interest rates of the Bank's average deposit accounts
for the years indicated:

<TABLE>
<CAPTION>
                                                                                      Year Ended
                                                         ---------------------------------------------------------------------
                                                                December 31, 2000                     December 31, 1999
                                                         --------------------------------    ---------------------------------
                                                                      Percent   Weighted                  Percent   Weighted
                                                                         of     Average                      of     Average
                                                           Average     Total    Nominal        Average     Total    Nominal
                                                           Balance    Deposits    Rate         Balance    Deposits    Rate
                                                           -------    --------    ----         -------    --------    ----
                                                                                                  (Dollars in thousands)
<S>                                                      <C>          <C>       <C>          <C>          <C>       <C>
Passbook accounts                                        $   741,453    26.20%    2.48%      $   737,322    27.65%    2.48%
Interest bearing NOW accounts                                223,358     7.88     1.22           210,525     7.90     1.28
Non-interest bearing checking                                 76,440     2.70        -            62,508     2.34        -
Commercial checking accounts                                  55,367     1.95        -            50,252     1.88        -
                                                         -----------  -------                -----------  -------
  Total passbook, NOW and checking accounts                1,096,618    38.73     1.92         1,060,607    39.77     1.98
                                                         -----------  -------                -----------  -------
Money market accounts                                        190,693     6.73     3.87           158,991     5.96     3.40
Jumbo deposits                                                29,890     1.05     5.97            32,659     1.22     4.90
Certificate accounts with original maturities of:
  91 days or less                                             46,992     1.66     2.00            50,173     1.88     4.30
  5 months                                                       931      .03     6.34                 -        -        -
  6 months                                                   257,757     9.10     5.26           273,997    10.28     4.48
  7 months                                                    65,838     2.32     6.11                 -        -        -
  8 months                                                        11        -     4.77           134,009     5.03     4.74
  10 months                                                  209,734     7.40     5.53            71,647     2.69     5.34
  11 months                                                   24,867      .88     4.93            61,957     2.32     4.87
                                                         -----------  -------                -----------  -------
   Total jumbo certificates of deposits and 7-day
    to 11 month certificate accounts                         636,020    22.44     5.42           624,442    23.42     4.68
                                                         -----------  -------                -----------  -------
Certificate accounts with original maturities of:
  12 months                                                  169,386     5.98     5.29           158,491     5.95     4.69
  13 months                                                   47,093     1.66     6.32                 -        -        -
  15 months                                                    1,552      .05     4.75            19,959     0.75     4.95
  18 months                                                  155,642     5.49     5.20           252,819     9.48     5.11
  19 months                                                        -        -        -               126        -     5.80
  24 months                                                  211,611     7.47     6.38            66,329     2.49     4.86
  25 months                                                   41,638     1.47     5.60            15,595     0.58     5.45
  30 months                                                   77,679     2.74     5.65           104,285     3.91     5.63
  35 months                                                   67,240     2.37     6.27            11,130     0.42     5.74
  36 months                                                   17,624      .62     5.87            37,626     1.41     7.74
  42 months                                                   15,316      .54     5.59            17,582     0.66     5.58
  60 months                                                   73,715     2.60     5.75           104,454     3.92     5.97
  61 months to 120 months                                     31,456     1.11     5.96            34,056     1.28     6.06
                                                         -----------  -------                -----------  -------
   Total 12-month to 120-month certificate
    accounts and other certificate accounts                  909,952    32.10     5.77           822,452    30.85     5.37
                                                         -----------  -------                -----------  -------
   Total deposits                                        $ 2,833,283   100.00%    4.08%      $ 2,666,492   100.00%    3.74%
                                                         ===========  =======    =====       ===========   ======    =====

<CAPTION>
                                                         --------------------------------
                                                                December 31, 1998
                                                         --------------------------------
                                                                      Percent   Weighted
                                                                         of     Average
                                                           Average     Total    Nominal
                                                           Balance    Deposits    Rate
                                                           -------    --------    ----
<S>                                                      <C>          <C>       <C>
Passbook accounts                                        $   647,515     27.67%   2.65%
Interest bearing NOW accounts                                174,003      7.44    1.34
Non-interest bearing checking                                 50,662      2.16       -
Commercial checking accounts                                  42,127      1.80       -
                                                         -----------   -------
  Total passbook, NOW and checking accounts                  914,307     39.07    2.13
                                                         -----------   -------
Money market accounts                                        134,208      5.74    3.37
Jumbo deposits                                                17,713      0.76    5.47
Certificate accounts with original maturities of:
  91 days or less                                             33,849      1.45    4.61
  5 months                                                         -         -       -
  6 months                                                   254,200     10.86    5.10
  7 months                                                         -         -       -
  8 months                                                    26,303      1.12    5.00
  10 months                                                  100,888      4.31    5.44
  11 months                                                        -                 -
                                                         -----------   -------
   Total jumbo certificates of deposits and 7-day
    to 11 month certificate accounts                         432,953     18.50    5.15
                                                         -----------   -------
Certificate accounts with original maturities of:
  12 months                                                  170,430      7.28    5.33
  13 months                                                        -         -       -
  15 months                                                    5,639       .24    5.20
  18 months                                                  296,749     12.68    5.66
  19 months                                                   82,306      3.52    5.93
  24 months                                                   15,542      0.66    5.61
  25 months                                                        -         -       -
  30 months                                                   78,080      3.34    5.83
  35 months                                                        -         -       -
  36 months                                                    7,191      0.31    5.46
  42 months                                                   26,560      1.13    6.13
  60 months                                                  130,123      5.56    6.04
  61 months to 120 months                                     46,008      1.97    6.89
                                                         -----------   -------
   Total 12-month to 120-month certificate
    accounts and other certificate accounts                  858,628     36.69    5.77
                                                         -----------   -------
   Total deposits                                        $ 2,340,096    100.00%   4.09%
                                                         ===========   =======   =====
</TABLE>

                                       41
<PAGE>

     Borrowings. Although deposits are the Bank's primary source of funds, the
Bank's policy has been to utilize borrowings, such as advances from FHLB of
Chicago, and reverse repurchase agreements, when they are a less costly source
of funds or can be reinvested at a positive rate of return.

     A summary of the Company's borrowed funds at December 31, 2000 and 1999 is
as follows:

<TABLE>
<CAPTION>
                                                               December 31, 2000                 December 31, 1999
                                                  ---------------------------------------   -----------------------
                                                                    Weighted                 Weighted
                                                    Interest Rate    Average                 Average
                                                        Range         Rate        Amount       Rate        Amount
                                                  ---------------    -------    ---------   ---------    ----------
                                                                          (Dollars in thousands)
Fixed-rate advances from FHLB due:
<S>                                               <C>     <C>        <C>      <C>              <C>      <C>
   Within 1 year                                  5.62%   - 6.84%     6.37%   $   365,000      6.63%    $   105,000
   1 to 2 years                                   5.99    - 7.40      6.43        305,000      6.28         390,000
   2 to 3 years                                   5.84    - 6.78      6.35         55,500      6.21         275,000
   3 to 4 years                                   5.83    - 7.22      6.61        205,000      6.35          55,500
   4 to 5 years                                   4.87    - 7.20      6.16        195,000      6.54          65,000
   5 to 6 years                                   6.82    - 6.82      6.82         30,000      5.57         105,000
   6 to 8 years                                   4.81    - 5.86      5.26        285,000       -                 -
   Greater than 8 years                           5.42    - 5.86      5.62         80,000      5.30         385,000
                                                  --------------              -----------               -----------
      Total fixed rate advances                   4.81    - 7.40      6.15      1,520,500      5.98       1,380,500

Adjustable-rate advances from FHLB due:
   Within 1 year                                  6.70    - 6.87      6.81        100,000       -                 -
   1 to 2 years                                   6.87    - 6.87      6.87         25,000      6.35          50,000
   2 to 3 years                                    -      -  -         -                -      6.62          25,000
   Greater than 3 years                           6.53    - 6.64      6.58         50,000      6.26          25,000
                                                  --------------              -----------               -----------
      Total adjustable rate advances              6.53    - 6.87      6.75        175,000      6.40         100,000
                                                  --------------              -----------               -----------
      Total advances from FHLB                    4.81    - 7.40      6.21      1,695,500      6.01       1,480,500
                                                  --------------              -----------               -----------

Fixed-rate reverse repurchase agreements                               -                -      5.86           9,963
Unsecured term bank loan                                              7.72         29,400      7.17          29,900
Other borrowing                                                       7.71          4,000      4.20           6,000
                                                                              -----------               -----------
    Total borrowed funds                                              6.24%   $ 1,728,900      6.02%    $ 1,526,363
                                                                      ====    ===========      ====     ===========
</TABLE>

Federal Home Loan Bank of Chicago Advances

     The Bank obtains advances from the FHLB of Chicago upon the security of its
capital stock in the FHLB of Chicago and a blanket pledge of certain of its
mortgage loans. See "Regulation and Supervision - Federal Home Loan Bank
System." Such advances are made pursuant to several different credit programs,
each of which has its own interest rate and range of maturities. The maximum
amount that the FHLB of Chicago will advance to member institutions, including
the Bank, for purposes other than meeting withdrawals, fluctuates from time to
time in accordance with the policies of the FHLB of Chicago. The maximum amount
of FHLB of Chicago advances to a member institution generally is reduced by
secured borrowings from any other source. At December 31, 2000, the Bank's FHLB
of Chicago advances totaled $1.7 billion, representing 32.6% of total assets.

     Included in FHLB of Chicago advances at December 31, 2000 are $535.0
million of fixed-rate advances with original scheduled maturities of 4 to 10
years, callable at the discretion of the FHLB of Chicago as follows: $60.0
million at 6.4% in 2001, $105.0 million at 5.5% in 2002, $240.0 million at 5.9%
in 2003, $80.0 million at 5.4% in 2004 and $50.0 million at 4.6% in 2005. The
Bank also has $25.0 million of adjustable-rate advances callable in 2001. The
average term to maturity on these advances is 6.8 years, while the average term
to call is 2.3 years. The Bank receives a lower cost of borrowing on such
advances than on similar non-callable long-term advances in return for granting
the FHLB of Chicago the right to call the advances prior to their final
maturity. If called, the FHLB of

                                       42
<PAGE>

Chicago will provide replacement funding at the then prevailing market rate of
interest for the remaining term to maturity of the advances, subject to standard
terms and conditions.

     Unsecured Term Bank Loan

     The Company obtained a $35.0 million unsecured term bank loan in
conjunction with its acquisition of Northwestern. The loan provides for an
interest rate of the prime rate minus 0.5% or 1% over one-, two-, three-, six-,
or twelve-month LIBOR at management's discretion adjustable and payable at the
end of the repricing period. The loan currently carries an interest rate of 1%
over three-month LIBOR. The remaining principal amount outstanding at December
31, 2000 was $29.4 million. The loan requires increasing annual principal
payments with $18.7 million due at the final maturity of the loan on December
31, 2003. The Company made its scheduled principal payment on the loan on
December 31, 2000 in the amount of $500,000. Prepayments of principal are
allowed. In conjunction with the term bank loan, the Company also maintains a
$25.0 million one year unsecured revolving line of credit that matures annually
on May 31. The interest rate on the line of credit is the prime rate minus 0.5%
or 1% over one-, two-, three-, six- or twelve-month LIBOR, at management's
discretion with interest payable at the end of the repricing period. At December
31, 2000, $4.0 million is outstanding on the line of credit, at one-month LIBOR
plus 1%. The financing agreements contain covenants that, among other things,
require the Company to maintain a minimum stockholders' equity balance and to
obtain certain minimum operating results, as well as requiring the Bank to
maintain "well capitalized" regulatory capital levels and certain non-performing
asset ratios. In addition, the Company has agreed not to pledge any stock of the
Bank or MAF Developments for any purpose. At December 31, 2000, the Company was
in compliance with these covenants.

Liquidity and Capital Resources

     The Company's principal assets are its investment in the Bank and in MAF
Developments. To the extent that it does not generate significant earnings
outside of these two subsidiaries, the Company's liquidity position is primarily
dependent on dividends from the Bank and to a lesser extent dividends from MAF
Developments.

     The Bank's ability to pay dividends to the Company is dependent on its
ability to generate earnings, and to meet regulatory restrictions. See
"Regulation and Supervision - Limitation on Capital Distributions" for a detail
of these restrictions. The Bank has not been restricted by these limitations in
funding the necessary amounts needed by the Company for its operations. The
Company received $20.0 million in dividends from the Bank in 2000, compared to
$35.0 million in 1999, and $50.0 million in 1998.

     The primary uses of funds at the Company consist of principal and interest
payments on borrowed funds, cash dividends, and stock repurchases. The Company
has also funded loans to and investments in MAF Developments from time to time,
although none were made in 2000. To the extent the Company has excess cash at
any time, it will invest funds in investment securities, marketable equity
securities or other interest-earning assets.

     During 2000, the Company made total interest payments of $2.8 million on
its unsecured term bank loan and revolving line of credit, as well as a
scheduled payment of principal in the amount of $500,000.

                                       43
<PAGE>

     During 2000, the Company repurchased 1,070,300 shares for a total of $19.1
million (average price of $17.82), compared to 1,540,762 shares for a total of
$35.1 million (average price of $22.77 per share) in 1999. The totals for 2000
include 15,000 shares purchased in the second quarter for $270,000, and 70,000
shares purchased in the third quarter for approximately $1.3 million, from Allen
Koranda, the company's chief executive officer. The terms of these private
transactions were approved by the disinterested members of the Board. The sale
of shares was related to Mr. Koranda's marital dissolution agreement. The
Company has used stock repurchase programs as a means of providing for future
acquisitions, stock option exercises, and other general corporate purposes.

     Cash dividends paid to common shareholders totaled $8.9 million ($.39 per
share declared) in 2000, compared to $7.6 million ($.34 per share declared) in
1999. The increase is primarily due to a 15% increase in the cash dividend rate
in 2000 compared to 1999. The most recent quarterly dividend of $.10 per share
was paid on January 3, 2001. The payment of cash dividends is subject to the
discretion of the Board of Directors and depends on a variety of factors,
including operating results, financial position, and the ability for the Bank to
pay dividends.

     The Bank's principal sources of funds are deposits, advances from the FHLB
of Chicago, principal repayments on loans and mortgage-backed securities,
proceeds from the sale of loans and funds provided by operations. While
scheduled loan and mortgage-backed securities amortization and maturing
interest-bearing deposits are a relatively predictable source of funds, deposit
flows and loan and mortgage-backed securities prepayments are greatly influenced
by economic conditions, the general level of interest rates and competition. The
Bank utilizes particular sources of funds based on comparative costs and
availability.

     Cash flows from operating activities primarily include net income for the
year, adjusted for items in net income that did not impact cash, as well as cash
flow activity from mortgage banking activity. The Bank originated and purchased
$364.1 million of loans for sale, and received $334.8 million in proceeds from
sales and swaps during 2000. The Bank had $41.1 million of loans held for sale
at December 31, 2000, up from $12.6 million at December 31, 1999. The increase
in loans held for sale is due to declining interest rates that have led to an
increase in fixed-rate loan originations.

     Cash used in investing activities reflects the impact of loans and
investments acquired for the Bank's interest-earning asset portfolios, as well
as cash flows from asset sales, real estate held for development activity and
the impact of business acquisitions. Cash used in investing activities totaled
$270.2 million in 2000, compared to $653.1 million in 1999. During the current
year, the Bank originated and purchased $1.12 billion of loans for investment,
which were offset by $704.4 million of loan amortization and prepayments.
Additionally, the Bank collected $25.0 million in amortization and prepayments
from mortgage-backed securities, which were primarily reinvested into loans held
for investment purposes. Purchases of investment securities declined in 2000
compared to 1999 as a higher portion of available funds were used to fund
continued strong loan demand. Investments securities purchased by the Company
totaled $22.6 million, financed mainly by maturities and sales of investments of
$49.7 million. Cash flow from the Company's land development operations was
positive, as sales of property of $43.8 million was offset by expenditures for
land acquisition and development of $23.6 million.

     Cash provided from financing activities for Bank operations are primarily
in the form of savings deposits, FHLB of Chicago advances and to a lesser
extent, reverse repurchase agreements. Cash provided from financing activities
totaled $370.3 million in 2000. During the current year, as a means to fund loan
originations held for investment, the Bank borrowed a total of $475.0 million of
FHLB of Chicago advances, which were offset by $260.0 million of maturities.

     At December 31, 2000, the Company believes it has sufficient cash to fund
its outstanding commitments, or will be able to obtain the necessary funds from
outside sources to meet its cash needs.

                                       44
<PAGE>

     The Bank is required by regulation to maintain specific minimum levels of
liquid investments. Regulations currently require the Bank to maintain liquid
assets at least equal to 4.0% of the sum of its average daily balance of net
withdrawable accounts and borrowed funds due in one year or less. This
regulatory requirement may be changed from time to time to reflect current
economic conditions. During the year ended December 31, 2000, the Bank's average
liquidity ratio was 9.8%. At December 31, 2000, total liquidity was $346.4
million, or 12.1%, which was $231.8 million in excess of the 4.0% regulatory
requirement. This excess liquidity has provided the Bank with the flexibility
needed to maintain its short-term gap ratios within strategic limits, as well as
most recently, to fund the increased loan volume.

Impact of Inflation and Changing Prices

     The consolidated financial statements and related consolidated information
are prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time due to inflation. Unlike most industrial companies, virtually
all of the assets and liabilities of a financial institution are monetary in
nature. As a result, interest rates have a more significant effect on a
financial institution's performance than the effects of general levels of
inflation. Interest rates do not necessarily move in the same direction or in
the same magnitude as the price of goods and services.

Subsidiary Activities

     MAF Developments and NW Financial. The Company engages in the business of
purchasing unimproved land for development into residential subdivisions of
single family lots through two wholly-owned subsidiaries. MAF Developments is a
wholly-owned subsidiary of the Company, while NW Financial is a wholly-owned
subsidiary of the Bank. The Company has been engaged in this activity since
1974, and since that time has developed and sold over 5,600 lots in 24 different
subdivisions primarily in the western suburbs of Chicago. These subsidiaries act
as sole principal or as a joint venture partner in their developments. The
subsidiaries historically have provided essentially all of the capital for a
joint venture and receive in exchange an ownership interest in the joint venture
which entitles it to a percentage of the profit or loss generated by the
project, generally 50-60%, with the exact percentage based upon a number of
factors, including characteristics of the venture, the perceived risks involved,
and the time to completion. The net profits are generally defined in the joint
venture agreement as the gross profits of the joint venture from sales, less all
expenses, loan repayments and capital contributions.

     NW Financial is active in the development of unimproved land for
development into residential subdivisions, as well as the construction of
single-family homesites on the improved lots. NW Financial currently has two
projects whereby it and a developer share in the profits of the projects on a
50/50 basis. These projects are expected to be completed during 2001. NW
Financial also provides the funds, via loans, to the projects. The projects are
located in the north and northwest suburbs of Chicago.

     OTS regulations impose restrictions on the Bank's participation in real
estate development activities. See "Regulation and Supervision - Federal Savings
Institution Regulation - Capital Requirements." In 1993, the Company formed a
wholly-owned subsidiary, MAF Developments, to continue its land development
activities. As a subsidiary of the Company, the activities of MAF Developments
are not restricted by OTS regulations as they are for the Bank. The Bank also
plans to limit the activity of NW Financial to the completion of its existing
projects.

                                       45
<PAGE>

    The following is a summary as of December 31, 2000, of the residential real
estate projects NW Financial and MAF Developments currently have an interest in:

<TABLE>
<CAPTION>
                                                                                  Lots
                                          Date      Number of     Number      Available For
                                          Land        Lots       Sold but      Development     Total    Investment
   Description of Project               Acquired      Sold      Not Closed       or Sale       Lots       Balance
   ----------------------               --------      ----      ----------       -------       ----       -------
                                                                (Dollars in thousands)
<S>                                     <C>         <C>         <C>           <C>             <C>       <C>
NW Financial:

   Woodbridge                               2/90        531           -            -            531     $      290
   531 single-family homes
   48-acre commercial parcel

   Reigate Woods                           10/93         85           -            -             85              -
   85 single-family homes

MAF Developments:

   Tallgrass of Naperville            11/96-1/00        578         103          270            951          8,041
   951 residential lots

   Plainfield project                       6/00          -           -          365            365          4,387
   Proposed 365 residential lots
                                                                                                          --------
                                                                                                        $   12,718
                                                                                                          ========
</TABLE>

     The following table is a summary of the Bank's investment in and advances
to NW Financial at the dates indicated:

<TABLE>
<CAPTION>
                                                                   December 31,
                                                       -----------------------------------
                                                          2000         1999         1998
                                                       ---------     --------     --------
                                                                  (In thousands)
<S>                                                    <C>           <C>          <C>
           Common stock                                $     100        2,486        2,486
           Retained earnings                                (294)       2,657        8,179
           Intercompany advances                           2,639        2,787        1,853
                                                       ---------     --------     --------
                                                       $   2,445        7,930       12,518
                                                       =========     ========     ========
</TABLE>

     During the years ended December 31, 2000, 1999, and 1998, Mid America
Investments and NW Financial paid aggregate dividends of $3.8 million, $9.0
million, and $5.5 million, respectively, to the Bank. The remaining investment
at December 31, 2000 is a deduction for the Bank in computing its regulatory
capital requirements.

     The following is a description of the projects currently under development:

     Tallgrass of Naperville

     MAF Developments, Inc., with a venture partner who shares in 40% of the
profits, has invested in 447 acres in three separate parcels from 1996 to 2000
for the development of 951 residential lots in Naperville, Illinois. As of
December 31, 2000, the Company's investment was $8.0 million.

     Reigate Woods

     Reigate Woods consists of approximately 106 acres of land in Green Oaks,
Illinois. The subdivision was developed into 85 lots for single-family home
construction in conjunction with a developer, who shares in 50% of the profits
of the project. The project is funded solely by funds from NW Financial. The
last home was sold in December 2000.

                                       46
<PAGE>

     Woodbridge

     Woodbridge consists of 341 acres of land in Elgin, Illinois. The project is
being developed with a developer who shares in 50% of the project's profits. The
project includes 232 acres for the construction of 531 single-family homes,
which is complete, and 48 acres of commercially-zoned property. At December 31,
2000, the Company has an investment of $290,000, all related to the remaining
3.5 acres of unsold commercial property. At December 31, 2000, the remaining
acreage is under contract and expected to be sold in 2001 at a pre-tax profit of
approximately $500,000.

     Plainfield Project

     Land for a planned development of approximately 365 single-family lots in
Plainfield, Illinois was purchased in June 2000 for $4.4 million. Development is
expected to begin in late 2001 with lot sales commencing in 2002.

     Mid America Insurance Agency. Mid America Insurance Agency, Inc. ("Mid
America Insurance") is an indirect wholly-owned subsidiary of the Bank which
provides insurance brokerage services, including personal and commercial
insurance products, to the Bank's customers. For the years ended December 31,
2000, 1999 and 1998, Mid America Insurance generated pre-tax income of $113,000,
$75,000, and $60,000, respectively.

     Mid America Investments. The Bank, through Mid America Investments, is a
subscriber to INVEST, a registered broker-dealer that provides certain
securities brokerage and investment advisory services under its INVEST service
mark to the general public. Through this program and licensed dual employees,
these services are offered to customers of the Bank. Presently 14 investment
executives are employed and operate from all Bank locations. Revenues are
generated from the sales of securities products in the form of commissions which
are apportioned between INVEST and the Bank. For the years ended December 31,
2000, 1999 and 1998, pre-tax income from INVEST operations was $448,000,
$836,000, and $1.0 million, respectively.

                          REGULATION AND SUPERVISION

General

     The Company, as a savings and loan holding company, is required to file
certain reports with, and otherwise comply with the rules and regulations of the
OTS under the Home Owners' Loan Act (the "HOLA"). In addition, the activities of
savings institutions, such as the Bank, are governed by the HOLA and the Federal
Deposit Insurance Act ("FDI Act").

     The Bank is subject to extensive regulation, examination and supervision by
the OTS, as its primary federal regulator, and the FDIC, as the deposit insurer.
The Bank is a member of the Federal Home Loan Bank ("FHLB") System and its
deposit accounts are insured up to applicable limits by the Savings Association
Insurance Fund ("SAIF") managed by the FDIC. The Bank must file reports with the
OTS and the FDIC concerning its activities and financial condition in addition
to obtaining regulatory approvals prior to entering into certain transactions
such as mergers with, or acquisitions of, other savings institutions. The OTS
and/or the FDIC conduct periodic examinations to test the Bank's compliance with
various regulatory requirements. This regulation and supervision establishes a
comprehensive framework of activities in which an institution can engage and is
intended primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such regulatory requirements and policies, whether by the OTS, the
FDIC or the Congress, could have a material adverse impact on the Company, the
Bank and their operations. Certain of the regulatory requirements applicable to
the Bank and to the Company are

                                       47
<PAGE>

referred to below or elsewhere herein. The description of statutory provisions
and regulations applicable to savings institutions and their holding companies
set forth in this Form 10-K does not purport to be a complete description of
such statutes and regulations and their effects on the Bank and the Company.

Holding Company Regulation

     The Company is a nondiversified unitary savings and loan holding company
within the meaning of the HOLA. As a unitary savings and loan holding company,
the Company generally will not be restricted under existing laws as to the types
of business activities in which it may engage, provided that the Bank continues
to be a qualified thrift lender ("QTL"). See "Federal Savings Institution
Regulation - QTL Test." Upon any non-supervisory acquisition by the Company of
another savings institution or savings bank that meets the QTL test and is
deemed to be a savings institution by the OTS, the Company would become a
multiple savings and loan holding company (if the acquired institution is held
as a separate subsidiary) and would be subject to extensive limitations on the
types of business activities in which it could engage. The HOLA limits the
activities of a multiple savings and loan holding company and its non-insured
institution subsidiaries primarily to activities permissible for bank holding
companies under Section 4(c)(8) of the Bank Holding Company Act of 1956, as
amended ("BHC Act"), subject to the prior approval of the OTS, and activities
authorized by OTS regulation and no multiple savings and loan holding company
may acquire more than 5% of the voting stock of a company engaged in
impermissible activities.

     The HOLA prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from acquiring more than 5% of
the voting stock of another savings institution or holding company thereof,
without prior written approval of the OTS; or acquiring or retaining control of
a depository institution that is not insured by the FDIC. In evaluating
applications by holding companies to acquire savings institutions, the OTS must
consider the financial and managerial resources and future prospects of the
company and institution involved, the effect of the acquisition of the
institution on the risk to the insurance funds, the convenience and needs of the
community and competitive factors.

     Although savings and loan holding companies are not subject to specific
capital requirements or specific restrictions on the payment of dividends or
other capital distributions, HOLA does prescribe such restrictions on subsidiary
savings institutions, as described below. The Bank must notify the OTS 30 days
before declaring any dividend to the Company. In addition, the financial impact
of a holding company on its subsidiary institution is a matter that is evaluated
by the OTS and the agency has authority to order cessation of activities or
divestiture of subsidiaries deemed to pose a threat to the safety and soundness
of the institution.

Federal Savings Institution Regulation

     Capital Requirements. The OTS capital regulations require savings
institutions to meet three minimum capital standards: a 1.5% tangible capital
ratio, a 3% leverage (core capital) ratio and an 8% risk-based capital ratio. In
addition, the prompt corrective action standards discussed below also establish,
in effect, a minimum 2% tangible capital standard, a 4% leverage (core) capital
ratio (3% for institutions receiving the highest rating on the CAMEL financial
institution rating system), and, together with the risk-based capital standard
itself, a 4% Tier I risk-based capital standard. The OTS regulations also
require that, in meeting the leverage ratio, tangible and risk-based capital
standards, institutions must generally deduct investments in and loans to
subsidiaries engaged in activities as principal that are not permissible for a
national bank. For the Bank, this includes its $2.4 million investment in NW
Financial at December 31, 2000, which the Bank must deduct from regulatory
capital for purposes of calculating its capital requirements. The risk-based
capital standard for savings institutions requires the maintenance of Tier I
(core) and total capital (which is defined as core capital and supplementary
capital) to risk-weighted assets of at least 4% and 8%, respectively.

                                       48
<PAGE>

     At December 31, 2000 and 1999, the Bank was in compliance with the current
capital requirements as follows:

<TABLE>
<CAPTION>
                                                              December 31, 2000               December 31, 1999
                                                          -------------------------       -------------------------
                                                                        Percent of                      Percent of
                                                            Amount        Assets             Amount       Assets
                                                          -----------   ---------          ----------    --------
<S>                                                     <C>             <C>              <C>            <C>
                                                                          (Dollars in thousands)

Stockholder's equity of the Bank                        $     394,474      7.63%         $    354,297       7.64%
                                                            =========    ======             =========     ======

Tangible capital                                        $     321,931      6.32          $    288,177       6.32
Tangible capital requirement                                   76,408      1.50                68,391       1.50
                                                            ---------    ------             ---------     ------
Excess                                                  $     245,523      4.82          $    219,786       4.82
                                                            =========    ======             =========     ======

Core capital                                                  321,931      6.32               288,177       6.32
Core capital requirement                                      152,816      3.00               136,782       3.00
                                                            ---------    ------             ---------     ------
Excess                                                  $     169,115      3.32          $    151,395       3.32
                                                            =========    ======             =========     ======

Core and supplementary capital                          $     336,801     11.98          $    305,453      12.32
Risk-based capital requirement                                224,878      8.00               198,423       8.00
                                                            ---------    ------             ---------     ------
Excess                                                  $     111,923      3.98          $    107,030       4.32
                                                            =========    ======             =========     ======

Total Bank assets                                       $   5,168,163                    $  4,634,591
Adjusted total Bank assets                                  5,093,883                       4,559,397
Total risk-weighted assets                                  2,885,260                       2,555,481
Adjusted total risk-weighted assets                         2,810,981                       2,480,286
Investment in Bank's real estate subsidiaries                   2,445                           7,930
Goodwill and core deposit intangibles                          68,864                          61,200
</TABLE>

     The following table reflects the Bank's regulatory capital as of December
31, 2000 as it relates to these three capital requirements:

<TABLE>
<CAPTION>
                                                                                                             Risk-
                                                                            Tangible         Core            Based
                                                                            --------      -----------    -------------
<S>                                                                        <C>            <C>            <C>
                                                                                    (Dollars in thousands)

Stockholder's equity of the Bank                                           $ 394,474        394,474         394,474
Goodwill and core deposit intangibles                                        (68,864)       (68,864)        (68,864)
Non-permissible subsidiary deduction                                          (2,445)        (2,445)         (2,445)
Non-includible purchased mortgage servicing rights                              (511)          (511)           (511)
Regulatory capital adjustment for available for sale securities                 (723)          (723)           (723)
Low level recourse                                                                 -              -          (3,388)
General allowance for loan losses                                                  -              -          18,258
                                                                           ---------        -------         -------
   Regulatory capital                                                      $ 321,931        321,931         336,801
                                                                           =========        =======         =======
</TABLE>

     Prompt Corrective Regulatory Action. Under the OTS prompt corrective action
regulations, the OTS is required to take certain supervisory actions against
undercapitalized institutions, the severity of which depends upon the
institution's degree of undercapitalization. Generally, a savings institution is
considered "well capitalized" if its ratio of total capital to risk-weighted
assets is at least 10%, its ratio of Tier I (core) capital to risk-weighted
assets is at least 6%, its ratio of core capital to total assets is at least 5%,
and it is not subject to any order or directive by the OTS to meet a specific
capital level. A savings institution generally is considered "adequately
capitalized" if its ratio of total capital to risk-weighted assets is at least
8%, its ratio of Tier I (core) capital to risk-weighted assets is at least 4%,
and its ratio of core capital to total assets is at least 4% (3% if the
institution receives the highest CAMEL rating). A savings institution that has a
ratio of total capital to weighted assets of less than 8%, a ratio of Tier I
(core) capital to risk-weighted assets of less than 4% or a ratio of core
capital to total assets of less than 4% (3% or less for institutions with the
highest examination rating) is considered to be "undercapitalized." A savings

                                       49
<PAGE>

institution that has a total risk-based capital ratio less than 6%, a Tier 1
risk-based capital ratio of less than 3% or a leverage ratio that is less than
3% is considered to be "significantly undercapitalized," and a savings
institution that has a tangible capital to assets ratio equal to or less than 2%
is deemed to be "critically undercapitalized." Subject to a narrow exception,
the banking regulator is required to appoint a receiver or conservator for an
institution that is "critically undercapitalized." The regulation also provides
that a capital restoration plan must be filed with the OTS within 45 days of the
date a savings institution receives notice that it is "undercapitalized,"
"significantly undercapitalized" or "critically undercapitalized." Compliance
with the plan must be guaranteed by any parent holding company. In addition,
numerous mandatory supervisory actions become immediately applicable to an
undercapitalized institution, including, but not limited to, increased
monitoring by regulators and restrictions on growth, capital distributions and
expansion. The OTS could also take any one of a number of discretionary
supervisory actions, including the issuance of a capital directive and the
replacement of senior executive officers and directors.

     Insurance of Deposit Accounts. The FDIC has adopted a risk-based deposit
insurance system that assesses deposit insurance premiums according to the level
of risk involved in an institution's activities. An institution's risk category
is based upon whether the institution is classified as "well capitalized,"
"adequately capitalized" or "undercapitalized" and one of three supervisory
subcategories within each capital group. The supervisory subgroup to which an
institution is assigned is based on a supervisory evaluation and information
which the FDIC determines to be relevant to the institution's financial
condition and the risk posed to the deposit insurance fund. Based on its capital
and supervisory subgroups, each Bank Insurance Fund ("BIF") and SAIF member
institution is assigned an annual FDIC assessment rate, with an institution in
the highest category (i.e., well-capitalized and healthy) receiving the lowest
rates and an institution in the lowest category (i.e., undercapitalized and
posing substantial supervisory concern) receiving the highest rates. The FDIC
has authority to further raise premiums if deemed necessary. If such action is
taken, it could have an adverse effect on the earnings of the Bank.

     The Deposit Insurance Funds Act of 1996 (the "Funds Act") imposed a special
one-time assessment on SAIF members, including the Bank, to recapitalize the
SAIF. The SAIF was undercapitalized due primarily to a statutory requirement
that SAIF members make payments on bonds issued in the late 1980's by the
Financing Corporation ("FICO") to recapitalize the predecessor to SAIF. The
Funds Act spreads the obligations for payment of the FICO bonds across all SAIF
and BIF members. Beginning on January 1, 1997, BIF deposits were assessed for a
FICO payment of 1.3 basis points, while SAIF deposits paid 6.48 basis points.
Full pro rata sharing of the FICO payments between BIF and SAIF members will
occur on the date the BIF and SAIF are merged. As of December 31, 2000, the BIF
and SAIF have not been merged.

     As a result of the Funds Act and the FDIC Act, the FDIC voted to
effectively lower SAIF assessments to 0 to 27 basis points as of January 1,
1997. The Bank's assessment rate for the year ended December 31, 2000 was the
lowest available to well-capitalized financial institutions. A significant
increase in SAIF insurance premiums would likely have an adverse effect on the
operating expenses and results of operations of the Bank.

     Under the FDI Act, insurance of deposits may be terminated by the FDIC upon
a finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
OTS. The management of the Bank does not know of any practice, condition or
violation that might lead to termination of deposit insurance.

     Impact of the Gramm-Leach-Bliley Act. On November 12, 1999, President
Clinton signed into law the Gramm-Leach-Bliley Act (the "GLB Act"). The GLB Act
significantly reforms various aspects of the financial services business,
including, but not limited to: (i) the establishment of a new framework under
which bank holding companies and, subject to numerous restrictions, banks can
own securities firms,

                                       50
<PAGE>

insurance companies and other financial companies; (ii) subjecting banks to the
same securities regulation as other providers of securities products; and (iii)
prohibiting new unitary savings and loan holding companies from engaging in
nonfinancial activities or affiliating with nonfinancial entities.

     The provisions in the GLB Act permitting full affiliations between bank
holding companies or banks and other financial companies do not increase our
authority to affiliate with securities firms, insurance companies or other
financial companies. As a unitary savings and loan holding company, the Company
was generally permitted to have such affiliations prior to the enactment of the
GLB Act. It is expected, however, that these provisions will benefit the
Company's competitors.

     The prohibition on the ability of new unitary savings and loan holding
companies to engage in nonfinancial activities or affiliating with nonfinancial
entities generally applies only to savings and loan holding companies that were
not, or had not submitted an application to become, savings and loan holding
companies as of May 4, 1999. Since the Company was treated as a unitary savings
and loan holding company prior to that date, the GLB Act will not prohibit us
from engaging in nonfinancial activities or acquiring nonfinancial subsidiaries.
However, the GLB Act generally restricts any nonfinancial entity from acquiring
the Company unless such nonfinancial entity was, or had submitted an application
to become a savings and loan holding company as of May 4, 1999.

     The GLB Act imposes new requirements on financial institutions with respect
to customer privacy by generally prohibiting disclosure of customer information
to non-affiliated third parties unless the customer has been given the
opportunity to object and has not objected to such disclosure. Financial
institutions are further required to disclose their privacy policies to
customers annually. Final regulations have been passed regarding customer
privacy under the GLB Act, however, compliance with such privacy regulations are
voluntary until July, 2001.

     The Company does not believe that the GLB Act will have a material adverse
affect upon its operations in the near term. However, to the extent the GLB Act
permits banks, securities firms and insurance companies to affiliate, the
financial services industry may experience further consolidation. This could
result in a growing number of larger financial institutions that offer a wider
variety of financial services than the Company currently offers and that can
aggressively compete in the markets the Company currently serves.

     Loans to One Borrower. Under the HOLA, savings institutions are generally
subject to the limits on loans to one borrower applicable to national banks.
Generally, savings institutions may not make a loan or extend credit to a single
or related group of borrowers in excess of 15% of its unimpaired capital and
surplus. An additional amount may be lent, equal to 10% of unimpaired capital
and surplus, if such loan is secured by readily-marketable collateral, which is
defined to include certain financial instruments and bullion. At December 31,
2000, the Bank's limit on loans to one borrower was $48.3 million. At December
31, 2000, the Bank's largest aggregate outstanding balance of loans to any one
borrower was $23.1 million.

     QTL Test. The HOLA requires savings institutions to meet a QTL test. Under
the QTL test, a savings and loan association is required to either qualify as a
"domestic building and loan association" under the Internal Revenue Code or
maintain at least 65% of its "portfolio assets" (total assets less (i) specified
liquid assets up to 20% of total assets; (ii) intangibles, including goodwill;
and (iii) the value of property used to conduct business) in certain "qualified
thrift investments" (primarily residential mortgages and related investments,
including certain mortgage-backed securities) in at least 9 months out of each
12 month period. A savings institution that fails the QTL test is subject to
certain operating restrictions and may be required to convert to a bank charter.
As of December 31, 2000, the Bank maintained 95.4% of its portfolio assets in
qualified thrift investments and, therefore, met the QTL test.

                                       51
<PAGE>

     Limitation on Capital Distributions. OTS regulations impose limitations
upon all capital distributions by savings institutions, such as cash dividends,
payments to repurchase or otherwise acquire its shares, payments to shareholders
of another institution in a cash-out merger and other distributions charged
against capital. The regulations provide that an institution (i) which is not
eligible for expedited treatment; or (ii) which its total amount of capital
distributions for a calendar year exceeds its net income for that year to date
plus its retained income for the proceeding two years; or (iii) which would not
be at least adequately capitalized following the distribution; or (iv) which
would violate a prohibition contained in a statute, regulation or agreement
between the institution and the OTS by performing the capital distribution, must
submit an application to the OTS to receive approval of the capital
distribution. Under any other circumstances, the Bank would be required to
provide a written notice to the OTS 30 days prior to the capital distribution.

     Assessments. Savings institutions are required to pay assessments to the
OTS to fund the agency's operations. The general assessment, paid on a
semi-annual basis, is computed upon the savings institution's total assets,
including consolidated subsidiaries, as reported in the Bank's latest quarterly
thrift financial report. The assessments paid by the Bank were $661,000,
$577,000, and $512,000 in 2000, 1999 and 1998 respectively.

     Branching. OTS regulations permit nationwide branching by federally
chartered savings institutions to the extent allowed by federal statute. This
permits federal savings institutions to establish interstate networks and to
geographically diversify their loan portfolios and lines of business. The OTS
authority preempts any state law purporting to regulate branching by federal
savings institutions.

     Transactions with Related Parties. The Bank's authority to engage in
transactions with related parties or "affiliates" (e.g., any company that
controls or is under common control with an institution, including the Company
and its non-savings institution subsidiaries) is limited by Sections 23A and 23B
of the Federal Reserve Act ("FRA"). Section 23A limits the aggregate amount of
covered transactions with any individual affiliate to 10% of the capital and
surplus of the savings institution. The aggregate amount of covered transactions
with all affiliates is limited to 20% of the savings institution's capital and
surplus. Certain transactions with affiliates are required to be secured by
collateral in an amount and of a type described in Section 23A, and the purchase
of low quality assets from affiliates is generally prohibited. Section 23B
generally provides that certain transactions with affiliates, including loans
and asset purchases, must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the
institution as those prevailing at the time for comparable transactions with
non-affiliated companies. In addition, savings institutions are prohibited from
lending to any affiliate that is engaged in activities that are not permissible
for bank holding companies and no savings institution may purchase the
securities of any affiliate other than a subsidiary.

     The Bank's authority to extend credit to executive officers, directors and
10% shareholders, as well as entities such persons control, is governed by
Sections 22(g) and 22(h) of the FRA and Regulation O thereunder. Among other
things, such loans are generally required to be made on terms substantially the
same as those offered to unaffiliated individuals and to not involve more than
the normal risk of repayment. Regulation O also places individual and aggregate
limits on the amount of loans the Bank may make to such persons based, in part,
on the Bank's capital position and requires certain board approval procedures to
be followed.

     Enforcement. Under the FDI Act, the OTS has primary enforcement
responsibility over savings institutions and has the authority to bring actions
against the institution and all "institution-affiliated parties," including
stockholders, and any attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on an
insured institution. Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of officers and/or
directors to institution of proceedings for receivership, conservatorship or
termination of deposit insurance. Civil penalties cover a wide range of
violations and may amount to as much as $1

                                       52
<PAGE>

million per day in certain circumstances. Under the FDI Act, the FDIC has the
authority to recommend to the Director of the OTS enforcement action to be taken
with respect to a particular savings institution. If action is not taken by the
Director, the FDIC has authority to take such action under certain
circumstances. Federal law also establishes criminal penalties for certain
violations.

     Standards for Safety and Soundness. The federal banking agencies have
adopted Interagency Guidelines Prescribing Standards for Safety and Soundness
("Guidelines") and a final rule to implement safety and soundness standards
required under the FDI Act. The Guidelines set forth the safety and soundness
standards that the federal banking agencies use to identify and address problems
at insured depository institutions before capital becomes impaired. The
standards set forth in the Guidelines address internal controls and information
systems; internal audit system; credit underwriting; loan documentation;
interest rate risk exposure; asset growth; asset quality; earnings and
compensation, fees and benefits. If the appropriate federal banking agency
determines that an institution fails to meet any standard prescribed by the
Guidelines, the agency may require the institution to submit to the agency an
acceptable plan to achieve compliance with the standard, as required by the FDI
Act. The final rule establishes deadlines for the submission and review of such
safety and soundness compliance plans when such plans are required.

Federal Home Loan Bank System

     The Bank is a member of the FHLB System, which consists of 12 regional
FHLBs. The FHLB provides a central credit facility primarily for member
institutions. The Bank, as a member of the FHLB of Chicago, is required to
acquire and hold shares of capital stock in that FHLB in an amount at least
equal to 1% of the aggregate principal amount of its unpaid residential mortgage
loans and similar obligations at the beginning of each year, or 1/20 of its
advances (borrowings) from the FHLB-Chicago, whichever is greater. At December
31, 2000, the Bank was in compliance with this requirement, with an investment
in FHLB of Chicago stock of $84.8 million. FHLB of Chicago advances must be
secured by specified types of collateral and may be obtained primarily for the
purpose of providing funds for residential housing finance.

     The FHLBs are required to provide funds to cover certain obligations on
bonds issued to fund the resolution of insolvent thrifts and to contribute funds
for affordable housing programs. These requirements could reduce the amount of
dividends that the FHLBs pay to their members and could also result in the FHLBs
imposing a higher rate of interest on advances to their members. For the years
ended December 31, 2000, 1999, and 1998, dividends from the FHLB of Chicago to
the Bank amounted to $6.1 million, $3.9 million, and $2.6 million, respectively.
If FHLB dividends were reduced, or interest on future FHLB advances increased,
the Bank's net interest income might also be reduced.

Federal Reserve System

     The Federal Reserve Board regulations require savings institutions to
maintain non-interest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The Federal Reserve Board
regulations generally require that reserves be maintained against aggregate
transaction accounts as follows: for accounts aggregating $42.8 million or less
(subject to adjustment by the Federal Reserve Board) the reserve requirement is
3%; and for accounts greater than $42.8 million, the reserve requirement is
currently $1,284,000 plus 10% (subject to adjustment by the Federal Reserve
Board between 8% and 14%) against that portion of total transaction accounts in
excess of $42.8 million, as the first $5.5 million of otherwise reservable
balances (subject to adjustments by the Federal Reserve Board) are exempted from
the reserve requirements. The Bank is in compliance with the foregoing
requirements. The balances maintained to meet the reserve requirements imposed
by the Federal Reserve Board may be used to satisfy liquidity requirements
imposed by the OTS.

                                       53
<PAGE>

Impact of New Accounting Standards

     In June 1998, the Financial Accounting Standards Board, ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
This Statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires all derivatives to be
recognized as either assets or liabilities in the statement of financial
condition and to be measured at fair value. As issued, the Statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB No.
133." The Statement is effective upon issuance and it amends SFAS No. 133 to be
effective for all fiscal quarters of fiscal years beginning after June 30, 2000.
The Company adopted these statements as of January 1, 2001, and this
implementation did not have a material impact on its financial position or
results of operations.

     In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No.
140 supercedes and replaces FASB SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." Accordingly,
SFAS No. 140 is now the authoritative accounting literature for transfers and
servicing of financial assets and extinguishments of liabilities. SFAS No. 140
also includes several additional disclosure requirements in the area of
securitized financial assets and collateral arrangements. The provisions of SFAS
No. 140 related to transfers of financial assets are to be applied to all
transfers of financial assets occurring after March 31, 2001. The collateral
recognition and disclosure provisions in SFAS No. 140 are effective for fiscal
years ending after December 15, 2000. The Company anticipates that the adoption
of SFAS No. 140 will not have a material impact on the Company's results of
operation.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

     Asset/Liability Management and GAP Analysis. As part of its normal
operations, the Bank is subject to interest-rate risk on the interest-sensitive
assets it invests in and the interest-sensitive liabilities it borrows. The
Bank's exposure to interest rate risk is reviewed at least quarterly by the
Bank's asset/liability management committee ("ALCO") and the Board of Directors
of the Company. The ALCO, which includes members of senior management, monitors
the rate and sensitivity repricing characteristics of the individual asset and
liability portfolios the Bank maintains and determines risk management
strategies.

     The Bank utilizes an interest rate sensitivity gap analysis to monitor the
relationship of maturing or repricing interest-earning assets and
interest-bearing liabilities, while maintaining an acceptable interest rate
spread. Interest rate sensitivity gap is defined as the difference between the
amount of interest-earning assets maturing or repricing within a specific period
of time and the amount of interest-bearing liabilities maturing or repricing
within that same period of time, and is usually analyzed at a period of one
year. Generally, a negative gap, where more interest-bearing liabilities are
repricing or maturing than interest-earning assets, would tend to result in a
reduction in net interest income in a period of rising interest rates.
Conversely, during a period of falling interest rates, a negative gap would
likely result in an improvement in net interest income. Management's goal is to
maintain its cumulative one-year gap within the range of (15)% to 15%. The gap
ratio fluctuates as a result of market conditions and management's expectation
of future interest rate trends. The Bank's asset/liability management strategy
emphasizes the origination of one- to four-family adjustable-rate loans and
other loans which have shorter terms to maturity or reprice more frequently than
fixed-rate mortgage loans, yet provide a positive margin over the Bank's cost of
funds, for its own portfolio. Historically, the Bank has generally sold its
conforming fixed-rate loan originations in the secondary market in order to
maintain its interest rate sensitivity levels. During the eighteen to
twenty-four month period ended June 30, 1999, the Bank had been retaining the
majority of the non-conforming, fixed-rate originations and all of the
prepayment protected fixed-rate loan originations in portfolio for investment
purposes to help utilize the Bank's higher capital base resulting from the
merger with Northwestern. These fixed rate loans were funded with intermediate
to longer-term fixed rate FHLB advances, some of which contained call options at
the discretion of the FHLB of Chicago.

                                       54
<PAGE>

     The Bank, except as noted below, has not used derivative financial
instruments such as swaps, caps, floors, options or similar financial
instruments to manage its interest rate risk. However, in conjunction with its
origination and sale strategy discussed above, management does hedge the Bank's
exposure to interest rate risk primarily by committing to sell fixed-rate
mortgage loans for future delivery. Under these commitments, the Bank agrees to
sell fixed-rate loans at a specified price and at a specified future date. The
sale of fixed-rate mortgage loans for future delivery has enabled the Bank to
continue to originate new mortgage loans, and to generate gains on sale of these
loans as well as loan servicing fee income, while maintaining its gap ratio
within the parameters discussed above. Most of these forward sale commitments
are conducted with FNMA and FHLMC with respect to loans that conform to the
requirements of these government agencies. The forward commitment of mortgage
loans presents a risk to the Bank if the Bank is not able to deliver the
mortgage loans by the commitment expiration date. If this should occur, the Bank
would be required to pay a fee to the buyer. The Bank attempts to mitigate this
risk by charging potential retail borrowers a 1% fee to fix the interest rate,
or by requiring the interest rate to float at market rates until shortly before
closing. In its wholesale lending operation, there is more risk due to the
competitive inability to charge a rate lock fee to the mortgage brokers, which
the Bank tries to offset by using higher assumed fallout rates. In addition, the
Bank uses U.S. Treasury bond futures contracts to hedge some of the mortgage
pipeline exposure. These futures contracts are used to hedge mortgage loan
production in those circumstances where loans are not sold forward as described
above.

     The table on the next page sets forth the scheduled repricing or maturity
of the Bank's assets and liabilities at December 31, 2000. The table uses
management's assumptions regarding prepayment percentages on loans and
mortgage-backed securities, based on its current experience in these portfolios.
The Bank uses the withdrawal assumptions used by the FHLB of Chicago with
respect to NOW, checking and passbook accounts, which are annual rates of 17.0%,
17.0%, 17.0%, 16.0%, and 33.0%, respectively. Investment securities and FHLB
advances that contain call provisions at the option of the issuer or lender are
generally shown in the category relating to their respective final maturities.
$60.0 million of FHLB advances with final maturities in more than five years,
but callable in calendar 2001 are categorized as $60.0 million due in 6 months
or less, in anticipation of them being called.

     The effect of these assumptions is to quantify the dollar amount of items
that are interest-sensitive and may be repriced within each of the periods
specified. Certain shortcomings are inherent in using gap analysis 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. 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, such as the
pricing of deposits. Additionally, certain assets such as hybrid adjustable-rate
mortgage loans have features that restrict changes in interest rates on a
short-term basis and over the life of the asset. Finally, as interest rates
change, loan prepayment rates will differ from those rates assumed by management
in the table.

                                       55
<PAGE>

     Although management believes that its asset/liability management strategies
mitigate the potential effects of changes in interest rates on the Bank's
operations, material and prolonged increases in interest rates may adversely
affect the Bank's operations because the Bank's interest-bearing liabilities
which mature or reprice within one year are currently greater than the Bank's
interest-earning assets which mature or reprice within the same period.
Conversely, decreases in interest rates could benefit the Bank's operation as
maturing interest-bearing liabilities are replaced at lower costs.

<TABLE>
<CAPTION>
                                                                            December 31, 2000
                                                  ---------------------------------------------------------------------------
                                                      1/2 Yr.   1/2 - 1 Yr.   1 - 3 Yrs.   3 - 5 Yrs.    5+ Yrs.   Total
                                                   ------------ ----------    ----------   ----------  ---------  --------
                                                                             (Dollars in thousands)
<S>                                                              <C>         <C>         <C>         <C>           <C>
Interest-earning assets:
   Loans receivable                              $  784,677        544,934    1,228,611    801,888     986,262      4,346,372
   Mortgage-backed securities                        59,741         12,837       12,485      9,004      10,318        104,385
   Investment securities /(1)/                      144,363            464       30,215     13,567      83,293        271,902
   Interest-bearing deposits                         53,392              -            -          -           -         53,392
   Federal funds sold                               139,268              -            -          -           -        139,268
                                                 ----------      ----------  ----------  ---------  -----------    ----------
      Total interest-earning assets               1,181,441        558,235    1,271,311    824,459   1,079,873      4,915,319
   Impact of hedging activities /(2)/                41,074              -            -          -     (41,074)             -
                                                 ----------      ---------    ---------  ---------   ---------     ----------
      Total net interest-earning assets,
        adjusted for impact of hedging
        activities                                1,222,515        558,235    1,271,311    824,459    1,038,799     4,915,319
Interest-bearing liabilities:
   NOW and checking accounts                         21,096         19,303       70,650     43,886      93,258        248,193
   Money market accounts                            231,360              -            -          -           -        231,360
   Passbook accounts                                 62,782         57,445      210,249    130,602     277,529        738,607
   Certificate accounts                             734,389        290,144      542,831     40,462       7,284      1,615,110
   FHLB advances                                    425,000        175,000      465,500    345,000     285,000      1,695,500
   Other borrowings and subordinated debt            33,400              -            -          -           -         33,400
                                                 ----------      ---------    ---------  ---------   ---------     ----------
      Total interest-bearing liabilities          1,508,027        541,892    1,289,230    559,950     663,071      4,562,170
                                                  ---------      ---------    ---------  ---------   ---------      ---------
Interest sensitivity gap                         $ (285,512)        16,343      (17,919)   264,509     375,728        353,149
                                                 ==========      =========    =========  =========   =========     ==========
Cumulative gap                                   $ (285,512)      (269,169)    (287,088)   (22,579     353,149
                                                 ==========      =========    =========  =========   =========


Cumulative gap as a percentage
   of total assets                                    (5.50)%        (5.18)       (5.53)      (.43)       6.80
Cumulative net interest-earning assets as
   a percentage of interest-bearing liabilities       81.07%         86.87        91.40      99.42      107.74
</TABLE>

/(1)/ Includes $84.8 million of stock in FHLB of Chicago in 6 months or less.

/(2)/ Represents forward commitments to sell long-term fixed-rate mortgage
loans.

      The Bank's cumulative one-year gap was a negative $269.2 million or
(5.18)%, of total assets at December 31, 2000, compared with a negative $534.5
million or (11.47)% of total assets at December 31, 1999. During 2000, the Bank
took steps to decrease its liability-sensitive gap measure by emphasizing the
addition of shorter-term liquidity investments, as well as extending maturities
on borrowings and maturing certificates of deposit. In addition, with the
decline in interest rates during the last quarter of 2000, prepayments on loans
receivable increased, shortening expected maturities on longer-term fixed rate
loans, which helped further improve the negative gap position of the Bank.

     Net Portfolio Value Analysis. Under OTS Thrift Bulletin 13a, the Bank is
required to measure its interest rate risk assuming various increases and
decreases in general interest rates, and the effect on net interest income and
market value of portfolio equity. The Board of Directors has established limits
to changes in Net Portfolio Value ("NPV") and net interest income across a range
of hypothetical interest rate changes. If estimated changes to NPV and net
interest income are not within these limits, the Board may direct management to
adjust its asset/liability mix to bring its interest rate risk within Board
limits. At December 31, 2000, the Bank was within the Board approval limits.

                                       56
<PAGE>

     Interest rate sensitivity analysis is used to measure the Bank's interest
rate risk by calculating the estimated change in the NPV of its cash flows from
interest sensitive assets and liabilities, as well as certain off-balance sheet
items, in the event of a series of sudden and sustained changes in interest
rates ranging from 100 to 300 basis points. Management assumes that a 200 basis
point movement up or down is considered reasonable and plausible for purposes of
reviewing its overall interest-rate risk. NPV is the market value of portfolio
equity and is computed as the difference between the market value of assets and
the market value of liabilities, adjusted for the value of off-balance sheet
items. The table below shows the change in NPV applying various rate shocks to
the Bank's interest-earning assets and interest-bearing liabilities as of
December 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                  Estimated Increase           Percentage Increase
          Change in                      Estimated NPV             (Decrease) in NPV            (Decrease) in NPV
                                    ----------------------      ----------------------       ----------------------
        Interest rate               12/31/00      12/31/99      12/31/00      12/31/99       12/31/00      12/31/99
--------------------------          --------      --------      --------      --------       --------      --------
                                                                (Dollars in thousands)
<S>                              <C>              <C>            <C>          <C>            <C>           <C>
200 basis point rise             $   317,033       205,306       (113,593)    (134,036)          (26)%          (39)%
100 basis point rise                 386,263       278,243        (44,363)     (61,099)          (10)           (18)
Base scenario                        430,626       339,342              -            -             -              -
100 basis point decline              437,684       378,980          7,659       39,638             2             12
200 basis point decline              416,403       396,377        (14,223)      57,035            (3)            17
</TABLE>

     The Bank's net portfolio value ("NPV") at December 31, 2000 increased $91.3
million to $430.6 million from $339.3 million at December 31, 1999. The increase
is due to (1) a $34.8 million increase in stockholders' equity; (2) the emphasis
on adding adjustable-rate mortgage loans to the Bank's loan portfolio during
2000; (3) the extending of certificate of deposit maturities; and (4) the
decrease in market interest rates. In addition, the sensitivity to changes in
interest rates improved as noted by the Bank's percentage change in NPV at the
200 basis point rise scenario. This improvement is due to the addition of
shorter duration loans receivable, which are less sensitive to changes in
interest rates than longer-term loans, as well as the addition of shorter-term
investment securities for the same reasons.

     Interest rate risk is the most significant market risk affecting the Bank.
Other types of market risk, such as foreign currency exchange risk and commodity
price risk, do not arise in the normal course of the Company's business
activities and operations.

                                       57
<PAGE>

Item 8.   Financial Statements and Supplementary Data

                      MAF Bancorp, Inc. and Subsidiaries
                Consolidated Statements of Financial Condition

<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                        ---------------------------
                                                                                            2000           1999
                                                                                        -----------     -----------
                                                                                              (In thousands)
<S>                                                                                   <C>               <C>
Assets
Cash and due from banks                                                               $      77,860          71,721
Interest-bearing deposits                                                                    53,392          51,306
Federal funds sold                                                                          139,268          35,013
                                                                                        -----------     -----------
   Total cash and cash equivalents                                                          270,520         158,040

Investment securities, at amortized cost (fair value of $13,290 and $12,321)                 12,633          11,999
Investment securities available for sale, at fair value                                     174,494         194,105
Stock in Federal Home Loan Bank of Chicago, at cost                                          84,775          75,025
Mortgage-backed securities, at amortized cost
   (fair value of $79,137 and $92,095)                                                       80,301          94,251
Mortgage-backed securities available for sale, at fair value                                 24,084          39,703
Loans receivable held for sale                                                               41,074          12,601
Loans receivable, net of allowance for loan losses of $18,258 and $17,276                 4,287,040       3,871,968
Accrued interest receivable                                                                  27,888          23,740
Foreclosed real estate                                                                        1,808           7,415
Real estate held for development or sale                                                     12,718          15,889
Premises and equipment, net                                                                  48,904          42,489
Other assets                                                                                 60,485          49,640
Intangible assets, net of accumulated amortization of $15,030 and $10,555                    68,864          61,200
                                                                                        -----------     -----------
                                                                                      $   5,195,588       4,658,065
                                                                                        ===========     ===========

Liabilities and Stockholders' Equity
Liabilities:
   Deposits                                                                           $   2,974,213       2,699,242
   Borrowed funds                                                                         1,728,900       1,526,363
   Advances by borrowers for taxes and insurance                                             38,354          34,767
   Accrued expenses and other liabilities                                                    66,392          44,772
                                                                                        -----------     -----------
      Total liabilities                                                                   4,807,859       4,305,144
Stockholders' equity:

   Preferred stock, $.01 par value; authorized
     5,000,000 shares; none issued or outstanding                                                 -               -
   Common stock, $.01 par value;
     80,000,000 shares authorized; 25,420,650 shares issued;
     23,110,022 and 23,911,508 shares outstanding                                               254             254
   Additional paid-in capital                                                               198,068         194,874
   Retained earnings, substantially restricted                                              237,867         198,156
   Stock in Gain Deferral Plan; 223,453 shares                                                  511             511
   Accumulated other comprehensive income (loss), net of tax                                  1,435          (3,675)
   Treasury stock, at cost; 2,534,081 and 1,732,595 shares                                  (50,406)        (37,199)
                                                                                        -----------     -----------
      Total stockholders' equity                                                            387,729         352,921
                                                                                        -----------     -----------
                                                                                      $   5,195,588       4,658,065
                                                                                        ===========     ===========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       58
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
                     Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                             ---------------------------------------------
                                                                                 2000            1999             1998
                                                                             -----------      -----------      -----------
                                                                             (Dollars in thousands, except per share data)
<S>                                                                         <C>               <C>              <C>
Interest income:
   Loans receivable                                                         $    304,349          253,499          212,427
   Mortgage-backed securities held to maturity                                     5,740            6,625           10,128
   Mortgage-backed securities available for sale                                   2,217            2,808            3,847
   Investment securities held to maturity                                          7,199            4,837            3,689
   Investment securities available for sale                                       12,435           11,566            9,763
   Interest-bearing deposits and federal funds sold                               11,163            5,757            7,409
                                                                             -----------      -----------      -----------
     Total interest income                                                       343,103          285,092          247,263
Interest expense:
   Deposits                                                                      115,509           99,665           95,788
   Borrowed funds                                                                101,664           68,736           54,787
                                                                             -----------      -----------      -----------
     Total interest expense                                                      217,173          168,401          150,575
                                                                             -----------      -----------      -----------
     Net interest income                                                         125,930          116,691           96,688
Provision for loan losses                                                          1,500            1,100              800
                                                                             -----------      -----------      -----------
     Net interest income after provision for loan losses                         124,430          115,591           95,888
Non-interest income:
   Gain (loss) on sale and writedown of:
     Loans receivable                                                              1,108            2,583            3,204
     Mortgage-backed securities                                                     (700)               -                -
     Investment securities                                                           256            1,776              816
     Foreclosed real estate                                                          258              (57)             212
     Loan servicing rights                                                         4,442                -                -
   Income from real estate operations                                              9,536            9,630            4,517
   Deposit account service charges                                                12,715           10,200            8,626
   Loan servicing fee income                                                       1,686            1,761            1,400
   Impairment recovery (writedown) of mortgage servicing rights                        -              900           (1,269)
   Brokerage commissions                                                           2,322            2,566            2,812
   Other                                                                           5,820            5,485            5,232
                                                                             -----------      -----------      -----------
     Total non-interest income                                                    37,443           34,844           25,550
Non-interest expense:
   Compensation and benefits                                                      41,197           37,845           34,494
   Office occupancy and equipment                                                  8,124            7,274            6,645
   Advertising and promotion                                                       3,569            3,149            2,281
   Data processing                                                                 3,034            2,611            2,267
   Federal deposit insurance premiums                                                604            1,585            1,438
   Amortization of intangible assets                                               4,475            3,884            2,411
   Other                                                                          12,000           11,332            9,407
                                                                             -----------      -----------      -----------
     Total non-interest expense                                                   73,003           67,680           58,943
                                                                             -----------      -----------      -----------
     Income before income taxes and extraordinary item                            88,870           82,755           62,495
Income taxes                                                                      32,311           31,210           23,793
                                                                             -----------      -----------      -----------
     Income before extraordinary item                                             56,559           51,545           38,702
Extraordinary item - loss on early extinguishment
   of debt, net of tax benefit of $294                                                 -                -             (456)
                                                                             -----------      -----------      -----------
     Net income                                                             $     56,559           51,545           38,246
                                                                             ===========      ===========      ===========

Basic earnings per share:
     Income before extraordinary item                                       $       2.43            2.13              1.72
     Extraordinary item, net of tax                                                    -               -              (.02)
                                                                             -----------      -----------      -----------
         Net income                                                         $       2.43            2.13              1.70
                                                                             ===========      ===========      ===========
Diluted earnings per share:
     Income before extraordinary item                                       $       2.40            2.07              1.67
     Extraordinary item, net of tax                                                    -               -              (.02)
                                                                             -----------      -----------      -----------
       Net income                                                           $       2.40            2.07              1.65
                                                                             ===========      ===========      ===========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       59
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
          Consolidated Statements of Changes in Stockholders' Equity

<TABLE>
<CAPTION>
                                                                                               Accumulated
                                                                                                  other
                                                              Additional                Gain     compre-
                                                     Common     paid-in   Retained    Deferral   hensive    Treasury
                                                      stock     capital   earnings      Plan   income(loss)   stock       Total
                                                      -----     -------   --------      ----   -----------    -----       -----
                                                                                (Dollars in thousands)
<S>                                                  <C>      <C>       <C>           <C>      <C>          <C>          <C>
Balance at December 31, 1997                           $169    172,201   129,002           -       1,552    (39,513)      263,411
                                                      -----   --------  --------        ----      ------    -------      --------
Comprehensive income:
   Net income                                             -          -    38,246           -           -          -        38,246
   Other comprehensive income, net of tax:
     Unrealized holding loss during the year              -          -         -           -        (668)         -          (668)
     Less: reclassification adjustment of
       gains included in net income                       -          -         -           -        (459)         -          (459)
                                                      -----   --------  --------        ----      ------    -------      --------
   Total comprehensive income                             -          -    38,246           -      (1,127)         -        37,119
                                                      -----   --------  --------        ----      ------    -------      --------
Issuance of 3,305,129 shares, including value
   of stock option carryovers, for acquisition
   of  Westco Bancorp                                     -     19,120         -           -           -     53,244        72,364
Exercise of 163,470 stock options, and
   reissuance of treasury stock                           -          -    (1,462)          -           -      1,786           324
Tax benefits from stock-related compensation              -        152         -           -           -          -           152
Purchase of 973,938 shares of treasury stock              -          -         -           -           -    (22,608)      (22,608)
Cash dividends declared, $0.257 per share                 -          -    (5,750)          -           -          -        (5,750)
50% stock dividend, including impact of
   fractional shares                                     85          -      (101)          -           -          -           (16)
                                                      -----   --------  --------        ----      ------    -------      --------
Balance at December 31, 1998                            254    191,473   159,935           -         425     (7,091)      344,996
                                                      -----   --------  --------        ----      ------    -------      --------
Comprehensive income:
   Net income                                             -          -    51,545           -           -          -        51,545
   Other comprehensive income, net of tax:
     Unrealized holding loss during the year              -          -         -           -      (2,994)         -        (2,994)
     Less: reclassification adjustment of gains
       included in net income                             -          -         -           -      (1,106)         -        (1,106)
                                                      -----   --------  --------        ----      ------    -------      --------
   Total comprehensive income                             -          -    51,545           -      (4,100)         -        47,445
                                                      -----   --------  --------        ----      ------    -------      --------
Exercise of 525,801 stock options, and
   reissuance of treasury stock                           -          -    (5,143)        511           -      5,525           893
Tax benefits from stock-related compensation              -      1,008         -           -           -          -         1,008
Impact of exercise of acquisition carry-over options      -      2,393         -           -           -          -         2,393
Purchase of 1,565,591 shares of treasury stock            -          -         -           -           -    (35,633)      (35,633)
Cash dividends declared, $0.34 per share                  -          -    (8,221)          -           -          -        (8,221)
Dividends paid to Gain Deferral Plan                      -          -        40           -           -          -            40
                                                      -----   --------  --------        ----      ------    -------      --------
Balance at December 31, 1999                            254    194,874   198,156         511      (3,675)   (37,199)      352,921
                                                      -----   --------  --------        ----      ------    -------      --------
Comprehensive income:
   Net income                                             -          -    56,559           -           -          -        56,559
   Other comprehensive income, net of tax:
     Unrealized holding gain during the year              -          -         -           -       4,827          -         4,827
     Less: reclassification adjustment of loss
       included in net income                             -          -         -           -         283          -           283
                                                      -----   --------  --------        ----      ------    -------      --------
   Total comprehensive income                             -          -    56,559           -       5,110          -        61,669
                                                      -----   --------  --------        ----      ------    -------      --------
Exercise of 425,279 stock options, and
   reissuance of treasury stock                           -          -    (7,866)          -           -      8,087           221
Tax benefits from stock-related compensation              -      2,425         -           -           -          -         2,425
Impact of exercise of acquisition carry-over options      -        769         -           -           -          -           769
Purchase of 1,070,300 shares of treasury stock            -          -         -           -           -    (21,294)      (21,294)
Cash dividends declared, $0.39 per share                  -          -    (9,072)          -           -          -        (9,072)
Dividends paid to Gain Deferral Plan                      -          -        90           -           -          -            90
                                                      -----   --------  --------        ----      ------    -------      --------
Balance at December 31, 2000                           $254    198,068   237,867         511       1,435    (50,406)      387,729
                                                      =====   ========  ========        ====      ======    =======      ========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       60
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows



<TABLE>
<CAPTION>
                                                                                       Year Ended December 31,
                                                                              -------------------------------------
                                                                                  2000        1999          1998
                                                                             -----------   ----------     ---------
                                                                                           (In thousands)
<S>                                                                          <C>           <C>            <C>
Operating activities:
  Net income                                                                 $    56,559       51,545        38,246
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Amortization of premiums, discounts and deferred loan fees                     1,248        1,107         2,850
    Provision for loan losses                                                      1,500        1,100           800
    FHLB of Chicago stock dividend                                                (4,359)           -             -
    Net gain on sale of loans, mortgage-backed securities,
      and real estate held for development or sale                                (9,944)     (12,213)       (7,721)
    Net gain on sale of loan servicing rights                                     (4,442)           -             -
    Gain on sale of investment securities, net                                      (256)      (1,776)         (816)
    Impairment (recovery) of mortgage servicing rights                                 -         (900)        1,269
    Depreciation and amortization                                                  4,467        3,982         3,542
    Amortization of intangible assets                                              4,475        3,884         2,411
    Deferred income tax expense (benefit)                                            662        1,505          (318)
    Extraordinary item, net of tax benefit                                             -            -           456
    Decrease (increase) in accrued interest receivable                            (4,148)      (2,195)          296
    Net (increase) decrease in other assets and liabilities,
      net of effects from acquisitions                                            (4,100)     (18,841)        8,675
  Loans originated for sale                                                     (353,696)    (229,424)     (432,345)
  Loans purchased for sale                                                       (10,442)     (23,306)      (89,238)
  Sale of loans originated and purchased for sale                                334,817      402,890       438,453
                                                                             -----------   ----------     ---------
      Net cash provided by (used in) operating activities                         12,341      177,358       (33,440)
                                                                             -----------   ----------     ---------
Investing activities:
  Loans originated for investment                                             (1,055,442)  (1,138,206)     (973,030)
  Principal repayments on loans receivable                                       704,420      736,956       942,101
  Principal repayments on mortgage-backed securities                              25,010       49,142        84,956
  Proceeds from maturities of investment securities available for sale            47,526       54,499       138,309
  Proceeds from maturities of investment securities held to maturity                   -       10,251        15,000
  Proceeds from sale of:
    Loans receivable                                                                   -        1,023         1,164
    Investment securities held to maturity                                             -            -           912
    Investment securities available for sale                                       2,201       34,825        22,139
    Mortgage backed securities available for sale                                  9,300            -             -
    Stock in Federal Home Loan Bank of Chicago                                         -            -           500
    Real estate held for development or sale                                      43,813       46,352        32,106
  Purchases of:
    Loans receivable held for investment                                         (63,117)    (320,782)     (255,789)
    Investment securities available for sale                                     (22,000)     (89,289)     (206,498)
    Investment securities held to maturity                                          (631)     (11,066)       (1,717)
    Mortgage-backed securities available for sale                                      -            -       (12,449)
    Mortgage-backed securities held to maturity                                   (4,808)           -        (3,769)
    Stock in Federal Home Loan Bank of Chicago                                    (5,391)     (24,147)      (16,250)
    Real estate held for development or sale                                     (23,567)     (15,724)      (13,891)
    Bank owned life insurance                                                          -            -       (20,000)
    Premises and equipment                                                        (8,382)      (5,652)       (5,947)
  Proceeds (payment) for acquisitions, net of cash acquired                       80,903       18,734       (51,883)
                                                                             -----------   ----------     ---------
      Net cash used in investing activities                                     (270,165)    (653,084)     (324,036)
                                                                             -----------   ----------     ---------

                                                                                                        (Continued)
</TABLE>

                                       61
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows
                                  (Continued)

<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                               ------------------------------------
                                                                                  2000         1999         1998
                                                                               ---------     --------     ---------
                                                                                          (In thousands)
<S>                                                                            <C>           <C>          <C>
Financing activities:
  Proceeds from:
     FHLB of Chicago advances                                                  $ 475,000      790,000       420,000
     Unsecured line of credit                                                     15,000       21,000             -
  Repayments of:
     FHLB of Chicago advances                                                   (260,000)    (285,000)     (105,000)
     Unsecured term bank loan                                                       (500)      (3,100)       (1,500)
     Subordinated capital notes                                                        -            -       (27,600)
     Unsecured line of credit                                                    (11,000)     (21,000)            -
  Net decrease in reverse repurchase agreements                                   (9,963)     (10,037)      (24,804)
  Net increase in deposits                                                       185,852       21,877        57,715
  Increase in advances by borrowers for taxes and insurance                        3,587        4,191         4,608
  Issuance of common stock in conjunction with acquisitions                            -            -        72,713
  Proceeds from exercise of stock options                                            221          893           324
  Purchase of treasury stock                                                     (19,071)     (35,147)      (22,924)
  Cash dividends paid                                                             (8,822)      (7,610)       (5,275)
                                                                               ---------     --------     ---------
     Net cash provided by financing activities                                   370,304      476,067       368,257
                                                                               ---------     --------     ---------
Increase in cash and cash equivalents                                            112,480          341        10,781
Cash and cash equivalents at beginning of year                                   158,040      157,699       146,918
                                                                               ---------     --------     ---------
Cash and cash equivalents at end of year                                       $ 270,520      158,040       157,699
                                                                               =========     ========     =========
Supplemental disclosure of cash flow information:
   Cash paid during the year for:
    Interest on deposits and borrowed funds                                    $ 214,755      165,509       149,868
    Income taxes                                                                  30,861       27,801        21,901
   Summary of non-cash transactions:
    Transfer of loans receivable to foreclosed real estate                         3,520        5,945         3,511
    Loans receivable swapped into mortgage-backed securities                       9,290       62,583        26,605
    Loans receivable transferred to held for sale                                      -       74,379             -
    Stock of acquiree transferred to treasury stock (14,935 shares)                    -            -           349
    Mortgage-backed securities unconsolidated due to sale of
      beneficial interests in special purpose finance subsidiaries                    -            -         30,904
    CMO bonds payable unconsolidated due to sale of
      beneficial interests in special purpose finance subsidiaries                     -            -        31,781
    Other borrowing assumed in foreclosure                                             -            -         6,000
    Treasury stock received for withholding tax liability related to
      stock option exercises (109,552 and 21,829 shares)                           2,202          486             -
    Treasury stock received for stock option exercises (48,775,
      33,100 and 19,123 shares)                                                      989          718           471
                                                                               =========      =======     =========
</TABLE>

See accompanying Notes to Consolidated Financial Statements

                                       62
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
                  Notes to Consolidated Financial Statements

1.   Summary of Significant Accounting Policies

     Principles of Consolidation. The consolidated financial statements include
the accounts of MAF Bancorp, Inc. ("Company") and its two wholly-owned
subsidiaries, Mid America Bank, fsb ("Bank") and MAF Developments, Inc., as well
as the Bank's wholly-owned subsidiaries, Mid America Investment Services, Inc.
("Mid America Investments"), Mid America Finance Corporation ("MAFC"), Mid
America Insurance Agency, Inc., Mid America Mortgage Securities, Inc., NW
Financial, Inc. ("NW Financial"), Northwestern Acceptance Corporation ("NWAC"),
Centre Point Title Services, Inc., MAF Realty III, LLC, and MAF Realty IV, LLC.
All significant intercompany balances and transactions have been eliminated in
consolidation. Certain reclassifications of prior year amounts have been made to
conform with the current year presentation.


     Use of Estimates. The preparation of the consolidated financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.

     Statement of Cash Flows. For purposes of reporting cash flows, cash and
cash equivalents include cash and due from banks, interest-bearing deposits and
federal funds sold. Generally, federal funds are sold for one-day periods and
interest-bearing deposits mature within one day to three months.

     Restrictions on Cash. Based on the types and amounts of deposits received,
the Bank maintains vault cash and non-interest bearing cash balances in
accordance with Federal Reserve Bank reserve requirements. At December 31, 2000
and 1999, the Bank's reserve requirements were met with vault cash.

     Investment and Mortgage-Backed Securities. All investment securities and
mortgage-backed securities are classified in one of three categories: trading,
held to maturity, or available for sale. Trading securities include investment
and mortgage-backed securities that the Company has purchased and holds for the
purpose of selling in the future. These investments are carried at fair value,
with unrealized gains and losses reflected in income in the current period. Held
to maturity securities include investment and mortgage-backed securities which
the Company has the positive intent and ability to hold to maturity. These
investments are carried at amortized cost, with no recognition of unrealized
gains or losses in the consolidated financial statements. All other investment
and mortgage-backed securities are classified as available for sale. These
investments are carried at fair value, with unrealized gains and losses
reflected in stockholders' equity, net of tax. Securities that have losses
deemed other than temporary are recognized as losses in the statement of
operations and a new cost basis is established.

     Amortization of premiums, accretion of discounts, and the amortization of
purchase accounting adjustments for investment and mortgage-backed securities
acquired are recognized in interest income over the period to maturity for
investment securities, or the estimated life of mortgage-backed securities using
the level-yield method. Gains and losses on sales of investment securities,
mortgage-backed securities, and equity securities are determined using the
specific identification method.

     The Bank arranges for "swap" transactions with the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC") which involve the exchange of whole mortgage loans originated by the
Bank for mortgage-backed securities.

                                       63
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

     Loans receivable held for sale. The Bank sells, generally without recourse,
whole loans and participation interests in mortgage loans that it originates.
Loans originated are identified as either held for investment or sale upon
origination. Loans which the Bank intends to sell before maturity are classified
as held for sale, and are carried at the lower of cost, adjusted for applicable
deferred loan fees or expenses, or estimated market value in the aggregate.

     The Bank enters into forward commitments to sell mortgage loans primarily
with FNMA to deliver mortgage loans originated by the Bank at a specific time
and specific price in the future. Loans subject to forward sales are classified
as held for sale. Unrealized losses, if any, on forward commitments are included
in gain (loss) on sale of mortgage loans in the period the loans are committed.

     Loans Receivable. Loans receivable are stated at unpaid principal balances
less unearned discounts, deferred loan origination fees, loans in process and
the allowance for loan losses.

     Discounts on loans receivable are amortized to interest income using the
level-yield method over the remaining period to contractual maturity, adjusted
for anticipated prepayments. Amortization of purchase accounting discounts are
being amortized over the contractual term of loans receivable acquired, adjusted
for anticipated prepayments, using the level-yield method.

     Loan fees and certain direct loan origination costs are deferred, and the
net deferred fee or cost is recognized as an adjustment to yield using the
level-yield method over the contractual life of the loans.

     The Bank considers a loan impaired when, based on current information and
events, it is probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan. For loans which are not
individually significant (i.e. loans under $1.0 million) and represent a
homogeneous population, the Bank evaluates impairment collectively based on
management reports on the volume and extent of delinquencies, as well as
historical loss experience for these types of loans. The Bank uses this criteria
on one- to four-family residential loans, consumer loans, multi-family
residential loans, and land loans. Impairment for loans considered individually
significant and commercial real estate loans are measured based on the present
value of expected future cash flows discounted at the loan's effective interest
rate, or the fair value of the collateral if the loan is collateral dependent.
There were no impaired loans as of December 31, 2000 or 1999. Charge-offs of
principal occur when a loss has deemed to have occurred as a result of the book
value exceeding the fair value or net realizable value.

     A loan (whether considered impaired or not) is classified as non-accrual
when collectibility is in doubt, and is normally analyzed upon the borrower
becoming 90 days past due on contractual principal or interest payments. When a
loan is placed on non-accrual status, or is in the process of foreclosure,
previously accrued but unpaid interest is reversed against interest income.
Income is subsequently recorded to the extent cash payments are received, if the
entire principal balance is considered collectible, or at a time when the loan
is brought current in accordance with its original terms.

     Allowance for Loan Losses. The allowance for loan losses is increased by
charges to operations and decreased by charge-offs, net of recoveries. The
allowance for loan losses reflects management's estimate of the reserves needed
to cover probable losses inherent in the Bank's loan portfolio. In determining
an adequate level of loss reserves, management periodically evaluates the
adequacy of the allowance based on the Bank's past loan loss experience, known
and inherent risks in the loan portfolio, adverse situations that may affect the
borrower's ability to repay, estimated value of any underlying collateral, and
current economic conditions. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the Bank's
allowance for loan losses. Such agencies may require the Bank to recognize
additions to the allowance based on their judgments about information available
to them at the

                                       64
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

time of their examination. In the opinion of management, the allowance, when
taken as a whole, is adequate to absorb probable losses in the loan portfolio.

     Foreclosed Real Estate. Real estate properties acquired through, or in lieu
of, foreclosure are initially recorded at the lower of carrying value or fair
value less the cost to dispose at the date of foreclosure, establishing a new
cost basis. Valuations are periodically performed by management and an allowance
for loss is established by a charge to operations if the carrying value of a
property exceeds its estimated fair value less cost to dispose.

     Real Estate Held for Development or Sale. Real estate properties held for
development or sale, are carried at the lower of cost, including capitalized
holding costs, or net realizable value. Gains and losses on individual lot sales
in a particular development are based on cash received less the estimated cost
of sales per lot. Cost of sales is calculated as the current investment in the
particular development plus anticipated costs to complete the development, which
includes interest capitalized, divided by the remaining number of lots to be
sold. Periodic estimates are made as to a development's cost to complete. Per
unit cost of sales estimates are adjusted on a prospective basis when, and if,
estimated costs to complete change.

     Premises and Equipment. Land is carried at cost. Buildings, leasehold
improvements, furniture, fixtures, and equipment are carried at cost, less
accumulated depreciation and amortization. Buildings, furniture, fixtures, and
equipment are depreciated using the straight-line method over the estimated
useful lives of the assets. Useful lives are 20 to 50 years for office
buildings, 10 to 15 years for parking lot improvements, and 2 to 10 years for
furniture, fixtures, and equipment. The cost of leasehold improvements is being
amortized using the straight-line method over the lesser of the life of the
leasehold improvement or the term of the related lease.

     Intangibles. Goodwill represents the excess of the purchase price over the
fair value of the net identifiable assets acquired in business combinations.
Core deposit intangibles represent the value assigned to the core deposit base
acquired. Each is recognized as a result of the purchase method of accounting
for business combinations. Goodwill is generally amortized over a period not to
exceed 25 years, while core deposit intangibles are amortized on an accelerated
method over a period not to exceed 10 years. Adjustments to goodwill after
acquisition are generally made within one year of acquisition date and are
primarily related to tax adjustments on assets and liabilities assumed in the
acquisition.

     The Company reviews long-lived assets and certain identifiable intangibles
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The impairment is measured based on the
expected future cash flows from the use of the asset and its eventual
disposition. If expected future cash flows are less than the carrying amount of
the asset, an impairment loss is recognized based on current fair values.

     Mortgage Servicing Rights. Mortgage servicing rights are initially
capitalized upon acquisition, and are subsequently amortized over the estimated
life of the loan servicing income stream, using the level-yield method. The
balance of mortgage servicing rights is included in the consolidated statements
of financial condition in other assets. The Bank conducts periodic impairment
analysis by evaluating the present value of the future economic benefit to be
derived from the servicing rights using current information regarding interest
rates, prepayment assumptions, and the cost to service such loans. For purposes
of measuring impairment, the mortgage servicing rights are stratified based on
the predominant risk characteristics of the underlying loans. The Bank
stratifies loans by interest rate, maturity, and whether the loans are fixed or
adjustable rate. An impairment is recognized in the amount by which the
capitalized servicing rights for a specific stratum exceeds its fair value.

                                       65
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

     Income Taxes. The Company and its direct subsidiaries file a consolidated
federal income tax return. Deferred income taxes are provided for all
significant items of income and expense that are recognized in different periods
for financial reporting purposes and income tax reporting purposes. The asset
and liability approach is used for the financial accounting and reporting of
income taxes. This approach requires companies to take into account changes in
the tax rates when valuing the deferred income tax accounts recorded on the
consolidated statement of financial condition. In addition, it provides that a
deferred tax liability or asset shall be recognized for the estimated future tax
effects attributable to "temporary differences" and loss and tax credit
carryforwards. Temporary differences include differences between financial
statement income and tax return income which are expected to reverse in future
periods as well as differences between tax bases of assets and liabilities and
their amounts for financial reporting purposes which are also expected to be
settled in future periods. To the extent a deferred tax asset is established
which is not likely to be realized, a valuation allowance shall be established
against such asset.

     Derivative Financial Instruments. The Company utilizes forward commitments
to sell mortgage loans and interest rate futures contracts, primarily U.S.
Treasury bond futures, as part of its mortgage loan origination hedging
strategy. Gains and losses on open and closed futures positions are deferred and
recognized as an adjustment to gain (loss) on the sale of loans receivable when
the underlying loan being hedged is sold into the secondary market.

     Comprehensive Income. Comprehensive income includes net income plus other
comprehensive income. Other comprehensive income includes revenues, expenses,
gains and losses that under accounting principles generally accepted in the
United States of America are included in comprehensive income but excluded from
net income. The Company reports comprehensive income in its consolidated
statement of changes in stockholders' equity.

     Segments. The Company uses the management approach for determining segment
reporting. Based on the management approach, the Company operates two separate
lines of business, retail banking and land development operations.

     Earnings Per Share. Earnings per share is determined by dividing net income
for the period by the weighted average number of shares outstanding. Stock
options are regarded as future common stock and are considered in the earnings
per share calculations only if dilutive, and are the only adjustments made to
average shares outstanding in computing diluted earnings per share.

                                       66
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

     Weighted average shares used in calculating earnings per share are
summarized below.

<TABLE>
<CAPTION>
                                           Year Ended December 31, 2000             Year Ended December 31, 1999
                                     --------------------------------------     --------------------------------------
                                       Income          Shares      Per Share      Income        Shares        Per Share
                                     (Numerator)    (Denominator)   Amount      (Numerator)  (Denominator)     Amount
                                     -----------    -------------   ------      -----------  -------------     ------
                                                       (Dollars in thousands, except per share data)
<S>                                  <C>            <C>            <C>        <C>            <C>              <C>
Income before extraordinary item       $ 56,559                                  $ 51,545
Extraordinary item, net of tax                -                                         -
                                       --------                                  --------
Basic earnings per share:
  Income available to
   common shareholders                   56,559       23,311,135       2.43        51,545      24,253,946         2.13
                                                                      =====                                      =====
Effect of dilutive securities-
  Stock options                                          275,457                                  676,667
                                                      ----------                               ----------
Diluted earnings per share:
  Income available to common
   shareholders plus assumed
   conversions                         $ 56,559       23,586,592       2.40      $ 51,545      24,930,613         2.07
                                       ========       ==========      =====      ========      ==========        =====

<CAPTION>
                                             Year Ended December 31, 1998
                                   ------------------------------------------------
                                         Income          Shares       Per Share
                                       (Numerator)    (Denominator)     Amount
                                       -----------    -------------     ------
                                     (Dollars in thousands, except per share data)
<S>                                <C>                <C>             <C>
Income before extraordinary item          $38,702
Extraordinary item, net of tax               (456)
                                          -------
Basic earnings per share:

  Income available to
   common shareholders                     38,246       22,433,184        $1.70
                                                                          =====
Effect of dilutive securities-
  Stock options                                            764,978
                                                        ----------
Diluted earnings per share:
  Income available to common
   shareholders plus assumed
   conversions                            $38,246       23,198,162        $1.65
                                          =======       ==========        =====
</TABLE>

2.   Acquisitions

     On April 17, 2000, the Bank purchased two branch offices from M&I Bank,
FSB, with approximately $89.8 million of deposits. The Company received
primarily cash for the deposits in the transaction. The transaction was recorded
as a purchase, and generated goodwill and a core deposit intangible of $12.1
million.

     On September 10, 1999, the Bank purchased a branch office from the Northern
Trust Company, with approximately $22.2 million of deposits. The Company
received primarily cash for the deposits in the transaction. The transaction was
recorded as a purchase, and generated goodwill and a core deposit premium of
$3.1 million.

     On December 31, 1998, the Company acquired Westco Bancorp, Inc. ("Westco"),
and its wholly owned subsidiary First Federal Savings and Loan of Westchester
("Westchester"). Under the terms of the merger agreement, all of the outstanding
shares of Westco were exchanged for 1.395 shares of MAF Bancorp common stock, or
a total of 3,305,129 shares. As of December 31, 1998, Westco and Westchester
were merged into the Company and Bank, respectively.

                                       67
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

     As of the date of acquisition, Westco had total assets of $312.3 million,
loans receivable of $245.2 million, deposits of $259.9 million, and
stockholders' equity of $46.7 million. The transaction was accounted for as a
purchase, and created goodwill of $31.6 million, and a core deposit intangible
of $1.7 million. Premiums and discounts on the fair value adjustments amounted
to $3.7 million and $2.6 million, respectively. Acquisition expenses incurred in
the transaction included professional fees as well as $4.2 million of severance
costs, net of applicable tax benefits. Westco operated one branch in
Westchester, Illinois, along with a drive-up facility.

3.   Investment Securities

     Investment securities available for sale and held to maturity are
summarized below:

<TABLE>
<CAPTION>
                                                    December 31, 2000                               December 31, 1999
                                         ------------------------------------------    --------------------------------------------
                                                      Gross      Gross                              Gross       Gross
                                        Amortized  Unrealized Unrealized     Fair     Amortized  Unrealized   Unrealized     Fair
                                           Cost       Gains     Losses       Value       Cost       Gains       Losses      Value
                                         --------   --------   --------    --------    --------    --------    --------    --------
                                                                          (Dollars in thousands)
<S>                                     <C>        <C>        <C>          <C>        <C>        <C>          <C>          <C>
Held to maturity:
United States government
  and agency obligations due:
     After one year to five years        $  9,986        657          -      10,643       9,983         322           -      10,305
Other investment securities                 2,647          -          -       2,647       2,016           -           -       2,016
                                         --------   --------   --------    --------    --------    --------    --------    --------
                                         $ 12,633        657          -      13,290      11,999         322           -      12,321
                                         ========   ========   ========    ========    ========    ========    ========    ========
Available for sale:
United States government
  and agency obligations due:
     Within one year                     $      -          -          -           -      15,004           5          (3)     15,006
     After one year to five years          27,029        164       (113)     27,080      32,000          16        (858)     31,158
     After five to ten years               50,000          -       (627)     49,373      30,000           -      (2,371)     27,629
     After ten or more years                5,000          -       (198)      4,802       5,000           -        (175)      4,825
Equity securities                          10,643      2,599       (617)     12,625      10,576         500        (830)     10,246
Asset-backed securities                    79,617      1,455       (458)     80,614     107,047           2      (1,808)    105,241
                                         --------   --------   --------    --------    --------    --------    --------    --------
                                         $172,289      4,218     (2,013)    174,494     199,627         523      (6,045)    194,105
                                         ========   ========   ========    ========    ========    ========    ========    ========
</TABLE>

     The table above classifies investment securities by contractual maturities.
Expected maturities may differ from contractual maturities because certain
borrowers have the right to call obligations without penalty.

     As of December 31, 2000 and 1999, the Company recorded unrealized gains
(losses) on investment securities available for sale as increases (decreases) to
stockholders' equity of $1.3 million and $(3.3) million, respectively, net of
deferred income tax expense (benefit) of $873,000 and $(2.2) million.
Additionally, during the year ended December 31, 1998, the Company recognized
losses deemed other than temporary in marketable equity securities available for
sale totaling $375,000.

                                       68
<PAGE>

                      MAF Bancorp, inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

     Activity in the sales of investment securities available for sale is as
follows:

<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                           ----------------------------------------
                                                                              2000           1999          1998
                                                                           --------       --------        ---------
                                                                                        (In thousands)
<S>                                                                     <C>             <C>            <C>
Total proceeds on sale                                                  $     2,201         34,825        22,139
                                                                           ========       ========       =======
Gross realized gains                                                            336          1,789         1,447
Gross realized losses                                                           (80)           (13)         (332)
                                                                           --------       --------       -------
                                                                                256          1,776         1,115
Losses deemed other than temporary                                                -              -          (375)
                                                                           --------       --------       -------
Net gain                                                                $       256          1,776           740
                                                                           ========       ========       =======
</TABLE>

4.   Mortgage-Backed Securities

     Mortgage-backed securities available for sale and held to maturity are
summarized below:

<TABLE>
<CAPTION>
                                              December 31, 2000                         December 31, 1999
                                     -------------------------------------   --------------------------------------
                                                Gross      Gross                          Gross       Gross
                                    Carrying  Unrealized Unrealized  Fair     Carrying  Unrealized  Unrealized  Fair
                                      Value     Gains     Losses    Value      Value      Gains      Losses     Value
                                   --------- ---------- ----------  -----    --------  ----------  ----------   -----
                                                                (Dollars in thousands)
<S>                                <C>        <C>        <C>        <C>       <C>       <C>         <C>
Held to maturity:
GNMA pass-through certificates       $   744       36        (1)       779      1,115        50         (10)    1,155
FHLMC pass-through certificates       31,523      372      (131)    31,764     37,804       486        (888)   37,402
FNMA pass-through certificates        15,479      280      (158)    15,601     13,385       158        (362)   13,181
Collateralized mortgage obligations   32,555        -    (1,562)    30,993     41,947         -      (1,590)   40,357
                                      ------    -----   -------   --------   --------     -----      ------    ------
                                     $80,301      688    (1,852)    79,137     94,251       694      (2,850)   92,095
                                      ======    =====   =======   ========   ========     =====     =======    ======
Available for sale:
FHLMC pass-through certificates      $ 2,229       24       (12)     2,241      2,717        28         (29)    2,716
FNMA pass-through certificates         2,816       67        (4)     2,879      3,640        83         (12)    3,711
Collateralized mortgage obligations   18,870      123       (29)    18,964     33,896         5        (625)   33,276
                                      ------    -----   --------   -------   --------   -------        ----    ------

                                     $23,915      214       (45)    24,084     40,253       116        (666)   39,703
                                     =======    =====   =======    =======   ========   =======        ====    ======
</TABLE>

     As of December 31, 2000 and 1999, the Company recorded unrealized gains
(losses) on mortgage-backed securities available for sale as increases
(decreases) to stockholders' equity of $102,000, and $(333,000), respectively,
net of deferred income tax expense (benefit) of $67,000 and $(217,000),
respectively. During the year ended December 31, 2000, the Company recorded
realized losses of $700,000 on the sale of mortgage-backed securities. For the
years ended December 31, 1999 and 1998 there were no realized gains or losses on
mortgage-backed securities.

     During the years ended December 31, 2000, 1999, and 1998, the Bank swapped
$9.3 million, $62.6 million, and $26.6 million, respectively, of loans it
originated into mortgage-backed securities, all of which were sold in the same
period swapped. Included in mortgage-backed securities at December 31, 2000 and
December 31, 1999, are $1.4 million and $1.9 million, respectively, of loans
originated by the Bank that were swapped into mortgage-backed securities.

     The carrying value and fair value of mortgage-backed securities by
contractual maturity term is shown in the table on the following page. Expected
maturities may differ from contractual maturities because of prepayments on
underlying mortgage loans.

                                       69
<PAGE>

                      MAF Bancorp, inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

<TABLE>
<CAPTION>
                                                       December 31, 2000                  December 31, 1999
                                                ------------------------------     --------------------------------
                                                                      Weighted                            Weighted
                                                Carrying     Fair      Average       Carrying      Fair     Average
                                                  Value      Value      Yield         Value       Value      Yield
                                                --------     -----    --------     ----------     -----   --------
                                                                     (Dollars in thousands)
<S>                                          <C>             <C>       <C>        <C>             <C>       <C>
Adjustable rate                                 $ 22,988     23,282     7.80%       $  28,003     28,290    6.92%
Fixed rate, 15-year                               14,496     14,364     6.21           17,573     16,702    6.22
Fixed rate, 30-year                               15,307     15,618     7.89           13,085     13,173    8.28
Collateralized mortgage obligations               51,425     49,957     6.20           75,843     73,633    6.12
                                                --------   --------     ----        ---------    -------    ----
                                                $104,216    103,221     6.50%       $ 134,504    131,798    6.51%
                                                ========   ========     ====        =========    =======    ====
</TABLE>

     In 1998, the Bank sold its 100% beneficial interest in its two special-
purpose finance subsidiaries, MAFC and NWAC for net proceeds of $912,000, and
recorded a gain on sale of investment securities of $76,000. The Company no
longer consolidates MAFC and NWAC in its consolidated financial statements,
reducing mortgage-backed securities held to maturity by $30.9 million in 1998.
The Company considered this transaction a permissible sale of held to maturity
securities.

5.   Loans Receivable Held For Sale

     The Bank classifies loan originations that it intends to sell in the
secondary market as held for sale at the time of origination. At December 31,
2000 and 1999, the Bank had $41.1 million and $12.6 million of fixed-rate loans
classified as held for sale with weighted average rates of 7.64% and 7.65%,
respectively.

6.   Loans Receivable

     Loans receivable are summarized as follows:

<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                              -------------------------------
                                                                                  2000                1999
                                                                              -----------         -----------
                                                                                     (Dollars in thousands)
<S>                                                                           <C>                 <C>
Real estate loans:
 One-to-four family residential                                               $ 3,807,980           3,479,425
 Multi-family                                                                     173,072             164,878
 Commercial                                                                        41,223              38,817
 Construction                                                                      29,566              27,707
 Land                                                                              40,497              28,602
                                                                              -----------         -----------
   Total real estate loans                                                      4,092,338           3,739,429
Other loans:
 Consumer loans:
  Equity lines of credit                                                          146,020              99,099
  Home equity loans                                                                64,465              48,397
  Other                                                                             4,783               4,757
                                                                              -----------         -----------
   Total consumer loans                                                           215,268             152,253
  Commercial business loans                                                         3,528               3,132
                                                                              -----------         -----------
   Total other loans                                                              218,796             155,385
                                                                              -----------         -----------
                                                                                4,311,134           3,894,814
Unearned discounts, premiums, and deferred loan expenses, net                       7,076               6,323
Loans in process                                                                  (12,912)            (11,893)
Allowance for loan losses                                                         (18,258)            (17,276)
                                                                              -----------         -----------
                                                                              $ 4,287,040           3,871,968
                                                                              ===========         ===========
</TABLE>

                                       70
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements -- (Continued)


     Adjustable-rate loans included in loans receivable totaled $2.3 billion and
$1.9 billion at December 31, 2000 and 1999, respectively.

     Allowance for loan losses. Activity in the allowance for loan losses is
summarized as follows for the periods indicated:

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                        -------------------------------------
                                                                         2000           1999            1998
                                                                        ------         -------         ------
                                                                                   (In thousands)
<S>                                                                     <C>            <C>             <C>
Balance at beginning of year                                            $17,276           16,770         15,475
Provision for loan losses                                                 1,500            1,100            800
Balance acquired in acquisition                                               -                -            846
Charge-offs                                                                (531)            (711)          (402)
Recoveries                                                                   13              117             51
                                                                        -------         --------        -------
Balance at end of year                                                  $18,258           17,276         16,770
                                                                        =======         ========        =======
</TABLE>

     At December 31, 2000, 1999 and 1998, the Bank had $15.0 million, $14.8
million and $12.6 million, respectively, of loans that were on non-accrual
status. Interest income that would have been recorded on non-accrual loans
amounted to $768,000, $703,000, and $699,000 for the years ended December 31,
2000, 1999 and 1998, respectively, had these loans been accruing under their
contractual terms. Interest income that was included in net income was $350,000,
$387,000, and $229,000, for the years ended December 31, 2000, 1999 and 1998,
respectively. There were no loans outstanding as of December 31, 2000 and 1999
that the Bank considered impaired.

     Loan servicing and mortgage servicing rights. The Bank services loans for
the benefit of others pursuant to loan servicing agreements. Under these
agreements, the Bank typically collects from the borrower monthly payments of
principal and interest, as well as funds for the payment of real estate taxes
and insurance. The Bank retains its loan servicing fee from these payments and
remits the balance of the principal and interest payments to the various
investors. Mortgage loans serviced for others are not included in the
accompanying consolidated statements of financial condition. The unpaid
principal balances of these loans were $785.3 million, $1.23 billion, and $1.07
billion, at December 31, 2000, 1999, and 1998, respectively. The decrease in
2000 is due to the sale of servicing rights relating to approximately $600.0
million in mortgage loans, resulting in a pre-tax gain of $4.4 million.
Non-interest bearing custodial balances maintained in connection with mortgage
loans serviced for others (included in deposits) were $12.7 million and $20.0
million at December 31, 2000 and 1999, respectively.

     Activity in mortgage servicing rights is as follows for the periods
indicated:

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                        -------------------------------------
                                                                         2000           1999            1998
                                                                        ------         -------         ------
                                                                                   (In thousands)
<S>                                                                     <C>            <C>             <C>
Balance at beginning of year                                            $ 7,334           4,208          2,494
Additions                                                                 3,002           3,497          4,291
Amortization                                                             (1,038)         (1,271)        (1,308)
Carrying value of sold rights                                            (4,191)              -              -
Impairment recovery (writedown)                                               -             900         (1,269)
                                                                        -------         -------         ------
Balance at end of year                                                  $ 5,107           7,334          4,208
                                                                        =======         =======         ======
</TABLE>

                                       71
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements -- (Continued)


7.   Accrued Interest Receivable

     Accrued interest receivable is summarized as follows:

<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                                 ----------------------------
                                                                                   2000                1999
                                                                                 --------            --------
                                                                                        (In thousands)
<S>                                                                              <C>                 <C>
Investment securities                                                             $ 3,873               3,289
Mortgage-backed securities                                                            619                 745
Loans receivable                                                                   24,697              20,768
Reserve for uncollected interest                                                   (1,301)             (1,062)
                                                                                 --------            --------
                                                                                  $27,888              23,740
                                                                                 ========            ========
</TABLE>

8.   Foreclosed Real Estate

     Foreclosed real estate is summarized as follows:

<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                                 ----------------------------
                                                                                   2000                1999
                                                                                 --------            --------
                                                                                        (In thousands)
<S>                                                                              <C>                 <C>
Residential real estate                                                           $ 1,762               1,220
Commercial real estate                                                                 46               6,195
                                                                                 --------            --------
                                                                                  $ 1,808               7,415
                                                                                 ========            ========
</TABLE>

9.   Real Estate Held for Development or Sale

     Real estate held for development or sale is summarized by project as
follows:

<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                                 ----------------------------
                                                                                   2000                1999
                                                                                 --------            --------
                                                                                        (In thousands)
<S>                                                                              <C>                 <C>
       Tallgrass of Naperville                                                    $ 8,041              11,720
       Reigate Woods                                                                    -               2,112
       Creekside of Remington                                                           -               1,657
       Woodbridge                                                                     290                 400
       Plainfield project                                                           4,387                   -
                                                                                 --------            --------
                                                                                  $12,718              15,889
                                                                                 ========            ========
</TABLE>

     Income (loss) from real estate operations is summarized by project for the
periods indicated:

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                          -----------------------------------
                                                                            2000          1999          1998
                                                                          --------     ---------     --------
                                                                                     (In thousands)
<S>                                                                       <C>          <C>           <C>
       Tallgrass of Naperville                                             $ 8,699         3,457          114
       Woodbridge                                                              418         5,163          153
       Harmony Grove                                                           104           479        2,851
       Reigate Woods                                                           210           509          930
       Ashbury                                                                   -          (150)         297
       Clow Creek Farm                                                           -             -          260
       Creekside of Remington                                                  105           172           29
       Woods of Rivermist                                                        -             -            5
       Fields of Ambria                                                          -             -         (122)
                                                                          --------      --------       ------
                                                                           $ 9,536         9,630        4,517
                                                                          ========      ========       ======
</TABLE>

                                       72
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements -- (Continued)


     Interest capitalized to real estate held for development or sale amounted
to $256,000, $536,000, and $267,000 for the years ended December 31, 2000, 1999
and 1998, respectively.

10.  Premises and Equipment

     Premises and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                    ----------------------------
                                                                                      2000                1999
                                                                                    ---------           --------
                                                                                           (In thousands)
<S>                                                                                 <C>                 <C>
Land                                                                                  $ 9,280              7,865
Office buildings                                                                       36,487             32,284
Furniture, fixtures and equipment                                                      31,964             26,912
Leasehold improvements                                                                  1,397              1,389
                                                                                    ---------           --------
     Total office properties and equipment, at cost                                    79,128             68,450
Less: accumulated depreciation and amortization                                       (30,224)           (25,961)
                                                                                    ---------           --------
                                                                                      $48,904             42,489
                                                                                    =========           ========
</TABLE>

     Depreciation and amortization of premises and equipment, included in data
processing expense and office occupancy and equipment expense was $4.5 million,
$4.0 million, and $3.7 million, for the years ended December 31, 2000, 1999 and
1998, respectively.

     The Bank is obligated under non-cancelable leases primarily for office
space. Rent expense under these leases for the years ended December 31, 2000,
1999 and 1998, was $1.2 million, $1.1 million, and $1.2 million, respectively.
The projected minimum rentals under existing leases (excluding lease
escalations) as of December 31, 2000, are as follows: 2001- $1.4 million; 2002-
$1.2 million; 2003- $1.2 million; 2004- $752,000; 2005- $622,000; 2006 and
thereafter $2.4 million.

11.  Intangible Assets

     Intangible assets are summarized as follows:

<TABLE>
<CAPTION>
                                                                                    Core deposit
                                                                   Goodwill          Intangible             Total
                                                                   --------          ----------           ---------
                                                                                   (In thousands)
<S>                                                                <C>               <C>                  <C>
Balance at December 31, 1997                                        $24,606               6,724              31,330
Addition related to Westco acquisition                               31,598               1,702              33,300
Amortization expense                                                 (1,336)             (1,075)             (2,411)
                                                                   --------          ----------           ---------
Balance at December 31, 1998                                         54,868               7,351              62,219
Adjustment related to Westco acquisition                               (192)                  -                (192)
Addition related to branch acquisition                                2,911                 146               3,057
Amortization expense                                                 (2,648)             (1,236)             (3,884)
                                                                  ---------              ------            --------
Balance at December 31, 1999                                         54,939               6,261              61,200
Addition related to branch acquisition                               10,141               1,998              12,139
Amortization expense                                                 (3,118)             (1,357)             (4,475)
                                                                  ---------           ---------           ---------
Balance at December 31, 2000                                        $61,962               6,902              68,864
                                                                  =========           =========           =========
</TABLE>

                                       73
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements -- (Continued)

12.  Deposits

     Deposit account balances by interest rate are summarized as follows:

<TABLE>
<CAPTION>
                                                   December 31, 2000                      December 31, 1999
                                         ----------------------------------       ---------------------------------
                                                                  Weighted                               Weighted
                                                         % of      Average                       % of     Average
                                            Amount       Total      Rate            Amount       Total      Rate
                                         ------------  --------  ----------       ----------   --------  ----------
                                                                 (Dollars in thousands)
<S>                                      <C>           <C>         <C>            <C>           <C>        <C>
Commercial checking accounts              $   48,472       1.6%        -%          $   49,076        1.8%      -%
Non-interest bearing checking                 92,471       3.1         -               68,845        2.6       -
Interest bearing NOW accounts                250,496       8.4      1.25              222,541        8.2    1.27
Money market accounts                        229,058       7.7      4.36              162,303        6.0    3.36
Passbook accounts                            738,606      24.9      2.49              726,176       26.9    2.49
                                         -----------   -------      ----          -----------   --------    ----
                                           1,359,103      45.7      2.32            1,228,941       45.5    2.14
                                         -----------   -------      ----          -----------   --------    ----
Certificate accounts:
    Less than 5.00%                           71,102       2.4      4.75              525,916       19.5    4.69
   5.00% to 5.99%                            693,431      23.3      5.65              774,505       28.7    5.46
   6.00% to 6.99%                            806,635      27.1      6.45              130,976        4.9    6.29
   7.00% and greater                          43,664       1.5      7.11               37,945        1.4    7.54
                                         -----------   -------      ----          -----------   --------    ----
                                           1,614,832      54.3      6.05            1,469,342       54.5    5.31
                                         -----------   -------      ----          -----------   --------    ----
Unamortized premium                              278         -                            959          -
                                         -----------   -------                    -----------   --------
      Total deposits                      $2,974,213     100.0%     4.34%          $2,699,242      100.0%   3.87%
                                         ===========   =======      ====          ===========   ========    ====
</TABLE>

     Scheduled maturities of certificate accounts at December 31, 2000 are as
follows (in thousands):

<TABLE>
<S>                                                             <C>
12 months or less                                               $ 1,024,282
13 to 24 months                                                     455,055
25 to 36 months                                                      87,646
Over 36 months                                                       47,849
                                                                -----------
                                                                $ 1,614,832
                                                                ===========
</TABLE>

     Interest expense on deposit accounts is summarized as follows for the
periods indicated:

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31
                                                                         ---------------------------------------
                                                                           2000            1999           1998
                                                                         ---------      ---------       --------
                                                                                      (In thousands)
<S>                                                                      <C>            <C>             <C>
    NOW and money market accounts                                         $ 10,100          8,042          6,851
    Passbook accounts                                                       18,383         18,268         17,132
    Certificate accounts                                                    87,026         73,355         71,805
                                                                         ---------       --------        -------
                                                                          $115,509         99,665         95,788
                                                                         =========       ========        =======
</TABLE>

     The aggregate amount of certificates of deposit with a minimum denomination
of $100,000 was $266.7 million and $224.8 million at December 31, 2000 and 1999,
respectively.

     At December 31, 2000, U.S. Treasury Notes, FHLMC and FNMA mortgage-backed
securities, as well as mortgage loans with an aggregate carrying value and
market value of $18.7 million, were pledged as collateral for certain jumbo
certificates.

                                       74
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)


13.  Borrowed Funds

     Borrowed funds are summarized as follows:

<TABLE>
<CAPTION>
                                                             December 31, 2000                  December 31, 1999
                                                  ---------------------------------------    ----------------------
                                                                    Weighted                 Weighted
                                                   Interest Rate    Average                  Average
                                                       Range         Rate        Amount       Rate        Amount
                                                  ---------------    ------   -----------    -------    -----------
                                                                          (Dollars in thousands)
<S>                                               <C>               <C>       <C>            <C>        <C>
Fixed-rate advances from FHLB due:
   Within 1 year                                  5.62%  - 6.84%      6.37%   $   365,000      6.63%    $   105,000
   1 to 2 years                                   5.99   - 7.40       6.43        305,000      6.28         390,000
   2 to 3 years                                   5.84   - 6.78       6.35         55,500      6.21         275,000
   3 to 4 years                                   5.83   - 7.22       6.61        205,000      6.35          55,500
   4 to 5 years                                   4.87   - 7.20       6.16        195,000      6.54          65,000
   5 to 6 years                                   6.82   - 6.82       6.82         30,000      5.57         105,000
   6 to 8 years                                   4.81   - 5.86       5.26        285,000       -                 -
   Greater than 8 years                           5.42   - 5.86       5.62         80,000      5.30         385,000
                                                  --------------      ----    -----------      ----     -----------
      Total fixed rate advances                   4.81   - 7.40       6.15      1,520,500      5.98       1,380,500
Adjustable-rate advances from FHLB due:
   Within 1 year                                  6.70   - 6.87       6.81        100,000       -                 -
   1 to 2 years                                   6.87   - 6.87       6.87         25,000      6.35          50,000
   2 to 3 years                                    -     -  -          -                -      6.62          25,000
   Greater than 3 years                           6.53   - 6.64       6.58         50,000      6.26          25,000
                                                  --------------      ----    -----------      ----     -----------
      Total adjustable rate advances              6.53   - 6.87       6.75        175,000      6.40         100,000
                                                  --------------      ----    -----------      ----     -----------
      Total advances from FHLB                    4.81%  - 7.40%      6.21      1,695,500      6.01       1,480,500
                                                  ==============      ----    -----------               -----------

Fixed-rate reverse repurchase agreements                               -                -      5.86           9,963
Unsecured term bank loan                                              7.72         29,400      7.17          29,900
Other borrowings                                                      7.71          4,000      4.20           6,000
                                                                      ----    -----------      ----     -----------
      Total borrowed funds                                            6.24%   $ 1,728,900      6.02%    $ 1,526,363
                                                                      ====    ===========      ====     ===========
</TABLE>

     Federal Home Loan Bank of Chicago Advances. The Bank has adopted a
collateral pledge agreement whereby the Bank has agreed to at all times keep on
hand, free of all other pledges, liens, and encumbrances, first mortgages with
unpaid principal balances aggregating no less than 167% of the outstanding
secured advances from the Federal Home Loan Bank ("FHLB") of Chicago. All stock
in the FHLB of Chicago is pledged as additional collateral for these advances.
At December 31, 2000, the Bank has $175.0 million of adjustable-rate advances
that are indexed to the one or three month London interbank offering rate.

     Included in FHLB of Chicago advances at December 31, 2000 are $535.0
million of fixed-rate advances with original scheduled maturities of 4 to 10
years, which are callable at the discretion of the FHLB of Chicago as follows:
$60.0 million at 6.3% in 2001, $105.0 million at 5.5% in 2002, $240.0 million at
5.9% in 2003, $80.0 million at 5.4% in 2004 and $50.0 million at 4.6% in 2005.
The Bank also holds $25.0 million of adjustable-rate advances callable in 2001.
The Bank receives a lower cost of borrowing on such advances than on similar
non-callable long-term advances in return for granting the FHLB of Chicago the
right to call the advances prior to their final maturity.

                                       75
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)


     Reverse Repurchase Agreements. The Bank enters into sales of securities
under agreements to repurchase the identical securities ("reverse repurchase
agreements") with nationally recognized primary securities dealers and are
treated as financings. The securities underlying the agreements are delivered to
the dealers who arrange the transaction and are reflected as assets. The
following table presents certain information regarding reverse repurchase
agreements as of and for the periods indicated:

                                                   Year Ended December 31,
                                              -------------------------------
                                                 2000       1999       1998
                                              ---------  ---------   --------
                                                        (In thousands)
   Balance at end of period                    $     -       9,963     20,000
   Maximum month-end balance                    19,813      29,700     44,804
   Average balance                              11,354      17,155     30,750
   Weighted average rate at end of period            -%       5.86       6.35
   Weighted average rate on average balance       6.23        6.20       6.33
                                              ========   =========   ========

     At December 31, 2000, the bank has no outstanding repurchase agreements. At
December 31, 1999, reverse repurchase agreements were collateralized by
investment and mortgage-backed securities with a carrying value of $10.0 million
and a market value of $10.0 million.

     Unsecured Term Bank Loan. The Company obtained a $35.0 million unsecured
term bank loan in conjunction with its acquisition of Northwestern. The loan
provides for an interest rate of the prime rate or 1% over one-, two-, three-,
six- or twelve-month LIBOR at management's discretion adjustable and payable at
the end of the repricing period. The loan currently carries an interest rate of
1% over three-month LIBOR. At December 31, 2000, the balance of the unsecured
term loan is $29.4 million. Prepayments of principal are allowed.

     Scheduled principal repayments of the unsecured term bank loan are as
follows as of December 31, 2000 (in thousands):

           December 31, 2001                           $  1,500
           December 31, 2002                              9,200
           December 31, 2003                             18,700
                                                       --------
                                                       $ 29,400
                                                       ========

     Other Borrowings. In conjunction with the term bank loan, the Company also
maintains a $25.0 million one year unsecured revolving line of credit, renewable
annually on May 31. $4.0 million was outstanding on the line of credit as of
December 31, 2000 at one month LIBOR plus 1%. The interest rate on the line of
credit is the prime rate minus 0.5% or 1% over one-, two-, three-, six- or
twelve-month LIBOR, at management's discretion with interest payable at the end
of the repricing period. The financing agreements contain covenants that, among
other things, require the Company to maintain a minimum stockholders' equity
balance and to obtain certain minimum operating results, as well as requiring
the Bank to maintain "well capitalized" regulatory capital levels and certain
non-performing asset ratios. In addition, the Company has agreed not to pledge
any stock of the Bank or MAF Developments for any purpose. At December 31, 2000,
the Company was in compliance with these covenants. At December 31, 1999 other
borrowings included a $6.0 million industrial revenue bond obligation
collateralizing a commercial office complex that the Bank foreclosed on in 1998
and subsequently sold in June 2000.



                                       76
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)


     Interest expense on borrowed funds is summarized as follows for the periods
indicated:

                                                  Year Ended December 31,
                                            ----------------------------------
                                              2000          1999        1998
                                            ---------    ---------    --------
                                                       (In thousands)

    FHLB of Chicago advances                $  98,096       65,060      47,936
    Unsecured term bank loan                    2,258        2,086       2,306
    Reverse repurchase agreements                 696        1,055       1,936
    Unsecured revolving line of credit            510          331           -
    Subordinated capital notes                      -            -       2,165
    Collateralized mortgage obligations             -            -         216
    Other borrowings                              104          204         228
                                            ---------    ---------    --------
                                            $ 101,664       68,736      54,787
                                            =========    =========    ========

14.  Derivative Financial Instruments

     The Bank enters into forward commitments to sell mortgage loans for future
delivery as a means of limiting exposure to changing interest rates between the
date a loan customer commits to a given rate, or closes the loan, whichever is
sooner, and the sale date, which is generally 10 to 60 days after the closing
date. These commitments to sell require the Bank to deliver mortgage loans at
stated coupon rates within the specified forward sale period, and subject the
Bank to risk to the extent the loans do not close. The Bank attempts to mitigate
this risk by collecting a non-refundable commitment fee, where possible, and by
estimating a percentage of fallout when determining the amount of forward
commitments to sell.

     The following is a summary of the Bank's forward sales commitment activity
for the periods indicated:

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                                     --------------------------------------
                                                        2000          1999         1998
                                                     ----------    ----------    ----------
                                                                  (In thousands)
<S>                                                  <C>           <C>           <C>
Balance at beginning of year                         $   20,089       112,346         7,088
New forward commitments to deliver loans                363,519       310,634       542,807
Loans delivered to satisfy forward commitments         (335,665)     (402,891)     (437,549)
                                                     ----------    ----------    ----------
Balance at end of year                               $   47,943        20,089       112,346
                                                     ==========    ==========    ==========
</TABLE>

     The Bank also enters into interest rate futures contracts to hedge its
exposure to price fluctuations on firm commitments to originate loans intended
for sale, that have not been covered by forward commitments to sell loans for
future delivery. Included in gain on sale of mortgage loans for the year ended
December 31, 2000, 1999 and 1998 are $(65,000), $159,000, and $(110,000), of net
futures gains (losses), respectively, from hedging activities. At December 31,
2000, the Bank had $78,000 of net deferred losses on futures contracts. At
December 31, 1999, the Bank had $12,000 of net deferred gains on futures
contracts.

     The following is a summary of the notional amount of interest rate futures
contract activity for the periods indicated:

                                                 Year Ended December 31,
                                         -------------------------------------
                                            2000          1999          1998
                                         ---------     ---------     ---------
                                                     (In thousands)
Balance at beginning of year             $       -         1,000             -
Interest rate futures contracts sold        35,400        73,700        59,700
Interest rate futures contracts closed     (35,400)      (74,700)      (58,700)
                                         ---------       -------     ---------
Balance at end of year                   $       -             -         1,000
                                         =========     =========     =========

                                       77
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)


15.  Income Taxes

     Total income tax expense was allocated as follows for the periods
indicated:

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                      ---------------------------------------
                                                         2000          1999            1998
                                                      ---------       -------        --------
                                                                  (In thousands)
<S>                                                   <C>             <C>            <C>
   Income from continuing operations                  $  32,311        31,210          23,793
   Extraordinary item                                         -             -            (294)
   Stockholders' equity, for compensation
    expense recognized for tax purposes in excess
    of amounts for financial reporting purposes          (2,425)       (1,008)           (152)
   Stockholders' equity, for change in unrealized
    gain (loss) on available for sale securities          3,337        (2,680)           (734)
                                                      ---------       -------        --------
                                                      $  33,223        27,522          22,613
                                                      =========       =======        ========
</TABLE>

     Retained earnings at December 31, 2000 include $59.4 million of tax bad
debt reserves for which no provision for income taxes has been made. If in the
future this amount or a portion thereof, is used for certain purposes other than
to absorb losses on bad debts, an income tax liability will be imposed on the
amount so used at the then current corporate income tax rate. If deferred taxes
were required to be provided on this item, the amount of this deferred tax
liability would be approximately $23.5 million.

     Income tax expense (benefit) attributable to income from continuing
operations is summarized below:

                                               Year Ended December 31,
                                       ------------------------------------
                                          2000           1999         1998
                                       --------        -------      -------
                                                    (In thousands)
         Current:
              Federal                  $ 29,866         26,598       21,057
              State                       1,783          3,107        3,054
                                       --------        -------      -------
                                         31,649         29,705       24,111
                                       --------        -------      -------
         Deferred:
              Federal                       477          1,235         (222)
              State                         185            270          (96)
                                       --------        -------      -------
                                            662          1,505         (318)
                                       --------        -------      -------

         Total income tax expense
           attributed to income from
           continuing operations       $ 32,311         31,210       23,793
                                       ========        =======      =======

     The reasons for the differences between the effective income tax rate
attributable to income from continuing operations and the corporate federal
income tax rate are summarized in the following table:

                                                         Percentage of
                                                  Income Before Income Taxes
                                               --------------------------------
                                                     Year Ended December 31,
                                               --------------------------------
                                                 2000        1999        1998
                                               -------     -------     --------

Federal income tax rate                           35.0%       35.0        35.0
Items affecting effective income tax rate:
  State income taxes, net of federal benefit       1.4         2.6         2.9
  Other items, net                                   -         0.1         0.2
                                               -------      ------     -------
Effective income tax rate                         36.4%       37.7        38.1
                                               =======      ======     =======



                                       78
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to consolidated Financial Statements - (Continued)

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2000 and 1999 are presented below:

<TABLE>
<CAPTION>
                                                                           December 31,
                                                                    ------------------------
                                                                       2000          1999
                                                                    ----------    ----------
                                                                          (In thousands)
<S>                                                                 <C>           <C>
Deferred tax assets:
  Deferred compensation                                             $    4,879         4,511
  Book general loan loss reserves                                        7,595         6,881
  Book versus tax basis of real estate held for sale                       243           511
  Book versus tax basis of loans receivable                                373           186
  Book versus tax basis of securities                                        -         1,441
  Book versus tax basis of deposits                                          -           367
  Other                                                                  1,144           786
                                                                    ----------    ----------
     Total deferred tax assets                                          14,234        14,683
Deferred tax liabilities:
  Loan origination fees                                                 (3,139)       (2,693)
  Excess of tax bad debt reserve over base year amount                  (1,515)       (1,981)
  Book versus tax basis of land and fixed assets                        (2,383)       (2,050)
  Book versus tax basis of capitalized servicing                        (2,127)       (2,825)
  Book versus tax basis of intangible assets                            (2,104)       (2,453)
  Book versus tax basis of securities                                   (4,472)            -
  Other                                                                  (494)          (405)
                                                                    ----------    ----------
     Total deferred tax liabilities                                    (16,234)      (12,407)
                                                                    ----------    ----------
     Net deferred tax asset (liability)                             $   (2,000)        2,276
                                                                    ==========    ==========
</TABLE>

16.  Extraordinary item

         During the year ended December 31, 1998, the Company called its $27.6
million of 8.32% Subordinated Capital Notes due September 30, 2005. Under the
terms of the bond indenture, the call was made at par plus accrued interest, and
resulted in an extraordinary charge to income of $456,000, or $.02 per diluted
share, representing the after-tax impact of the remaining $750,000 of
unamortized transaction costs, net of income tax benefits of $294,000.

                                       79
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

17.  Regulatory Capital

     The Bank is subject to regulatory capital requirements under the Office of
Thrift Supervision ("OTS"). Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions by
regulators which could have a material impact on the Bank's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital guidelines that
involve quantitative measures of the Bank's assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting practices.

     Quantitative measures established by the OTS to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (as set forth in the
table below) of three capital requirements: a tangible capital (as defined in
the regulations) to adjusted total assets ratio, a core capital (as defined) to
adjusted total assets ratio, and a risk-based capital (as defined) to total
risk-weighted assets ratio. Management believes that the Bank met all capital
adequacy requirements to which it is subject as of December 31, 2000.

     The Bank's actual capital amounts and ratios, as well as minimum amounts
and ratios required for capital adequacy and prompt corrective action provisions
are presented below:

<TABLE>
<CAPTION>
                                                                                               To Be Well
                                                                                            Capitalized Under
                                                                       For Capital          Prompt Corrective
                                                 Actual             Adequacy Purposes       Action Provisions
                                          --------------------    --------------------     -------------------
                                            Amount      Ratio       Amount      Ratio        Amount     Ratio
                                          ----------   -------    ----------   -------     ---------   -------
                                                                 (Dollars in thousands)
<S>                                       <C>          <C>        <C>          <C>         <C>         <C>
As of December 31, 2000:
   Tangible capital
     (to total assets)                    $  321,931    6.32%     *$   76,408   *1.50%          N/A
   Core capital
     (to total assets)                    $  321,931    6.32%     *$  152,816   *3.00%     *$ 254,694   *5.00%
   Total capital
     (to risk-weighted assets)            $  336,801   11.98%     *$  224,878   *8.00%     *$ 281,098  *10.00%
   Core capital
     (to risk-weighted assets)            $  321,931   11.45%           N/A                *$ 168,659   *6.00%

As of December 31, 1999:
   Tangible capital
     (to total assets)                    $  288,177    6.32%     *$   68,391   *1.50%          N/A
   Core capital
     (to total assets)                    $  288,177    6.32%     *$  136,782   *3.00%     *$ 227,970   *5.00%
   Total capital
     (to risk-weighted assets)            $  305,453   12.32%     *$  198,423   *8.00%     *$ 248,029  *10.00%
   Core capital
     (to risk-weighted assets)            $  288,177   11.62%           N/A                *$ 148,817   *6.00%
</TABLE>

* more than and equal to

                                       80
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

     OTS regulations require that in meeting the tangible, core and risk-based
capital standards, institutions must generally deduct investments in and loans
to subsidiaries engaged in activities not permissible for a national bank. For
the Bank, this includes its $2.4 million investment in NW Financial at December
31, 2000.

     OTS regulations provide various standards under which the Bank may declare
and pay dividends to the Company. If the total amount of all dividends,
including the proposed dividend, declared by the Bank in any calendar year, does
not exceed the Bank's net income of that year to date combined with the retained
net income of the preceding two years, the Bank must file a notice of such
proposed dividend with the OTS. At December 31, 2000, $48.4 million of the
Bank's retained earnings were available for dividend declaration under this
standard. Proposed capital distributions in excess of this retained net income
standard are not prohibited but are merely subject to greater regulatory review
through an application process.

     As of December 31, 2000 and 1999, the most recent notification from the OTS
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank must
maintain a minimum core capital to adjusted total assets, risk-based capital to
adjusted risk-weighted assets, and core capital to adjusted risk-weighted assets
ratios as set forth in the table above. There are no conditions or events since
that notification that management believes have changed the Bank's category.

18.  Officer, Director and Employee Benefit Plans

     Employee Stock Ownership Plan (ESOP). The Mid America Bank, fsb ESOP covers
substantially all employees with more than one year of employment who have
attained the age of 21. Contributions to the ESOP by the Bank are currently made
to purchase additional common shares of the Company's stock. For the years ended
December 31, 2000, 1999 and 1998, total contributions to the ESOP were $1.0
million, $960,000, and $800,000, respectively which were expensed. The ESOP
purchased 60,078, 42,308, and 34,314 of the Company's shares for the years ended
December 31, 2000, 1999 and 1998, respectively.

     Profit Sharing Plan/401(k) Plan. The Mid America Bank, fsb Profit
Sharing/401(k) Plan allows employees to make pre-tax contributions of up to 15%
of their compensation and after-tax contributions of up to 10% of compensation,
subject to certain limitations. The Bank matches the pre-tax contributions of
employees at a rate equal to 35%, up to a $1,200 maximum matching contribution
per employee. The Bank, at its discretion, may make additional contributions.
Employees' contributions vest immediately while the Bank's contributions vest
gradually based on an employee's years of service. The Bank made discretionary
and matching contributions of $1.0 million, $960,000, and $800,000 for the years
ended December 31, 2000, 1999 and 1998, respectively.

Stock Option Plans. The Company and its shareholders have adopted stock option
plans for the benefit of employees and directors of the Bank.

                                       81
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

     The number of shares of common stock authorized under the MAF Bancorp 1990
Incentive Stock Option Plan ("Incentive Plan") is 2,227,791. The option exercise
price must be at least 100% of the fair market value of the common stock on the
date of grant, and the option term cannot exceed 10 years. A summary of the
stock option activity and related information in the Incentive Plan follows:

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                     ----------------------------------------------------------------------------
                                             2000                        1999                       1998
                                     ----------------------     ----------------------     ----------------------
                                                   Average                    Average                    Average
                                                   Exercise                   Exercise                   Exercise
                                       Shares        Price        Shares       Price         Shares       Price
                                     ---------     --------     ---------     --------     ---------     --------
<S>                                  <C>           <C>          <C>           <C>          <C>           <C>
Beginning of year                    1,578,677     $  16.02     1,293,676     $   7.72     1,195,402     $   4.15
Granted                                 22,750        18.19       679,325        24.20       232,450        23.65
Exercised                             (364,282)        2.38      (384,264)        2.32      (131,176)        3.07
Cancelled                              (18,190)       24.18       (10,060)       25.11        (3,000)       23.46
                                     ---------     --------     ---------     --------     ---------     --------
End of year                          1,218,955     $  20.01     1,578,677     $  16.02     1,293,676     $   7.72
                                     =========     ========     =========     ========     =========     ========
Options exercisable                    790,519        18.08       878,889         9.94     1,093,172         4.95
                                     =========     ========     =========     ========     =========     ========
Fair value of options
   granted during year                             $   6.95                   $   9.88                   $   9.92
                                                   ========                   ========                   ========
</TABLE>

     At December 31, 2000, options for 157,474 shares were available for grant
under the Incentive Plan, which includes additions to the available shares of
191,696, representing shares surrendered in connection with stock option
exercises. Cancelled shares also increase the number of shares available for
grant under the Incentive Plan.

     The number of shares of common stock authorized under the MAF Bancorp, Inc.
1993 Premium Price Stock Option Plan is 556,875. The option exercise price
equals 133% of the fair market value of the common stock on the date of grant
with respect to executive officers, 110% with respect to directors and 100% with
respect to non-executive employees. The option term cannot exceed 10 years. A
summary of the stock option activity and related information in the Premium Plan
follows:

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                    -----------------------------------------------------------------------------
                                             2000                        1999                       1998
                                    -----------------------    -----------------------     ----------------------
                                                   Average                    Average                    Average
                                                   Exercise                   Exercise                   Exercise
                                      Shares        Price        Shares        Price         Shares        Price
                                    ----------     --------    ----------     --------     ----------    --------
<S>                                  <C>           <C>          <C>           <C>          <C>           <C>
Beginning of year                      519,359     $  19.54       416,612     $  16.54        383,536    $  13.85
Granted                                      -            -       102,747        31.71         63,870       30.81
Exercised                               (2,000)       11.78             -            -        (30,794)      12.62
                                    ----------                 ----------                  ----------
End of year                            517,359        19.57       519,359     $  19.54        416,612    $  16.54
                                    ==========     ========    ==========     --------     ==========    --------
Options exercisable                    517,359        19.57       519,359        19.54        409,112       16.58
                                    ==========     ========    ==========     ========     ==========    ========
Fair value of options
   granted during year                             $      -                   $   7.96                   $   8.07
                                                   ========                   ========                   ========
</TABLE>

     At December 31, 2000, no options were available for grant under the Premium
Plan.

     In conjunction with the Company's acquisitions, certain stock options owned
by individuals of the acquired institutions were carried over into stock options
of the Company based on the transactions' exchange ratios. The values of these
stock options were included in the purchase price of the transactions as well as
in additional paid-in capital in the consolidated statements of financial
condition.

                                       82
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

A summary of the activity in these carryover stock options is as follows:

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                    ------------------------------------------------------------------------------
                                            2000                         1999                       1998
                                    ---------------------       ----------------------     -----------------------
                                                 Average                      Average                     Average
                                                 Exercise                     Exercise                    Exercise
                                     Shares        Price         Shares         Price         Shares         Price
                                    --------     --------       --------      --------       --------     --------
<S>                                 <C>          <C>            <C>           <C>            <C>          <C>
Beginning of year                    141,066     $   4.51        282,603      $   4.80          5,802     $   2.13
Carryover options issued                   -            -              -             -        268,301         4.94
Exercised                            (58,997)        4.14       (141,537)         5.09         (1,500)        2.13
                                    --------                    --------                     --------
End of year                           82,069     $   4.78        141,066      $   4.51        282,603     $   4.80
                                    ========     ========       ========      ========       ========     ========
Options exercisable                   82,069     $   4.78        141,066      $   4.51        282,603     $   4.80
                                    ========     ========       ========      ========       ========     ========
</TABLE>

     In 2000, the Company adopted the MAF Bancorp 2000 Stock Option Plan, under
which 300,000 shares of common stock were authorized to be issued. As of
December 31, 2000, no options have been granted under this plan and 300,000
shares were available to be issued.

     The following table summarizes information about stock options outstanding
at December 31, 2000:

<TABLE>
<CAPTION>
                                          Options Outstanding                            Options Exercisable
                          ---------------------------------------------------       ------------------------------
                                         Weighted-Average    Weighted-Average                     Weighted-Average
      Range of               Options        Remaining           Exercise              Options         Exercise
   Exercise Prices        Outstanding      Life (yrs.)            Price             Exercisable         Price
--------------------      -----------      -----------            -----             -----------         -----
<S>                        <C>            <C>                 <C>                    <C>            <C>
$  3.77  to  $  6.94         230,943          1.54              $  4.39                230,943        $  4.39
  10.78  to    19.68         504,900          5.18                13.43                502,234          13.41
  20.24  to    35.99       1,082,540          8.07                25.05                656,770          25.97
                           ---------                                                 ---------
                           1,818,383          6.44              $ 19.20              1,389,947        $ 17.85
                           =========          ====              =======              =========         ======
</TABLE>

     The Company applies APB Opinion 25, "Accounting for Stock Issued to
Employees," and related Interpretations in accounting for its stock option
plans. Accordingly, no compensation cost has been recognized for its stock
option plans. Had compensation cost for the Company's stock option plans been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method of SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated in the table below:

<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                              -------------------------------------------------
                                                                2000                1999                  1998
                                                              -------              ------                ------
                                                                (Dollars in thousands, except per share data)
     <S>                                <C>                   <C>                  <C>                   <C>
     Net income                         As reported           $56,559              51,545                38,246
                                        Pro-forma              53,939              48,881                36,627
     Basic earnings per share           As reported              2.43                2.13                  1.70
                                        Pro-forma                2.31                2.02                  1.63
     Diluted earnings per share         As reported              2.40                2.07                  1.65
                                        Pro-forma                2.27                1.97                  1.58
                                                              =======              ======                ======
</TABLE>

     The fair value of each option grant is estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants during the years ended December 31, 2000, 1999, and 1998, respectively:
dividend yield of 2.21%, 1.37%, and .84%; expected volatility of 27.8%, 26.7%,
and 21.1%; risk-free interest rates of 6.28%, 5.51% and 5.80%; expected life of
10 years for each period.

                                       83
<PAGE>

                      MAF Bancorp. Inc. and Subsidiaries
            Notes to Consolidated Financial Statements - (Continued)

       Stock Option Gain Deferral Plan. The MAF Bancorp, Inc. Stock Option Gain
Deferral Plan ("Gain Deferral Plan") was adopted during 1999. The Gain Deferral
Plan combines traditional deferred compensation arrangements with stock option
exercise transactions by allowing designated executive officer participants
(currently two) to defer to a future date, the receipt of shares representing
the value of underlying MAF Bancorp stock options. The Company's obligation to
issue the deferred MAF Bancorp shares in the future is recorded in stockholders'
equity as the product of the number of shares to be issued multiplied by the
exercise price of the related stock options. Dividends paid on MAF Bancorp
shares deferred through the Gain Deferral Plan are recorded as compensation
expense.

       Supplemental Executive Retirement Plan. The Bank sponsors a supplemental
executive retirement plan ("SERP") for the purpose of providing certain
retirement benefits to executive officers and other corporate officers approved
by the Board of Directors. The annual retirement plan benefit under the SERP is
calculated equal to 2% of final average salary times the years of service after
1994. In most cases, ten additional years of service are credited to
participants in the event of a change in control transaction although in no
event may total years of service exceed 20 years. The maximum annual retirement
is equal to 40% of final average salary. Benefits are payable in various forms
in the event of retirement, death, disability and separation from service,
subject to certain conditions defined in the plan. The SERP also provides for
certain death benefits to the extent such amounts exceed a participant's accrued
benefit at the time of death. The plan is unfunded, however, the Company funds
life insurance policies that may be used to satisfy obligations of the SERP.

       The following table sets forth the change in benefit obligations and the
related assumptions for the SERP for the periods indicated:


<TABLE>
<CAPTION>
                                                                                        Year Ended December 31,
                                                                              -------------------------------------
                                                                                  2000       1999         1998
                                                                              ----------- ------------  -----------
                                                                                           (In thousands)
<S>                                                                           <C>               <C>         <C>
Projected benefit obligation - beginning of year                               $  1,552         1,298           850
Service cost                                                                        351           386           283
Interest cost                                                                       125            96            63
Actuarial (gains) losses                                                            186          (223)          107
Benefits paid                                                                        (5)           (5)           (5)
                                                                               --------        ------       -------
Projected benefit obligation - end of year                                     $  2,209         1,552         1,298
                                                                               ========        ======       =======

Funded status                                                                    (2,209)       (1,552)       (1,298)
Unrecognized (gain) loss                                                            143           (42)          191
                                                                               --------        ------       -------
Prepaid (accrued) benefit cost                                                 $ (2,066)       (1,594)       (1,107)
                                                                               ========        ======       =======

Weighted average assumptions:
Discount rate                                                                      8.00 %        7.00         7.50
Rate of compensation increase                                                      5.00          5.00         5.00
                                                                               ========        ======       ======
</TABLE>

                                       84
<PAGE>

                      MAF Bancorp. Inc. and Subsidiaries
            Notes to Consolidated Financial Statements - (Continued)

     The following sets forth the components of the net periodic benefit cost
related to the SERP for the year indicated:

                                                 Year Ended December 31,
                                             --------------------------------
                                              2000         1999        1998
                                             ------       -------     -------
                                                      (In thousands)
Service cost                                 $  351           386         283
Interest cost                                   125            96          63
Unrecognized net (gain) loss                      -            10           -
                                             ------       -------     -------
Net periodic benefit cost                    $  476           492         346
                                             ======       =======     =======

19.  Financial Instruments with Off-Balance Sheet Risk and Concentrations of
     Credit Risk

     The Bank is a party to various financial instruments with off-balance sheet
risk in the normal course of its business. These instruments include commitments
to extend credit, standby letters of credit, and forward commitments to sell
loans. These financial instruments carry varying degrees of credit and interest-
rate risk in excess of amounts recorded in the financial statements.

     Commitments to originate and purchase loans of $320.7 million at December
31, 2000, represent amounts which the Bank plans to fund within the normal
commitment period of 30 to 90 days of which $170.9 million were fixed-rate, with
rates ranging from 6.00% to 8.875%, and $149.8 million were adjustable-rate
loans. Because the credit worthiness of each customer is reviewed prior to
extension of the commitment, the Bank adequately controls their credit risk on
these commitments, as it does for loans recorded on the balance sheet. As part
of its effort to control interest-rate risk on these commitments, the Bank
generally sells fixed-rate mortgage loan commitments, for future delivery, at a
specified price and at a specified future date. Such commitments for future
delivery present a risk to the Bank, in the event it cannot deliver the loans
during the delivery period. This could lead to the Bank being charged a fee for
non-performance, or being forced to reprice the mortgage loans at a lower rate,
causing a loss to the Bank. The Bank seeks to mitigate this potential loss by
charging potential borrowers, at the time of application, a fee to fix the
interest rate, or by requiring the interest rate to float at market rates until
shortly before closing. At December 31, 2000, forward commitments to sell
mortgage loans for future delivery were $47.9 million, of which $41.1 million
are related to loans held for sale, and $6.8 million are unfunded as of December
31, 2000.

     Additionally, the Bank has approved, but unused, home equity lines of
credit of $144.2 million at December 31, 2000. Approval of equity lines is based
on underwriting standards that generally do not allow total borrowings,
including the equity line of credit to exceed 80% of the current appraised value
of the customer's home, which is similar to guidelines used when the Bank
originates first mortgage loans, and are a means of controlling its credit risk
on the loan. However, the Bank offers home equity lines of credit up to 100% of
the homes current appraised value, less existing liens, at a commensurate higher
interest rate.

     At December 31, 2000, the Bank had standby letters of credit totaling $14.4
million. Two of these standby letters of credit total $13.3 million, and enhance
a developer's industrial revenue bond financings of commercial real estate in
the Bank's market. At December 31, 2000, the Bank had pledged mortgage-backed
securities and investment securities with an aggregate carrying value and market
value of $21.0 million and $23.6 million respectively, as collateral for these
two standby letters of credit. Standby letters of credit are conditional
commitments issued by the Bank to guarantee the performance of a customer to a
third party. The credit risk involved in these transactions is essentially the
same as that involved in

                                       85
<PAGE>


                      MAF Bancorp. Inc. and Subsidiaries
            Notes to Consolidated Financial Statements - (Continued)

extending a loan to a customer, as performance under the letters of credit
creates a first position lien in favor of the Bank. Additionally, at December
31, 2000, the Company had standby letters of credit totaling $6.8 million, which
ensure the completion of land development improvements on behalf of MAF
Developments, Inc.

     The contractual amounts of credit-related financial instruments such as
commitments to extend credit, and letters of credit, represent the amounts of
potential accounting loss should the contract be fully drawn upon, the customer
default, and the value of any existing collateral become worthless.

     In addition to financial instruments with off-balance sheet risk, the Bank
is exposed to varying risks with concentrations of credit. Concentrations of
credit include significant lending activities in specific geographical areas and
large extensions of credit to individual borrowers. The Bank's loan portfolio
primarily consists of loans within its market area. At December 31, 2000 and
1999, loans representing 94.1% and 94.6%, respectively, of the Bank's total
loans receivable were located in the state of Illinois.

20. Parent Company Only Financial Information

     The information as of December 31, 2000, and 1999, and for the years ended
December 31, 2000, 1999, and 1998, presented below should be read in conjunction
with the other Notes to Consolidated Financial Statements.

                                                              December 31,
                                                     -------------------------
Condensed Statements of Financial Condition            2000             1999
                                                     ---------        --------
                                                           (In thousands)
Assets:

   Cash and cash equivalents                        $  2,940             4,137
   Investment securities                               8,957             8,205
   Equity in net assets of subsidiaries              410,777           365,056
   Other assets                                        3,861            11,180
                                                    --------          --------
                                                    $426,535           388,578
                                                    ========          ========

Liabilities and Stockholders' Equity:
  Liabilities:

   Unsecured term bank loan and line of credit      $ 33,400            29,900
   Accrued expenses                                    5,406             5,757
                                                    --------          --------
   Total liabilities                                  38,806            35,657
                                                    --------          --------
  Stockholders' equity:
   Common stock                                          254               254
   Additional paid-in capital                        198,068           194,874
   Retained earnings, substantially restricted       237,867           198,156
   Stock in Gain Deferral Plan                           511               511
   Accumulated other comprehensive income (loss)       1,435            (3,675)
   Treasury stock                                    (50,406)          (37,199)
                                                    --------          --------
   Total stockholders' equity                        387,729           352,921
                                                    --------          --------
                                                    $426,535           388,578
                                                    ========          ========

                                       86
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

<TABLE>
<CAPTION>
                                                                                      Year Ended December 31,
                                                                                -----------------------------------
Condensed Statements of Operations                                                2000         1999         1998
                                                                                --------     --------     ---------
                                                                                          (In thousands)
<S>                                                                             <C>          <C>          <C>
Dividend income from the Bank                                                   $ 20,000       35,000        50,000
Interest income                                                                      564        1,360         1,874
Interest expense                                                                   2,775        2,436         4,493
                                                                                --------     --------     ---------
   Net interest and dividend income                                               17,789       33,924        47,381
Gain on sale of investments, net                                                     256        1,330           740
Non-interest expense                                                               1,911        1,872         1,917
Extraordinary item, net of tax benefit                                                 -            -          (456)
                                                                                --------     --------     ---------
   Net income before income tax benefit and
     other adjustments                                                            16,134       33,382        45,748
Income tax benefit                                                                (1,595)        (743)       (1,615)
                                                                                --------     --------     ---------
   Net income before other adjustments                                            17,729       34,125        47,363
Dividend income in excess of equity in earnings of subsidiaries                        -            -       (10,865)
Equity in undistributed earnings of subsidiaries                                  38,830       17,420         1,748
                                                                                --------     --------     ---------
   Net income                                                                   $ 56,559       51,545        38,246
                                                                                ========     ========     =========
<CAPTION>

                                                                                      Year Ended December 31,
                                                                                -----------------------------------
Condensed Statements of Cash Flows                                                2000         1999         1998
                                                                                --------     --------     ---------
                                                                                          (In thousands)
<S>                                                                          <C>          <C>             <C>
Operating activities:
   Net income                                                                 $   56,559       51,545        38,246
   Equity in undistributed earnings of subsidiaries                              (38,830)     (17,420)       (1,748)
   Dividend income in excess of equity in subsidiaries                                 -            -        10,865
   Extraordinary item, net of tax benefit                                              -            -           456
   Gain on sale of investment securities                                            (256)      (1,330)         (740)
   Amortization of premiums and discounts                                              -            -            71
   Net decrease (increase) in other assets and liabilities,
     net of effects from acquisitions                                              4,932       (1,816)       13,946
                                                                              ----------     --------     ---------
     Net cash provided by operating activities                                    22,405       30,979        61,096
Investing activities:
   Proceeds from sale of investment securities                                     2,201        7,036        12,146
   Proceeds from maturity of investment securities                                     -            -           500
   Purchases of investment securities                                             (1,631)      (2,676)      (13,769)
   Payment for acquisitions, net of cash acquired                                      -            -       (76,959)
                                                                              ----------     --------     ---------
     Net cash provided by (used in) investing activities                             570        4,360       (78,082)
Financing activities:
   Proceeds from issuance of common stock                                              -            -        72,713
Proceeds from exercise of stock options                                              221          893           324
   Proceeds from borrowings                                                       15,000       21,000             -
   Repayment of borrowings                                                       (11,500)     (24,100)      (29,100)
   Purchases of treasury stock                                                   (19,071)     (35,147)      (22,924)
   Cash dividends paid                                                            (8,822)      (7,610)       (5,275)
                                                                              ----------     --------     ---------
     Net cash provided by (used in) financing activities                         (24,172)     (44,964)       15,738
                                                                              ----------     --------     ---------
     Decrease in cash and cash equivalents                                        (1,197)      (9,625)       (1,248)
Cash and cash equivalents at beginning of year                                     4,137       13,762        15,010
                                                                              ----------     --------     ---------
Cash and cash equivalents at end of year                                      $    2,940        4,137        13,762
                                                                              ==========     ========     =========
</TABLE>

                                      87
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

21.  Segment Information

     The Company utilizes the "management approach" for segment reporting. This
approach is based on the way that a chief decision maker for the Company
organizes segments for making operating decisions and assessing performance.

     The Company operates two separate lines of business. The Bank operates
primarily as a retail consumer bank, participating in mortgage loan portfolio
lending, deposit gathering and offering other financial services mainly to
individuals. Land development consists primarily of developing raw land for
residential use and sale to builders. Selected segment information is included
in the table below:

<TABLE>
<CAPTION>
                                                                     Year Ended December 31, 2000
                                                ----------------------------------------------------------------------
                                                    Retail             Land                             Consolidated
                                                    Banking         Development        Eliminations         Total
                                                    -------         -----------        ------------      ----------
                                                                            (In thousands)
<S>                                            <C>                  <C>                <C>              <C>
Interest income                                  $   343,319                -                (216)          343,103
Interest expense                                     217,173              216                (216)          217,173
                                                 -----------          -------            --------        ----------
  Net interest income                                126,146             (216)                  -           125,930
Provision for loan losses                              1,500                -                   -             1,500
                                                 -----------          -------            --------        ----------
  Net interest income after provision                124,646             (216)                  -           124,430
Non-interest income                                   27,907            9,536                   -            37,443
Non-interest expense                                  72,251              752                   -            73,003
                                                 -----------          -------            --------        ----------
Income before income taxes                            80,302            8,568                   -            88,870
Income tax expense                                    28,912            3,399                   -            32,311
                                                 -----------          -------            --------        ----------
Net income                                       $    51,390            5,169                   -            56,559
                                                 ===========          =======            ========        ==========
Average assets                                   $ 4,936,570           11,662                   -         4,948,232
                                                 ===========          =======            ========        ==========

<CAPTION>
                                                                     Year Ended December 31, 1999
                                                ----------------------------------------------------------------------
                                                    Retail             Land                           Consolidated
                                                    Banking         Development        Eliminations        Total
                                                    -------         -----------        ------------      ----------
                                                                           (In thousands)
<S>                                            <C>                  <C>                <C>            <C>
Interest income                                  $   286,457                -              (1,365)          285,092
Interest expense                                     168,401            1,365              (1,365)          168,401
                                                 -----------          -------            --------        ----------
  Net interest income                                118,056           (1,365)                  -           116,691
Provision for loan losses                              1,100                -                   -             1,100
                                                 -----------          -------            --------        ----------
  Net interest income after provision                116,956           (1,365)                  -           115,591
Non-interest income                                   25,214            9,630                   -            34,844
Non-interest expense                                  66,885              795                   -            67,680
                                                 -----------          -------            --------        ----------
Income before income taxes                            75,285            7,470                   -            82,755
Income tax expense                                    28,247            2,963                   -            31,210
                                                 -----------          -------            --------        ----------
Net income                                       $    47,038            4,507                   -            51,545
                                                 ===========          =======            ========        ==========
Average assets                                   $ 4,259,190           24,501                   -         4,283,691
                                                 ===========          =======            ========        ==========
</TABLE>

                                       88
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
            Notes to Consolidated Financial Statement - (Continued)

<TABLE>
<CAPTION>
                                                                     Year Ended December 31, 1998
                                                --------------------------------------------------------------------
                                                    Retail             Land                            Consolidated
                                                    Banking         Development        Eliminations        Total
                                                    -------         -----------        ------------      ----------
                                                                           (In thousands)
<S>                                            <C>                  <C>                <C>             <C>
Interest income                                $     249,309                -              (2,046)          247,263
Interest expense                                     150,575            2,046              (2,046)          150,575
                                                     -------          -------            --------           -------
  Net interest income                                 98,734           (2,046)                  -            96,688
Provision for loan losses                                800                -                   -               800
                                                     -------          -------            --------           -------
  Net interest income after provision                 97,934           (2,046)                  -            95,888
Non-interest income                                   21,033            4,517                   -            25,550
Non-interest expense                                  58,386              557                   -            58,943
                                                     -------          -------            --------           -------
Income before income taxes                            60,581            1,914                   -            62,495
Income tax expense                                    23,034              759                   -            23,793
Extraordinary item, net of tax                          (456)               -                   -              (456)
                                                     -------          -------            --------           -------
Net income                                     $      37,091            1,155                   -            38,246
                                                     =======          =======            ========           =======
Average assets                                 $   3,541,341           28,174                   -         3,569,515
                                                   =========          =======            ========         =========
</TABLE>

22.  Fair Values of Financial Instruments

     SFAS No. 107, "Disclosures about Fair Value of Financial Instruments"
requires the disclosure of estimated fair values of all asset, liability and
off-balance sheet financial instruments. The estimated fair value amounts under
SFAS No.107 have been determined as of a specific point in time utilizing
available market information, assumptions and appropriate valuation
methodologies. Accordingly, the estimated fair values presented herein are not
necessarily representative of the underlying value of the Company. Rather the
disclosures are limited to reasonable estimates of the fair value of only the
Company's financial instruments. The use of assumptions and various valuation
techniques, as well as the absence of secondary markets for certain financial
instruments, will likely reduce the comparability of fair value disclosures
between financial institutions. The Company does not plan to sell most of its
assets or settle most of its liabilities at these fair values.

     The estimated fair values of the Company's financial instruments as of
December 31, 2000 and 1999 are set forth in the following table below.

<TABLE>
<CAPTION>
                                                      December 31, 2000                      December 31, 1999
                                               ----------------------------           -----------------------------
                                                Carrying           Fair                 Carrying           Fair
                                                 Amount            Value                 Amount            Value
                                               -----------      -----------           -----------       -----------
                                                                          (In thousands)
<S>                                         <C>                 <C>                   <C>               <C>
Financial assets:
     Cash and cash equivalents              $      270,520          270,520               158,040           158,040
Investment securities                              271,902          272,559               281,129           281,451
     Mortgage-backed securities                    104,385          103,221               133,954           131,798
     Loans receivable                            4,328,114        4,353,349             3,884,569         3,821,782
     Interest receivable                            27,888           27,888                23,740            23,740
                                               -----------      -----------           -----------       -----------
        Total financial assets              $    5,002,809        5,027,537             4,481,432         4,416,811
                                               ===========      ===========           ===========       ===========
Financial liabilities:
     Non-maturity deposits                  $    1,359,103        1,359,103             1,228,941         1,228,941
     Deposits with stated maturities             1,615,110        1,619,670             1,470,301         1,470,134
     Borrowed funds                              1,728,900        1,741,300             1,526,363         1,500,602
     Interest payable                                9,314            9,314                 7,653             7,653
                                               -----------      -----------           -----------       -----------
        Total financial liabilities         $    4,712,427        4,729,387             4,233,258         4,207,330
                                               ===========      ===========           ===========       ===========
</TABLE>

                                       89
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements - (Continued)

     The following methods and assumptions are used by the Company in estimating
the fair value amounts for its financial instruments.

     Cash and cash equivalents. The carrying value of cash and cash equivalents
approximates fair value due to the relatively short period of time between the
origination of the instruments and their expected realization.

     Investment securities and mortgage-backed securities. The fair value of
these financial instruments were estimated using quoted market prices, when
available. If quoted market prices were not available, fair value was estimated
using quoted market prices for similar assets. The fair value of FHLB of Chicago
stock is based on its redemption value.

     Loans receivable. The fair value of loans receivable held for investment is
estimated based on contractual cash flows adjusted for prepayment assumptions,
discounted using the current rate at which similar loans would be made to
borrowers with similar credit ratings and remaining terms to maturity. The fair
value of mortgage loans held for sale are based on estimated values that could
be obtained in the secondary market.

     Interest receivable and payable. The carrying value of interest receivable,
net of the reserve for uncollected interest, and interest payable approximates
fair value due to the relatively short period of time between accrual and
expected realization.

     Deposits. The fair value of deposits with no stated maturity, such as
demand deposit, passbook savings, NOW and money market accounts, are disclosed
as the amount payable on demand. The fair value of fixed-maturity deposits is
the present value of the contractual cash flows discounted using interest rates
currently being offered for deposits with similar remaining terms to maturity.

     Borrowed funds. The fair value of FHLB of Chicago advances and reverse
repurchase agreements is the present value of the contractual cash flows,
discounted by the current rate offered for similar remaining maturities. The
carrying value of the unsecured term bank loan approximates fair value due to
the short term to repricing and adjustable rate nature of the loan.

     Commitments to extend credit and standby letters of credit. The fair value
of commitments to extend credit is estimated based on current levels of interest
rates versus the committed rates. As of December 31, 2000 and 1999, the fair
value of the Bank's mortgage loan commitments of $320.7 million and $318.3
million, respectively, was $5.8 million and $(2.3) million, respectively, which
represents the differential between the committed value and value at current
rates. The fair value of the standby letters of credit approximate the recorded
amounts of related fees and are not material at December 31, 2000 and 1999.

                                       90
<PAGE>

                      MAF Bancorp, Inc. and Subsidiaries
              Notes to Consolidated Financial Statements - (End)


23.  Selected Quarterly Financial Data (Unaudited)

     The following are the consolidated results of operations on a quarterly
basis:

<TABLE>
<CAPTION>
                                                                           Year Ended December 31, 2000
                                                                 --------------------------------------------------
                                                                   First        Second        Third       Fourth
                                                                  Quarter       Quarter      Quarter      Quarter
                                                                 --------------------------------------------------
                                                                  (Dollars in thousands, except per share amounts)
<S>                                                              <C>          <C>          <C>           <C>
Interest income                                                  $   80,091       84,631       88,310        90,071
Interest expense                                                     49,548       52,570       56,475        58,580
                                                                 ----------   ----------   ----------    ----------
   Net interest income                                               30,543       32,061       31,835        31,491
Provision for loan losses                                               300          300          500           400
                                                                 ----------   ----------   ----------    ----------
   Net interest income after provision for loan losses               30,243       31,761       31,335        31,091
Net gain (loss) on sale of assets                                       262         (421)       4,586           937
Income from real estate operations                                    2,475        2,701        2,625         1,735
Other income                                                          5,022        5,538        5,975         6,008
Non-interest expense                                                 17,686       17,997       18,438        18,882
                                                                 ----------   ----------   ----------    ----------
   Income before income taxes                                        20,316       21,582       26,083        20,889
Income tax expense                                                    7,207        7,911        9,570         7,623
                                                                 ----------   ----------   ----------    ----------
   Net income                                                    $   13,109       13,671       16,513        13,266
                                                                 ==========   ==========   ==========    ==========
Basic earnings per share                                         $      .55          .59          .71           .57
                                                                 ==========   ==========   ==========    ==========
Diluted earnings per share                                       $      .55          .58          .71           .57
                                                                 ==========   ==========   ==========    ==========
Cash dividends declared per share                                $      .09          .10          .10           .10
                                                                 ==========   ==========   ==========    ==========
Stock price information:
   High                                                          $    21.00        19.94        25.00         30.00
   Low                                                                15.50        15.50        17.88         20.50
   Close                                                              16.19        18.19        24.88         28.44

<CAPTION>
                                                                           Year Ended December 31, 1999
                                                                 --------------------------------------------------
                                                                   First        Second        Third       Fourth
                                                                  Quarter       Quarter      Quarter      Quarter
                                                                 --------------------------------------------------
                                                                  (Dollars in thousands, except per share amounts)
<S>                                                              <C>          <C>          <C>           <C>
Interest income                                                  $   67,438       68,895       72,119        76,640
Interest expense                                                     39,035       39,852       42,798        46,716
                                                                 ----------   ----------   ----------    ----------
   Net interest income                                               28,403       29,043       29,321        29,924
Provision for loan losses                                               250          250          300           300
                                                                 ----------   ----------   ----------    ----------
   Net interest income after provision for loan losses               28,153       28,793       29,021        29,624
Net gain on sale of assets                                            2,010          522          717         1,053
Income from real estate operations                                      621        3,917        2,478         2,614
Other income                                                          4,685        5,198        5,548         5,481
Non-interest expense                                                 16,180       16,524       17,217        17,759
                                                                 ----------   ----------   ----------    ----------
   Income before income taxes                                        19,289       21,906       20,547        21,013
Income tax expense                                                    7,610        8,667        7,671         7,262
                                                                 ----------   ----------   ----------    ----------
   Net income                                                    $   11,679       13,239       12,876        13,751
                                                                 ==========   ==========   ==========    ==========
Basic earnings per share                                         $      .47          .55          .53           .57
                                                                 ==========   ==========   ==========    ==========
Diluted earnings per share                                       $      .46          .53          .52           .56
                                                                 ==========   ==========   ==========    ==========
Cash dividends declared per share                                $      .07          .09          .09           .09
                                                                 ==========   ==========   ==========    ==========
Stock price information:
   High                                                          $    27.50        25.13        24.31         23.69
   Low                                                                21.75        21.50        18.88         19.88
   Close                                                              22.25        24.25        19.88         20.94
</TABLE>

                                       91
<PAGE>

                         Independent Auditors' Report


The Board of Directors
MAF Bancorp, Inc.

     We have audited the accompanying consolidated statements of financial
condition of MAF Bancorp, Inc. and subsidiaries as of December 31, 2000 and
1999, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of MAF Bancorp,
Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.

                            KPMG LLP

Chicago, Illinois
January 25, 2001

                                       92
<PAGE>

Item 9.    Changes in and Disagreements With Accountants on Accounting and
           Financial Disclosures

     None.

                                   PART III

Item 10.   Directors and Executive Officers of the Registrant

     Information regarding directors of the registrant is included in the
registrant's proxy statement under the heading "Election of Directors" and the
information included therein is incorporated herein by reference. Information
regarding the executive officers of the registrant included in this Form 10-K is
included in "Part I. Business."

Item 11.   Executive Compensation

     Information regarding compensation of executive officers and directors is
included in the registrant's proxy statement under the headings "Directors
Compensation," "Executive Compensation - Summary Compensation Table,"
"Employment and Special Termination Agreements," "Supplemental Executive
Retirement Plan," "Option Plans," and "Long Term Incentive Plan," and the
information included therein is incorporated herein by reference.

Item 12.   Security Ownership of Certain Beneficial Owners and Management

     Information regarding security ownership of certain beneficial owners and
management is included in the registrant's proxy statement under the headings
"Voting Securities," and "Security Ownership of Certain Beneficial Owners," and
"Information With Respect to Nominees, Continuing Directors and Others," and the
information included therein is incorporated herein by reference.

Item 13.   Certain Relationships and Related Transactions

     Information regarding certain relationships and related transactions is
included in the registrant's proxy statement under the heading "Transactions
with Certain Related Persons," and the information included therein is
incorporated herein by reference.

                                    PART IV

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

     (a)(1)  Financial Statements

             The following consolidated financial statements of the registrant
             and its subsidiaries are filed as a part of this document under
             "Item 8. Financial Statements and Supplementary Data."

             Consolidated Statements of Financial Condition at December 31, 2000
             and 1999.

             Consolidated Statements of Operations for the years ended December
             31, 2000, 1999 and 1998.

             Consolidated Statements of Changes in Stockholders' Equity for the
             years ended December 31, 2000, 1999 and 1998.

                                       93
<PAGE>
             Consolidated Statements of Cash Flows for the years ended December
             31, 2000, 1999 and 1998.

             Notes to Consolidated Financial Statements.

             Independent Auditors' Report.

     (a)(2)  Financial Statement Schedules

             All schedules are omitted because they are not required or are not
             applicable or the required information is shown in the consolidated
             financial statements or notes thereto.

     (a)(3)  Exhibits

             The following exhibits are either filed as part of this report or
             are incorporated herein by reference:

             Exhibit No. 3.  Certificate of Incorporation and By-laws.

             (i)    Restated Certificate of Incorporation. (Incorporated herein
                    by reference to Exhibit 3.1 to Registrant's Form 8-K dated
                    December 19, 2000).

             (ii)   Amended and Restated By-laws of Registrant. (Incorporated
                    herein by reference to Exhibit No. 3.2 to Registrant's Form
                    8-K dated December 19, 2000).

             Exhibit No. 10.  Material Contracts

             (i)    Mid America Bank, fsb Management Recognition and Retention
                    Plan and Trust Agreement. (Incorporated herein by reference
                    to Exhibit No. 10 to Registrant's June 30, 1992 Form 10-K).*

             (ii)   MAF Bancorp, Inc. 1990 Incentive Stock Option Plan, as
                    amended. (Incorporated herein by reference to Exhibit No. 10
                    to Registrant's June 30, 1999 Form 10-Q and to Exhibit A to
                    Registrant's Proxy Statement, dated March 23, 1998, relating
                    to the 1998 Annual Meeting of Shareholders, File No.
                    0-18121).*

             (iii)  Amendment dated May 23, 2000 to the MAF Bancorp, Inc. 1990
                    Incentive Stock Option Plan, as amended.*

             (iv)   MAF Bancorp, Inc. 1993 Amended and Restated Premium Price
                    Stock Option Plan. (Incorporated herein by reference to
                    Exhibit No. 10 to Registrant's June 30, 1999 Form 10-Q and
                    to Exhibit No. 10 to Registrant's December 31, 1998 Form
                    10-K). *

             (v)    Amendment dated May 23, 2000 to the MAF Bancorp, Inc. 1993
                    Amended and Restated Premium Price Stock Option Plan.*

             (vi)   Credit Agreement dated as of May 22, 1996, as amended
                    through April 3, 1998, between MAF Bancorp, Inc. and Harris
                    Trust and Savings Bank. (Incorporated herein by reference to
                    Exhibit No. 10 to Registrant's December 31, 1998 Form 10-K).

                                       94
<PAGE>

           (vii)    Amendment dated April 19, 1999, of the Credit Agreement
                    dated as of May 22, 1996, as amended, between MAF Bancorp,
                    Inc. and Harris Trust and Savings Bank. (Incorporated herein
                    by reference to Exhibit No. 10 to Registrant's December 31,
                    1999 Form 10-K).

           (viii)   Amendment dated May 5, 2000 of the Credit Agreement dated
                    as of May 22, 1996, as amended, between MAF Bancorp, Inc.
                    and Harris Trust and Savings Bank. (Incorporated herein by
                    reference to Exhibit No. 10 to Registrant's June 30, 2000
                    Form 10-Q).

           (ix)     Mid America Federal Savings and Loan Association Deferred
                    Compensation Trust Agreement. (Incorporated herein by
                    reference to Exhibit No. 10 to Registrant's June 30, 1990
                    Form 10-K).*

           (x)      Mid America Bank, fsb Directors' Deferred Compensation Plan.
                    (Incorporated herein by reference to Exhibit No. 10 to
                    Registrant's December 31, 1997 Form 10-K).*

           (xi)     Mid America Bank, fsb Executive Deferred Compensation Plan.
                    (Incorporated herein by reference to Exhibit No. 10 to
                    Registrant's December 31, 1997 Form 10-K).*

           (xii)    MAF Bancorp, Inc. Executive Annual Incentive Plan.
                    (Incorporated herein by reference to Exhibit No. 10 to
                    Registrant's June 30, 1994 Form 10-K).*

           (xiii)   Amendment dated January 30, 2001 to the MAF Bancorp, Inc.
                    Executive Annual Incentive Plan.*

           (xiv)    MAF Bancorp, Inc. Shareholder Value Long-Term Incentive
                    Plan, as amended. (Incorporated herein by reference to
                    Exhibit No. 10 to Registrant's December 31, 1999 Form
                    10-K).*

           (xv)     Amendment dated January 30, 2001 to the MAF Bancorp, Inc.
                    Shareholder Value Long-Term Incentive Plan, as amended.*

           (xvi)    Mid America Bank, fsb Supplemental Executive Retirement
                    Plan, as amended. (Incorporated herein by reference to
                    Exhibit No. 10 to Registrant's December 31, 1998 Form
                    10-K).*

           (xvii)   Form of Employment Agreement, as amended, between MAF
                    Bancorp, Inc. and Allen Koranda, Kenneth Koranda and Jerry
                    Weberling. *

           (xviii)  Form of Employment Agreement, as amended, between Mid
                    America Bank, fsb and Allen Koranda, Kenneth Koranda and
                    Jerry Weberling. *

           (xix)    Employment Agreement, as amended, between David C. Burba
                    and MAF Bancorp, Inc. (Incorporated herein by reference to
                    Exhibit No. 10 to Registrant's December 31, 1999 Form
                    10-K).*

           (xx)     Form of Special Termination Agreement, as amended, between
                    MAF Bancorp, Inc., and Kenneth Rusdal and various officers.*

           (xxi)    Form of Special Termination Agreement, as amended, between
                    Mid America Bank, fsb, and Kenneth Rusdal and various
                    officers.*

                                       95
<PAGE>

          (xxii)    Agreement Regarding Post-Employment Restrictive Covenants
                    between MAF Bancorp, Inc., Mid America Bank, fsb and David
                    C. Burba. (Incorporated herein by reference to Exhibit No.
                    10 to Registrant's December 31, 1998 Form 10-K). *

          (xxiii)   Form of Agreement Regarding Post-Employment Restrictive
                    Covenants between MAF Bancorp, Inc., Mid America Bank, fsb
                    and Richard A. Brechlin and Gregg P. Goossens. (Incorporated
                    herein by reference to Exhibit No. 10 to Registrant's
                    December 31, 1998 Form 10-K).

          (xxiv)    Westco Bancorp, Inc. 1992 Incentive Stock Option Plan, as
                    amended (Incorporated by reference to the Post-Effective
                    Amendment No. 1 to Form S-8 Registration Statement filed by
                    Westco Bancorp, Inc. with the Commission on March 17, 1995,
                    Registration Statement No. 33-54764 and to Exhibit 99.2 to
                    the Registrant's Post-Effective Amendment No. 1 on Form S-8
                    to Form S-4, Registration Statement No. 333-66693).*

          (xxv)     MAF Bancorp, Inc. Stock Option Gain Deferral Plan
                    (Incorporated herein by reference to Exhibit No. 10 to
                    Registrant's June 30, 1999 Form 10-Q).*

          (xxvi)    MAF Bancorp, Inc. Stock Option Gain Deferral Plan Trust
                    Agreement (Incorporated herein by reference to Exhibit No.
                    10 to Registrant's September 30, 1999 Form 10-Q).*

          (xxvii)   MAF Bancorp, Inc. 2000 Stock Option Plan (Incorporated
                    herein by reference to Exhibit A filed as part of
                    Registrant's Proxy Statement dated March 22, 2000, relating
                    to the 2000 Annual Meeting of Shareholders, File No. 0-
                    18121).*

          ----------------
          * Indicates management contracts or compensatory plans or arrangements
          required to be filed as an exhibit.

          Exhibit No. 11. Statement re: Computation of Per Share Earnings for
          the periods indicated:

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                       -----------------------------------------
                                                                           2000          1999           1998
                                                                       ------------   ----------      ----------
          <S>                                                          <C>            <C>             <C>
          Net income                                                   $ 56,559,000   51,545,000      38,246,000
                                                                       ============   ==========      ==========

          Weighted average common shares outstanding                     23,311,135   24,253,946      22,433,184
                                                                       ============   ==========      ==========

          Basic earnings per share                                     $       2.43         2.13            1.70
                                                                       ------------   ----------      ----------

          Weighted average common shares outstanding                     23,311,135   24,253,946      22,433,184

          Common stock equivalents due to dilutive
          effect on stock options                                           275,457      676,667         764,978
                                                                       ------------   ----------      ----------

          Total weighted average common shares
          and equivalents outstanding for
          diluted computation                                            23,586,592   24,930,613      23,198,162
                                                                       ============   ==========      ==========

          Diluted earnings per share                                   $       2.40         2.07            1.65
                                                                       ============   ==========      ==========
</TABLE>

          Exhibit No. 12. Statements re: Computation of ratio of earnings to
          fixed charges.

                                       96
<PAGE>

          Exhibit No. 21.  Subsidiaries of the Registrant

               A list of the Company's and the Bank's subsidiaries is included
               as an exhibit to this report.

          Exhibit No. 23.  Consent of KPMG LLP

          Exhibit No. 24.  Power of Attorney (Included on Signature Page)


     (b)  Reports on Form 8-K

          On October 19, 2000, MAF Bancorp, Inc. announced its 2000 third
          quarter earnings results.

          On December 19, 2000, MAF Bancorp, Inc. Board of Directors adopted a
          Restated Certificate of Incorporation and Amended and Restated By-
          laws.

                                       97
<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.

                                                     MAF Bancorp, Inc.
                                            -----------------------------------
                                                       (Registrant)

                                       By:         /s/ Allen H. Koranda
                                            -----------------------------------
                                                     Allen H. Koranda
                                                 Chairman of the Board and
                                                  Chief Executive Officer

                                                       March 7, 2001
                                            -----------------------------------
                                                          (Date)

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Allen H. Koranda or Kenneth Koranda or either of
them, his true and lawful attorney-in-fact and agents, with full power of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Annual Report on
Form 10-K, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming said attorneys-in-fact and agents or their substitutes
or substitute may lawfully do or cause to be done by virtue hereof.

     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.

By:       /s/ Allen H. Koranda                                March 7, 2001
    ------------------------------------                ------------------------
              Allen H. Koranda                                   (Date)
          Chairman of the Board and
           Chief Executive Officer
        (Principal Executive Officer)

By:      /s/ Jerry A. Weberling                               March 7, 2001
     -----------------------------------                ------------------------
             Jerry A. Weberling                                  (Date)
        Executive Vice President and
    Chief Financial Officer and Director
        (Principal Financial Officer)

By:      /s/ Christine Roberg                                 March 7, 2001
     -----------------------------------                ------------------------
             Christine Roberg                                    (Date)
            First Vice President
              and Controller
       (Principal Accounting Officer)

                                       98
<PAGE>

By:    /s/ Robert Bowles, M.D.                            March 7, 2001
     -----------------------------                  ------------------------
           Robert Bowles, M.D.                               (Date)
                Director

By:      /s/ David C. Burba                               March 7, 2001
     -----------------------------                  ------------------------
            David C. Burba                                   (Date)
              Director

By:        /s/ Terry Ekl                                  March 7, 2001
     -----------------------------                  ------------------------
             Terry Ekl                                       (Date)
             Director


By:      /s/ Joe F. Hanauer                               March 7, 2001
     -----------------------------                  ------------------------
             Joe F. Hanauer                                  (Date)
               Director

By:      /s/ Kenneth Koranda                              March 7, 2001
     -----------------------------                  ------------------------
            Kenneth Koranda                                  (Date)
               Director

By:      /s/ Henry Smogolski                              March 7, 2001
     -----------------------------                  ------------------------
            Henry Smogolski                                   (Date)
               Director

By:    /s/ F. William Trescott                            March 7, 2001
     -----------------------------                  ------------------------
          F. William Trescott                               (Date)
               Director

By:      /s/ Lois B. Vasto                                March 7, 2001
     -----------------------------                  ------------------------
           Lois B. Vasto                                     (Date)
              Director

By:     /s/ Andrew J. Zych                                March 7, 2001
     -----------------------------                  ------------------------
            Andrew J. Zych                                   (Date)
               Director

                                       99