<PAGE>

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   -----------

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

/X/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM __________ TO __________

                         COMMISSION FILE NUMBER 0-24566

                               MB FINANCIAL, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                    DELAWARE                            36-3895923
          (STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER
          INCORPORATION OR ORGANIZATION)              IDENTIFICATION NO.)

     1200 NORTH ASHLAND AVENUE, CHICAGO, ILLINOIS           60622
       (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)           (ZIP CODE)


     REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (773) 278-4040

     SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

            TITLE OF EACH CLASS       NAME OF EACH EXCHANGE ON WHICH REGISTERED

      _____________________________   __________________________________________

      _____________________________   __________________________________________

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                     COMMON STOCK, PAR VALUE $0.01 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 statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

<PAGE>

     The aggregate market value of the voting shares held by nonaffiliates of
the Registrant was $78,715,000 as of March 09, 2001. Solely for the purpose of
this computation, it has been assumed that executive officers and directors of
the Registrant are "affiliates".

     There were issued and outstanding 7,064,515 shares of the Registrant's
common stock as of March 09, 2001.


                      DOCUMENTS INCORPORATED BY REFERENCE:

<TABLE>
<CAPTION>
                  DOCUMENT                              PART OF FORM 10-K
                  --------                              -----------------
<S>                                                     <C>

      Proxy Statement for the Annual Meeting of
      Stockholders to be held on April 24, 2001             Part III
      (to be filed on or before March 31, 2001)

      Index to Exhibits is in Item 14(c)(1). on
      page 82.  This report consists of 137 pages.

</TABLE>



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                                       2
<PAGE>

                       MB FINANCIAL, INC. AND SUBSIDIARIES

                                    FORM 10-K

                                DECEMBER 31, 2000

                                      INDEX

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                                                                                                        Page
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<S>          <C>                                                                                        <C>

PART I

Item 1       Business ...............................................................................      4
Item 2       Properties .............................................................................     13
Item 3       Legal Proceedings ......................................................................     13
Item 4       Submission of Matters to a Vote of Security Holders ....................................     13

PART II

Item 5       Market for Registrant's Common Equity and Related Stockholder Matters ..................     14
Item 6       Selected Financial Data ................................................................     15
Item 7       Management's Discussion and Analysis of Financial Condition and Results of Operation ...     18
Item 7A      Quantitative and Qualitative Disclosures about Market Risk .............................     38
Item 8       Financial Statements and Supplementary Data ............................................     41
Item 9       Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...     78

PART III

Item 10      Directors and Executive Officers of the Registrant .....................................     78
Item 11      Executive Compensation .................................................................     78
Item 12      Security Ownership of Certain Beneficial Owners and Management .........................     78
Item 13      Certain Relationships and Related Transactions .........................................     78

PART IV

Item 14      Exhibits, Financial Statement Schedules, and Reports on Form 8-K .......................     79
             Signatures .............................................................................     81

</TABLE>

                                       3
<PAGE>

                                     PART 1

ITEM 1.  BUSINESS

         GENERAL

     MB Financial, Inc. ("MB Financial") was incorporated in Delaware in 1995
and is a bank holding company under the Federal Banking Holding Company Act of
1956, as amended ("BHCA") and the Illinois Bank Holding Company Act of 1957
("Illinois BHCA"). MB Financial conducts a commercial banking business through
Manufacturers Bank, an Illinois banking corporation, which is wholly-owned by
Manufacturers National Corporation, an Illinois corporation and wholly-owned
subsidiary of MB Financial. Unless the context otherwise requires, the Company
includes MB Financial and its subsidiaries and predecessors. At December 31,
2000, the Company had approximately 1,400 stockholders of record, 7,064,515
shares of common stock outstanding, total consolidated assets of $1.5 billion
and operated from a total of 13 offices throughout metropolitan Chicago,
including the principal business office at 1200 North Ashland Avenue, Chicago,
Illinois.

     Manufacturers Bank owns all of the issued and outstanding shares of common
stock of five active special purpose Illinois corporations, Ashland Management
Agency, Inc. ("Ashland"), MB1200 Corporation ("MB1200"), Manufacturers Deferred
Exchange Corporation ("MDEC"), Avondale Financial Services, Inc. ("AFS") and
Manufacturers Community Development Corporation, all of which have their
principal business offices at the principal business office of the Company at
1200 North Ashland Avenue, Chicago, Illinois. Ashland acts as manager of certain
real estate owned by Manufacturers Bank; MB1200 holds title to property that
Manufacturers Bank may receive pursuant to a foreclosure or other resolution of
a non-performing loan; MDEC holds escrowed funds relating to certain tax
advantaged property exchanges entered into by the customers of Manufacturers
Bank; AFS provides investment and insurance products to customers of
Manufacturers Bank and Manufacturers Community Development Corporation engages
in community lending and equity investments to facilitate the construction and
rehabilitation of housing in low and moderate neighborhoods in Manufacturers
Bank's market area. The Company also owns all of the issued and outstanding
Common Securities of Coal City Capital Trust I, a statutory Delaware business
trust, making such trust a subsidiary of the Company for financial reporting
purposes. In July 1998, Coal City Capital Trust I issued $25 million in
Preferred Capital Securities.

     In 1995, the Company acquired 100% of the outstanding stock of Peterson
Bank, located on Chicago's far north side, and in 1997, Manufacturers National
Corporation acquired 100% of U.S. Bancorp, the single-bank holding company for
U.S. Bank. In 1998, the Company sold 100% of the outstanding common stock of
Coal City National Bank to Kankakee Bancorp, Inc., the parent holding company of
Kankakee Federal Savings Bank.

     In 1999, Coal City Corporation, the then holding company for Manufacturers
Bank ("CCC"), was merged with and into Avondale Financial Corp., the holding
company for Avondale Federal Savings Bank. The resulting entity was renamed MB
Financial, Inc. Simultaneously, Avondale Federal Savings Bank was merged into
Manufacturers Bank. Since the CCC stockholders owned more than 50% of the merged
company, the merger was accounted for as a reverse acquisition using the
purchase method of accounting, with CCC being the accounting acquirer. As a
result, the post-merger historical financial statements of the merged company
are CCC's as the accounting acquirer, and include the operating results of
Avondale since the merger date. See Footnote 2 to the Notes to Consolidated
Financial Statements included herein in response to Item 8. for additional
information.


                                       4
<PAGE>

     RECENT DEVELOPMENTS

     On February 8, 2001, MB Financial, Manufacturers National Corporation,
Manufacturers Bank, and FSL Holdings, Inc. ("FSL Holdings") and its subsidiary,
First Savings & Loan Association of South Holland ("Association"), entered into
an Agreement and Plan of Merger pursuant to which Manufacturers National
Corporation will merge into FSL Holdings, which will survive the merger as a
wholly-owned subsidiary of MB Financial, and each shareholder of FSL Holdings
will be paid $165 a share for each share of common stock held by such
shareholder (for an aggregate consideration of $41,305,275). The Company expects
this transaction to have no impact on earnings until the fourth quarter of 2001
when it is expected to increase annual earnings by $0.05 to $0.10 per share. The
consideration for the aforesaid merger will be funded through a combination of
cash acquired through the acquisition and borrowings. It is anticipated that the
Company and Manufacturers Bank will continue to be in full compliance with all
capital adequacy requirements subsequent to merger. In connection with the
foregoing merger, both the Association and Manufacturers National Corporation
will also merge into Manufacturers Bank so that Manufacturers Bank will be a
direct subsidiary of MB Financial and the separate existence of the Association
and Manufacturers National Corporation will cease.

     Consummation of the merger is subject to certain conditions, including the
approval of the Agreement and Plan of Merger by the shareholders of FSL Holdings
and the approval of the merger by the Federal Reserve Board ("FRB"), the Office
of Thrift Supervision ("OTS"), the Federal Deposit Insurance Corporation and the
Illinois Commissioner of Banks and Real Estate ("Illinois Commissioner").
Subject to the foregoing conditions, the merger currently is expected to occur
in the second quarter of 2001.

     FSL Holdings is an Illinois corporation and a registered savings and loan
holding company with the OTS. FSL Holdings has not engaged in any significant
activity other than holding the stock of the Association.

     At December 31, 2000, FSL Holdings had consolidated assets of $224.8
million, consolidated liabilities of $192.2 million (which includes total
deposits through the Association of $176.6 million), and stockholders' equity of
$32.6 million. FSL Holdings' only office is located at 475 East 162nd Street,
South Holland, Illinois 60473, a Chicago suburb located approximately 25 miles
south of MB Financial's principal executive offices.

     The Association is an Illinois chartered stock savings and loan
association. The Association is regulated by the Illinois Commissioner, and its
deposits are insured up to the applicable limits under the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation. The Association is
a member of the Federal Home Loan Bank system.

     The Association's principal business activity consists of attracting
deposits from the public and investing those deposits, together with funds
generated from operations and borrowings, primarily in residential and
commercial mortgage loans. The Association operates from a single financial
services office located at the office of FSL Holdings. At December 31, 2000, the
Association's total assets were $217.2 million and its capital was $28.5 million
or 13.1% of total assets.

     BUSINESS AREAS

     Manufacturers Bank concentrates its business efforts on servicing small and
middle market businesses, such as manufacturers, wholesalers, distributors,
long-term health care operators, real estate operators and investors, and home
developers located throughout the entire Chicago metropolitan area. The Company,
through its acquisition program and through careful selection of officers and
employees, has moved to position Manufacturers Bank to take a leading role in
filling this attractive niche in the market. In order to further the ability of
Manufacturers Bank to play such a leading role, management has also caused
Manufacturers Bank to divide its business into four distinctly recognizable
areas, referred to as Commercial Banking, Lease Banking, Korean Banking and
Retail Banking.


                                       5
<PAGE>

     COMMERCIAL BANKING. The Commercial Banking group focuses on serving
privately-owned companies run by entrepreneurs, including manufacturers,
wholesalers, distributors, home developers, long-term health care operators,
real estate operators and investors, and selected types of service companies.
Manufacturers Bank provides a full set of credit, deposit, cash management and
investment products to these companies. These products are specifically designed
for companies with sales between $5 million and $50 million. The products
developed for this target market include:

     CREDIT PRODUCTS:

     o    Working capital loans and lines of credit, including accounts
          receivable and inventory financing

     o    Equipment loans and leasing

     o    Business acquisition loans

     o    Owner occupied real estate loans

     o    Financial, performance and commercial letters of credit

     DEPOSIT AND CASH MANAGEMENT PRODUCTS:

     o    Corporate InterConnect - an internet cash management product for
          businesses

     o    Zero balance accounts

     o    Automated tax payments

     o    ATM access

     o    Merchant credit card program

     o    Telephone banking

     o    Lockbox

     o    Direct deposit (ACH)

     o    Account reconciliation

     o    Controlled disbursement

     o    Detail and general information reporting

     o    Wire transfers

     o    A variety of international banking services

     o    Checking accounts


     o    Investment services

     In addition, for real estate operators and investors, Manufacturers Bank
also offers the following products:

     o    Commercial mortgages

     o    Residential, commercial, retail and industrial construction loans

     o    Land acquisition and development loans

     o    Industrial revenue bond financing

     LEASE BANKING. The target market for the Lease Banking group consists of
small and medium size equipment leasing companies located throughout the United
States. Manufacturers Bank has provided Lease Banking services to these
companies for more than 25 years. Competition in servicing this equipment
leasing market generally comes from large banks, financing companies, large
industrial companies and some community banks in certain segments of the
business. Manufacturers Bank provides rapid service and decision making and
flexible financial solutions to meet its customers' needs in this market.
Manufacturers Bank provides full banking services for these leasing companies by
financing the debt portion of leveraged leases ("Lease Loans"), providing
short-term and long-term equity financing, making working capital and bridge
loans, and investing directly into leased equipment. The volume of Lease Loans
is closely managed, in order to control Manufacturers Bank's liquidity and the
level of total risk adjusted assets.


                                       6
<PAGE>

     KOREAN BANKING. The Korean Banking group focuses on the expanding Korean
community located principally on the north side of Chicago and in Chicago's
northwestern suburbs. Manufacturers Bank serves ethnic Korean consumers and
Korean-owned businesses by providing complete banking services using the Korean
language. Korean commercial customers tend to be small owner-operated, cash
businesses, such as dry cleaners, gift shops and restaurants. While continuing
to serve these customers, Manufacturers Bank is also targeting those
Korean-owned businesses with annual sales between $2 million and $20 million.
Personnel in the Korean Banking group, as well as a number of other individuals
in key service positions at Manufacturers Bank, speak and conduct business in
Korean. Manufacturers Bank's automated telephone account access services are
provided in the Korean language as well. Competition in this growing market
segment is quite limited because of the need to provide all banking services in
Korean.

     RETAIL BANKING. The target market for the Retail Banking group consists of
consumers who live or work near Manufacturers Bank offices. Manufacturers Bank
offers a full set of consumer products to these individuals, including checking
accounts, savings accounts, money market accounts, time deposit accounts,
secured and unsecured consumer loans, residential mortgage loans, and a variety
of fee for service products, such as money orders and travelers checks.
Manufacturers Bank also offers brokerage services which include sales of
non-FDIC insured investment products to its client base.

     LENDING ACTIVITIES

     GENERAL. Manufacturers Bank is primarily a business lender and its loan
portfolio consists primarily of loans to businesses or for business purposes.

     COMMERCIAL LENDING. Manufacturers Bank makes commercial loans to small and
middle market businesses. The borrowers tend to be privately-owned and are
generally manufacturers, wholesalers, distributors, long-term health care
operators, and selected types of service providers. The loan products offered
are primarily working capital loans and lines of credit. These general product
classifications include accounts receivable and inventory financing, equipment
loans and business acquisition loans. Manufacturers Bank also offers financial,
performance and commercial letters of credit. Most commercial loans are
short-term in nature, being one year or less, although the maximum allowable
term is five years.

     Manufacturers Bank's lines of credit are typically secured, established for
one year or less, and are subject to renewal upon satisfactory review of the
borrower's financial statements and credit history. Secured short-term
commercial business loans are usually collateralized by accounts receivable,
equipment or real estate. Such loans are typically guaranteed by the owners of
the business. Interest rates tend to be at or above the prime-lending rate,
although there has been considerable recent market pressure to make loans at a
spread above LIBOR. At December 31, 2000, there were $229 million in commercial
loans representing 21.7% of the total loan portfolio outstanding.

     COMMERCIAL REAL ESTATE LENDING. Manufacturers Bank originates commercial
real estate mortgage loans that are generally secured by one or more of the
following kinds of properties: multi-unit residential property, owner and
non-owner occupied commercial and industrial property, and residential property
for development. Loans are also made to acquire and develop land. At December
31, 2000, there were $313 million in commercial real estate loans representing
29.6% of the total loan portfolio outstanding.


                                       7
<PAGE>

     LEASE LOANS. Manufacturers Bank lends money to small and mid-size leasing
companies to finance the debt portion of leveraged leases (i.e., Lease Loans). A
Lease Loan arises when a leasing company discounts with Manufacturers Bank the
equipment rental revenue stream owed to the leasing company by a lessee. Lease
Loans are generally non-recourse to the leasing company, and, consequently,
Manufacturers Bank underwrites Lease Loans by examining the creditworthiness of
the lessee rather than the lessor. Lease Loans are secured by the equipment
being leased. The lessee acknowledges Manufacturers Bank's security interest in
the leased equipment and agrees to send lease payments directly to Manufacturers
Bank. Lessees tend to be Fortune 500 or Fortune 1000 companies and have a public
debt rating in one of the top four rating categories by Moody's or Standard &
Poors, or the equivalent. If the lessee does not have a public debt rating, then
Manufacturers Bank lends when its own credit analysis indicates that if the
lessee did have a debt rating it would be in one of the top four categories.
Lease Loans are fully amortizing, with maturities ranging from two to five
years. Loan rates are fixed at a spread over the U.S. Treasury curve. Currently
lease loan yields range from 1.5% to 3.0% over the U.S. Treasury curve.
Manufacturers Bank uses Lease Loans to manage its risk adjusted asset totals.
Since these loans are high quality and made to well-known public companies, the
loans are generally marketable. Manufacturers Bank also has sold loans to
correspondents that range from a large regional bank to small community banks.
At December 31, 2000, there were $245 million in commercial loans collateralized
by lease payments representing 23.2% of the total loan portfolio outstanding.

     FOREIGN OPERATIONS

     The Company does not engage in any operations in foreign countries.

     COMPETITION

     Vigorous competition exists in the major areas in which Manufacturers Bank
is presently engaged in business. Competition includes not only commercial banks
but also other financial institutions, including savings and loan associations,
credit unions, money market and other mutual funds, mortgage companies, leasing
and finance companies and a variety of financial services and advisory
companies. Manufacturers Bank competes by providing quality services to its
customers, ease of access to facilities and competitive pricing of services
(including interest rates paid on deposits, interest rates charged on loans and
fees charged for other non-loan or non-deposit services).

     PERSONNEL

     As of December 31, 2000, the Company had 284 full time employees and 75
part-time employees. The employees are not represented by a collective
bargaining unit, and the Company considers its relationship with its employees
to be good.

     SUPERVISION AND REGULATION

     BANK HOLDING COMPANY REGULATION. Bank holding companies are subject to
comprehensive regulation by the FRB under the BHCA. As a bank holding company,
the Company is required to file reports with the FRB and such additional
information as the FRB may require, and the Company and its nonbanking
affiliates will be subject to examination by the FRB. Under FRB policy, a bank
holding company must serve as a source of strength for its subsidiary banks.
Under this policy the FRB may require, and has required in the past, a holding
company to contribute additional capital to an undercapitalized subsidiary bank.
Under the BHCA, a bank holding company must obtain FRB approval before: (i)
acquiring, directly or indirectly, ownership or control of any voting shares of
another bank or bank holding company if, after such acquisition, it would own or
control more than 5% of such shares (unless it already owns or controls the
majority of such shares); (ii) acquiring all or substantially all of the assets
of another bank or bank holding company; or (iii) merging or consolidating with
another bank holding company.


                                       8
<PAGE>

     The Company is subject to the activity limitations imposed on bank holding
companies. The BHCA prohibits a bank holding company, with certain exceptions,
from acquiring direct or indirect ownership or control of more than 5% of the
voting shares of any company which is not a bank or bank holding company, or
from engaging directly or indirectly in activities other than those of banking,
managing or controlling banks, or providing services for its subsidiaries. The
principal exceptions to these prohibitions involve certain non-bank activities
which, by statute or by FRB regulation or order, have been identified as
activities closely related to the business of banking or managing or controlling
banks. The list of activities permitted by the FRB includes, among other things,
operating a savings institution, mortgage company, finance company, credit card
company or factoring company; performing certain data processing operations;
providing certain investment and financial advice; underwriting and acting as an
insurance agent for certain types of credit-related insurance; leasing property
on a full-payout, non-operating basis; selling money orders, travelers' checks
and United States Savings Bonds; real estate and personal property appraising;
providing tax planning and preparation services; and, subject to certain
limitations, providing securities brokerage services for customers. The scope of
permissible activities may be expanded from time to time by the FRB. Such
activities may also be affected by federal legislation.

     The Company is also a bank holding company under the Illinois BHCA, and
subject to regulation and examination by the Illinois Commissioner.

     DEPOSITORY INSTITUTION REGULATION. Manufacturers Bank is subject to
regulation by the Illinois Commissioner and the FDIC. The federal regulatory
structure includes: (i) real estate lending standards, which provide guidelines
concerning loan-to-value ratios for various types of real estate loans; (ii)
risk-based capital rules including accounting for interest rate risk,
concentration of credit risk and the risks posed by "non-traditional"
activities; (iii) rules requiring depository institutions to develop and
implement internal procedures to evaluate and control credit and settlement
exposure to their correspondent banks; (iv) rules prohibiting, with certain
exceptions, equity investments of types and in amounts not permissible for
national banks; and (v) rules addressing various "safety and soundness" issues,
including operations and managerial standards, standards for asset quality,
earnings and stock valuations, and compensation standards.

     The Company and its subsidiaries are affiliates within the meaning of the
Federal Reserve Act ("FRA") so that Manufacturers Bank is subject to certain
restrictions on transactions with affiliates or involving securities issued by
an affiliate, such as any extensions of credit to the Company and its other
subsidiaries, investments in the stock or other securities of the Company and
its other subsidiaries and the acceptance of the stock or other securities of
the Company or its other subsidiaries as collateral for loans. Certain
limitations and reporting requirements will be placed on extensions of credit by
Manufacturers Bank to principal stockholders of the Company and its other
subsidiaries, to directors and certain executive officers of the Company and its
other subsidiaries, and to "related interests" of such principal stockholders,
directors and officers.

     Under the Federal Deposit Insurance Act ("FDIA"), an insured depository
institution which is commonly controlled with another insured depository
institution shall generally be liable for any loss incurred, or reasonably
anticipated to be incurred, by the FDIC in connection with the default (i.e.,
the appointment of a conservator or receiver) of such commonly controlled
institution, or for any assistance provided by the FDIC to such commonly
controlled institution, which is in danger of default. Thus, Manufacturers Bank
could incur liability to the FDIC in the event of a loss suffered by the FDIC in
connection with another depository institution subsidiary.

     Under the FDIC's risk-based insurance assessment system, each insured bank
or thrift is placed in one of nine risk categories based on its level of capital
and other relevant information. Each insured bank's or thrift's insurance
assessment rate is then determined by the risk category in which it has been
classified by the FDIC. There is currently a 0.27% spread between the highest
and lowest assessment rates, so that institutions classified as strongest by the
FDIC are subject in 2000 to 0.00% assessment, and those classified as weakest by
the FDIC are subject to an assessment rate of 0.27%. In 2000, each insured bank
and insured thrift was subject to an additional assessment which fluctuates
quarterly and is approximately 0.02%. These additional assessments were used to
fund debt service or obligations issued in connection with the resolution of the
thrift crisis in the 1980's. In 2001, each commercial bank and thrift will again
be subject to an additional assessment. The most current assessment was 0.019%.


                                       9
<PAGE>

     INTERSTATE BANKING AND BRANCHING. The FRB may approve an application of an
adequately capitalized and adequately managed bank holding company to acquire
control of, or acquire all or substantially all of the assets of, a bank located
in a state other than such holding company's home state, without regard to
whether the transaction is prohibited by the laws of any state. The FRB may not
approve the acquisition of a bank that has not been in existence for the minimum
time period (not exceeding five years) specified by the statutory law of the
host state and may not approve an application if the applicant (and its
depository institution affiliates) controls or would control more than 10% of
the insured deposits in the United States or 30% or more of the deposits in the
target bank's home state or in any state in which the target bank maintains a
branch. Individual states may also waive the 30% statewide concentration limit.
Each state may limit the percentage of total insured deposits in the state which
may be held or controlled by a bank or bank holding company to the extent such
limitation does not discriminate against out-of-state banks or bank holding
companies.

     The federal banking agencies are authorized to approve interstate merger
transactions without regard to whether such transactions are prohibited by the
law of any state, unless the home state of one of the banks opted out of
interstate mergers prior to June 1, 1997. Interstate acquisitions of branches
are permitted only if the law of the state in which the branch is located
permits such acquisitions. Interstate mergers and branch acquisitions are
subject to the nationwide and statewide insured deposit concentration amounts
described above.

     The FDIC may approve interstate branching de novo by state banks only in
states which specifically allow for such branching. Illinois banks are permitted
to branch into other states. Interstate branching authority may not be used
primarily for the purpose of deposit production.

     DIVIDENDS. The FRB's policy is that a bank holding company should pay cash
dividends only to the extent that its net income for the past year is sufficient
to cover both the cash dividends and a rate of earning retention that is
consistent with the holding company's capital needs, asset quality and overall
financial condition and that it is inappropriate for a company experiencing
serious financial problems to borrow funds to pay dividends. Furthermore, under
the prompt corrective action regulations adopted by the FRB, the FRB may
prohibit a bank holding company from paying any dividends if the holding
company's bank subsidiary is classified as "undercapitalized."

     Bank holding companies are required to give the FRB prior written notice of
any purchase or redemption of their outstanding equity securities if the gross
consideration for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during the preceding 12
months, is equal to 10% or more of their consolidated net worth. The FRB may
disapprove such a purchase or redemption if it determines that the proposal
would constitute an unsafe or unsound practice or would violate any law,
regulation, FRB order, or any condition imposed by, or written agreement with,
the FRB. This notification requirement does not apply to any company that meets
the well-capitalized standard for commercial banks, is well managed and is not
subject to any unresolved supervisory issues.

     Manufacturers Bank is permitted, under the Illinois Banking Act ("IBA"), to
declare and pay dividends in amounts up to the amount of its accumulated net
profits, provided that it shall retain in its surplus at least one-tenth of its
net profits since the date of the declaration of its most recent previous
dividend until said additions to surplus, in the aggregate, equal at least the
paid-in-capital of such bank. In no event may Manufacturers Bank, while it
continues its banking business, pay dividends in excess of its net profits then
on hand (after deductions for losses and bad debts).

     CAPITAL REQUIREMENTS. The FRB has established capital requirements for bank
holding companies that generally parallel the capital requirements for banks and
thrift institutions. The Company will be subject to capital requirements on a
consolidated basis and Manufacturers Bank individually will be subject to
applicable capital requirements.

     The FRB expects bank holding companies to maintain Tier 1 capital
commensurate with the level and nature of risks to which they are exposed. The
minimum ratio of Tier 1 capital to total assets is 4% or 3% in the case of a
company (i) with a safety and soundness examination rating of "1" or (ii) that
has implemented the risk-based capital measure for market risk (applicable only
when the sum of trading assets and liabilities is 10% or more of total assets or
$1 billion or more). In addition, a bank holding company is expected to maintain
at least an 8% minimum ratio of total capital (at least half of which must be
Tier 1 capital) to risk-weighted assets.


                                       10
<PAGE>

     The federal banking regulators must take prompt corrective action with
respect to FDIC-insured depository institutions that do not meet minimum capital
requirements. There are five capital tiers: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized." Under FDIC regulations, an insured institution is
well capitalized if it maintains a leverage ratio (I.E., ratio of Tier 1 capital
to total assets) of at least 5%, a total risk-based capital ratio (I.E., a ratio
of total qualifying capital to risk-weighted assets) of at least 10% and a Tier
1 risk-based capital ratio (I.E., a ratio of Tier 1 capital to risk-weighted
assets) of at least 6% and is not subject to an agreement, order or directive to
maintain a specified capital level. An institution is generally considered to be
adequately capitalized if it is not well capitalized but has a Leverage Ratio of
4% or greater (or a leverage ratio of 3% if it has a safety and soundness
examination rating of "1"), a total risk-based capital ratio of 8% or greater
and a Tier 1 risk-based capital ratio of 4% or greater. An institution will be
considered undercapitalized if it fails to meet any minimum requirement to be
adequately capitalized, significantly undercapitalized if it is significantly
below such requirement and critically undercapitalized if it maintains a level
of tangible equity capital equal to or less than 2% of total assets. An
institution may be reclassified in a lower capitalization category if it
receives a less than satisfactory examination rating by its examiners with
respect to its assets, management, earnings or liquidity that has not been
corrected, or it is determined that the institution is in an unsafe or unsound
condition or engaged in an unsafe or unsound practice. Tier 1 capital generally
includes common stockholders equity capital, certain noncumulative perpetual
preferred stock and minority interests in consolidated subsidiaries, minus
certain intangible assets. Total qualifying capital includes certain elements in
addition to Tier 1 capital.

     Undercapitalized depository institutions are subject to various
restrictions and are required to submit or implement a capital restoration plan.
If a depository institution fails to submit an acceptable plan, it is treated as
if it is significantly undercapitalized. Undercapitalization (under certain
circumstances) and critical undercapitalization are grounds for the appointment
of the FDIC as receiver or conservator of a depository institution.

     COMMUNITY INVESTMENT AND CONSUMER PROTECTION LAWS. In connection with
lending activities, Manufacturers Bank is subject to a variety of federal laws
designed to protect borrowers and promote lending to various sectors of the
economy and population. Included among these are the Federal Home Mortgage
Disclosure Act, the Real Estate Settlement Procedures Act, the Truth-in-Lending
Act, the Equal Credit Opportunity Act ("ECOA"), the Fair Credit Reporting Act
and the CRA. Manufacturers Bank is also subject to similar Illinois laws
applicable to, among other things, usury, credit discrimination and general
business practices.

     As an Illinois banking corporation controlled by a bank holding company,
Manufacturers Bank is not only subject to the rules regarding change of control
contained in the BHCA, the FRA and the FDIA and the regulations promulgated
thereunder by the FRB and the FDIC. It is also subject to the rules regarding
change in control of Illinois banks contained in the IBA. The Company is also
subject to these rules by virtue of control of Manufacturers Bank. Generally,
the IBA provides that no person or entity or group of affiliated persons or
entities may, without the Illinois Commissioner's consent, directly or
indirectly, acquire control of an Illinois bank. Such control is presumed if any
person owns or controls 20% or more of the outstanding stock of an Illinois bank
or such lesser amount as would enable the holder or holders, by applying
cumulative voting, to elect one director of the bank.

     RECENT LEGISLATION. Effective November 12, 1999, the federal
Gramm-Leach-Bliley Act ("GLB Act") became law. The GLB Act repeals certain
portions of the Glass-Steagall Act, a Depression-era statute aimed at reducing
risky activities previously undertaken by the nation's banks. The GLB Act is
intended, among other things, to facilitate affiliations among banks, securities
firms, insurance firms and other financial companies. To further this goal, the
GLB Act amended portions of the BHCA to authorize bank holding companies, such
as the Company, through non-bank subsidiaries to engage in securities, insurance
and other activities that are financial in nature or incidental to a financial
activity. In order to undertake such activities, a bank holding company must
become a "financial holding company" by submitting to the FRB a declaration that
the company elects to be a financial holding company and a certification that
all of the depository institutions controlled by the company are well
capitalized and well managed. The GLB Act also provides that a bank holding
company's election to become a financial holding company will not be effective
if the FRB finds that, as of the date the company submits its election to the
FRB, not all of the insured depository institutions controlled by the company
have achieved at least a "satisfactory" rating at the date of their most recent
CRA examination. The activities of bank holding companies that are not financial
holding companies will continue to be limited to activities currently authorized
under the BHCA, such as activities that the FRB has previously determined in
regulations and orders issued under the BHCA to be closely related to banking
and permissible for bank holding companies.


                                       11
<PAGE>

     In order to implement the provisions of the GLB Act, the FRB, by
adopting an interim rule that was effective as of March 11, 2000, amended its
Regulation Y by adding a new subpart that defines the term "financial holding
company" and establishes procedures by which a bank holding company may elect
to become a financial holding company. The interim rule also enumerates the
criteria a bank holding company must meet in order for the FRB to determine
that an election is effective, and describing the period within which the FRB
will act on an election, and sets forth the consequences if any depository
institution controlled by a financial holding company fails to maintain at
least a satisfactory CRA rating. In January, 2001, the FRB and the FDIC also
issued proposed rules that grant to financial holding companies the broadest
authority in regard to the range of non-financial investments that would
henceforth be allowed to entities under their respective jurisdictions, as
determined by the capital treatment permitted with respect to such
investments. While aware of the flexibility offered by financial holding
company status, the Company has, for the time being, decided not to make an
election to convert to a financial holding company, but will continue to
follow the reception given to financial holding companies in the marketplace.

     The GLB Act also prohibits a financial institution from disclosing
non-public information about a consumer to nonaffiliated third parties unless
the institution satisfies various disclosure and opt-out requirements and the
consumer has not elected to opt out of the disclosure. Under the GLB Act, a
financial institution must provide its customers with a notice of its privacy
policies and practices, and the FRB, the FDIC and other financial regulatory
agencies are authorized to issue regulations to implement notice requirements
and restrictions on a financial institution's ability to disclose non-public
personal information about consumers to nonaffiliated third parties.
Accordingly, in February 2000, these agencies proposed an extensive joint rule
to implement the foregoing provisions of the GLB Act. Because the final rule
adopted is substantially similar to the proposed rule, and because Illinois law
on this subject is substantially similar to federal law, an additional
regulatory burden on the Company and Manufacturers Bank will be imposed in
regard to notifying customers of Manufacturers Bank's privacy policies and
practices. However, because the Company and Manufacturers Bank are not now
engaged in selling or transferring non-public customer information to
nonaffiliated third parties, it is anticipated that this burden will not result
in material economic cost to the Company or Manufacturers Bank.

     Another item of legislation with the potential to have an impact on
Manufacturers Bank is the Banking on Illinois Act ("BIA"), which became
effective in mid-1999 and amended the IBA to provide a potential wide range of
new activities for Manufacturers Bank. The stated purpose of the BIA is to
reduce the number of bank headquarters lost to other states through interstate
mergers by promoting Illinois as a progressive place for banks to do business.
Accordingly, the BIA directs the courts and regulators to liberally construe the
provisions of the IBA in order to create a favorable business climate for banks
in Illinois. The main features of the BIA are to expand bank powers through a
new "wild card" provision authorizing Illinois chartered banks to offer
virtually any product or service that any bank or thrift may offer anywhere in
the country, subject to certain safety and soundness considerations. The BIA
also gives Illinois chartered banks more options with respect to corporate
governance, and gives the banks new liability protections, especially with
respect to fees. Management of Manufacturers Bank remains aware of the favorable
environment created by the BIA and will consider the advantages that may become
available to Manufacturers Bank as a result of such legislation.

     The Illinois legislature is also currently considering the adoption of
legislation aimed at curbing what some legislators and consumer-oriented
advocacy groups consider to be predatory lending practices by some mortgage
brokers and other lenders active in the State of Illinois. While the problems of
so-called "predatory" lending most often involve subprime credit, subprime loans
are not automatically "predatory" loans. So-called "predatory" lending does not
arise from pricing or from traditional loan terms that can provide real benefits
to borrowers, such as balloon payments or prepayment penalties. Rather,
"predatory" lending consists of fraudulent and deceptive sales practices that
occur when borrowers are pressured into taking out loans they do not need or
cannot afford. Inasmuch as neither the Company nor Manufacturers Bank indulges
in such practices, it is unlikely that any legislation adopted in Illinois to
combat this perceived problem would have an impact on either the Company or
Manufacturers Bank other than the creation of additional reporting requirements.


                                       12
<PAGE>

ITEM 2.  PROPERTIES

     The Company conducts its business at its corporate office and 12 other
retail branch locations in its primary market area. All of the branches have
ATM's and the Company has 12 ATM's at other locations.

     The following table sets forth information relating to each of the
Company's offices as of December 31, 2000. The total net book value of the
Company's premises and equipment (including land, building and leasehold
improvements and furniture, fixtures and equipment) at December 31, 2000 was
$15.5 million.

     PRINCIPAL BUSINESS OFFICE:

     1200 North Ashland Avenue, Chicago, Illinois

     BRANCH OFFICES:

     CENTRAL REGION
     2965 North Milwaukee, Chicago, Illinois
     2 South LaSalle Street, Chicago, Illinois (1)

     NORTH REGION
     7557 West Oakton Street, Niles, Illinois (1)
     6443 North Sheridan Road, Chicago, Illinois (1)
     6101 North Lincoln Avenue, Chicago, Illinois (2)
     3232 West Peterson Avenue, Chicago, Illinois
     8300 West Belmont, Chicago, Illinois

     SOUTH REGION
     3030 East 92nd Street, Chicago, Illinois
     901 East Sibley Boulevard, South Holland, Illinois
     16255 South Harlem Avenue, Tinley Park, Illinois
     17130 South Torrence Avenue, Lansing, Illinois (1)

     WEST REGION
     2215 York Road, Suite 306, Oak Brook, Illinois (1)

          (1)  Leased facilities

          (2)  Land is leased; building is owned for this facility

     Manufacturers Bank owns the principal business office at 1200 North Ashland
Avenue in Chicago, and seven of its branch facilities. The other facilities are
leased for various terms. Manufacturers Bank also owns a residence within
walking distance of its facility on Peterson Avenue, which it leases to a third
party. The Company believes that all of its properties and equipment are well
maintained, in good operating condition and adequate for all present and
anticipated needs of the Company.

ITEM 3.  LEGAL PROCEEDINGS

     The Company is involved from time to time as plaintiff or defendant in
various legal actions arising in the normal course of its businesses. While the
ultimate outcome of pending proceedings cannot be predicted with certainty, it
is the opinion of management, after consultation with counsel representing the
Company in such proceedings, that the resolution of these proceedings should not
have a material effect on the Company's consolidated financial position or
results of operation.

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

     No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended December 31,
2000.


                                       13
<PAGE>

                                     PART II

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

     The Company's common stock is traded on the Nasdaq National Market under
the symbol "MBFI". The approximate number of stockholders of record of common
stock as of December 31, 2000 was 1,400. Certain shares of the Company are held
in "nominee" or "street" name and accordingly, the number of beneficial owners
of such shares is not known or included in the foregoing number. The following
table presents quarterly market information for the Company's common stock for
1999 and 2000.

<TABLE>
<CAPTION>
                                               MARKET PRICE RANGE
                                               ------------------
                                                 HIGH      LOW
                                               -------   -------
<S>                                            <C>       <C>
             2000
             ----
Quarter ended December 31, 2000                $ 13.75   $ 10.50
Quarter ended September 30, 2000                 14.13     11.75
Quarter ended June 30, 2000                      12.63      8.97
Quarter ended March 31, 2000                     12.75      9.50

             1999
             ----
Quarter ended December 31, 1999                $ 13.50   $ 12.50
Quarter ended September 30, 1999                 14.50     12.38
Quarter ended June 30, 1999                      14.63     12.38
Quarter ended March 31, 1999                     16.00     13.38

</TABLE>

     MB Financial has not paid dividends in the past and does not anticipate
paying cash dividends on its common stock in the future. Any earnings are
expected to be used for operations and expansion of the Company's business and
working capital. Future dividend policy will depend on the Company's earnings,
capital requirements, financial condition and other relevant factors.
Manufactures Bank is subject to various regulatory capital requirements
administered by federal and state banking agencies, which affect Manufacturers
Bank's ability to pay dividends to Manufacturers National Corporation and for
Manufacturers National Corporation to pay dividends to MB Financial.
Manufacturers Bank's policy requires that dividends cannot be declared in an
amount that would cause Manufacturers Bank's capital to fall below the minimum
amount required for Manufacturers Bank to be considered "well capitalized" for
regulatory purposes. At December 31, 2000, Manufacturers Bank could pay $4.7
million in dividends and comply with the well capitalized regulatory capital
requirements. See "Supervision and Regulation - Dividends" in Item 1. hereof and
"Liquidity - Corporation Liquidity" under Item 7. hereof.


                                       14
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

     The following table sets forth certain consolidated financial and other
data of the Company at the dates and for the periods indicated. The information
set forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operation" included herein in
response to Item 7. and the consolidated financial statements and notes thereto
included herein in response to Item 8.

<TABLE>
<CAPTION>

                                                                             YEAR ENDED DECEMBER 31,
                                                   -------------------------------------------------------------------------
                                                        2000           1999          1998            1997            1996
                                                    -----------    -----------    -----------    -----------     -----------
<S>                                                 <C>            <C>            <C>            <C>             <C>

STATEMENT OF INCOME DATA:
Interest income                                    $   104,090    $    82,291    $    57,632    $    51,686     $    39,530
Interest expense                                        59,441         41,767         29,826         25,172          18,180
                                                   -----------    -----------    -----------    -----------     -----------

Net interest income                                     44,649         40,524         27,806         26,514          21,350
Provision for loan losses                                3,090          1,260            750            971             572
                                                   -----------    -----------    -----------    -----------     -----------

Net interest income after provision for loan            41,559         39,264         27,056         25,543          20,778
losses
Other income (1)                                        10,722          9,062          9,940          4,935           2,939
Other expense                                           35,745         33,560         27,136         24,195          16,868
                                                   -----------    -----------    -----------    -----------     -----------

Income before income taxes and minority interest        16,536         14,766          9,860          6,283           6,849
Applicable income taxes                                  4,931          4,812          3,605          2,402           2,576
                                                   -----------    -----------    -----------    -----------     -----------

Income before minority interest                         11,605          9,954          6,255          3,881           4,273
Minority interest                                           --             --             --           (432)           (636)
                                                   -----------    -----------    -----------    -----------     -----------

Net income                                              11,605          9,954          6,255          3,449           3,637
Preferred stock dividend                                    --             --          1,085            276              --
                                                   -----------    -----------    -----------    -----------     -----------

Net income available to common stockholders        $    11,605    $     9,954    $     5,170    $     3,173     $     3,637
                                                   ===========    ===========    ===========    ===========     ===========

COMMON SHARE DATA:
Basic earnings per common share                    $      1.64    $      1.51    $      1.26    $      0.76     $      0.88
Diluted earnings per common share                         1.64           1.51           1.25           0.76            0.88
Book value per common share                              12.99          11.24          11.46          10.20            9.41
Weighted average common shares outstanding (2)       7,064,515      6,586,596      4,093,254      4,151,036       4,143,938
Dividend payout ratio                                     0.00%          0.00%          0.00%          0.00%           0.00%
Cash dividends per common share                             --             --             --             --              --

</TABLE>

     (1)  For the year ended December 31, 1998, other income includes a $4.1
          million gain on the sale of Coal City National Bank.

     (2)  Common share data for the years ended prior to and including December
          31, 1998 were converted at an exchange ratio of 83.5 to 1 due to the
          Avondale merger.


                                       15
<PAGE>

<TABLE>
<CAPTION>

                                                                    AT OR FOR THE YEAR ENDED DECEMBER 31,
                                                      --------------------------------------------------------------
                                                          2000          1999          1998        1997        1996
                                                      -----------   -----------    ---------   ---------   ---------
<S>                                                   <C>           <C>            <C>         <C>         <C>
BALANCE SHEET DATA:
Cash and due from banks                               $    31,989   $    29,420    $  23,669   $  36,302   $  31,465
Federal funds sold                                              -             -       20,350      37,400      20,800
Investment securities                                     233,063       271,313      223,162     141,927     109,981
Loans, gross                                            1,057,163       903,126      548,353     527,321     388,302
Allowance for loan losses                                  13,837        12,197        6,344       7,922       4,692
Total assets                                            1,458,248     1,309,426      871,891     802,696     587,798
Deposits                                                1,069,264       936,075      645,661     684,060     509,717
Short-term and long-term borrowings                       281,210       277,267      167,555      50,428      25,399
Stockholders' equity                                       91,741        79,378       46,860      52,526      39,126

PERFORMANCE RATIOS:
Return on average assets                                   0.84 %        0.84 %       0.76 %      0.54 %      0.75 %
Return on average equity                                  13.86 %       13.79 %      11.16 %      7.08 %      9.74 %
Net interest margin on a fully tax equivalent basis        3.62 %        3.75 %       3.68 %      4.12 %      4.23 %
Loans to deposits                                         98.87 %       96.48 %      84.92 %     77.09 %     76.18 %

ASSET QUALITY RATIOS:
Non-performing loans to total loans                        0.53 %        1.18 %       0.89 %      1.87 %      0.35 %
Non-performing assets to total assets                      0.39 %        0.84 %       0.61 %      1.70 %      0.23 %
Allowance for loan losses to total loans                   1.31 %        1.35 %       1.16 %      1.50 %      1.21 %
Non-performing loans to allowance for loan losses         40.62 %       87.73 %      76.83 %    124.73 %     28.92 %
Net loan charge-offs to average loans                      0.15 %        0.63 %       0.36 %      0.07 %      0.00 %

CAPITAL RATIOS (1)
Tier 1 capital (to risk-weighted assets)                   8.49 %        8.85 %       7.38 %      7.09 %      8.00 %
Total capital (to risk-weighted assets)                    9.60 %       10.01 %      10.00 %     10.00 %     10.14 %
Tier 1 capital (to average assets)                         7.38 %        7.47 %       5.25 %      5.15 %      6.16 %
Average equity to average assets                           6.03 %        6.06 %       6.67 %      6.72 %      6.57 %

OTHER:
Banking facilities                                          13            12            8          11           6
Full-time equivalent employees                             306           312          243         287         199

</TABLE>

     (1)  Ratios presented are for the Company on a consolidated basis. See
          "Management's Discussion and Analysis of Financial Condition and
          Results of Operation of MB Financial, Inc. - Capital Resources."


                                       16
<PAGE>

     The following table sets forth selected quarterly financial data (in
thousands, except common share data):

<TABLE>
<CAPTION>

                                          THREE MONTHS ENDED 2000                             THREE MONTHS ENDED 1999
                              -------------------------------------------------   -------------------------------------------------
                               DECEMBER    SEPTEMBER       JUNE        MARCH       DECEMBER    SEPTEMBER       JUNE        MARCH
                              ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                           <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
STATEMENT OF INCOME DATA:
Interest Income               $   28,127   $   27,174   $   25,183   $   23,606   $   22,646   $   21,414   $   21,401   $   16,830
Interest expense                  16,436       16,145       14,135       12,725       11,583       10,462       10,841        8,881
                              ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------

Net interest income               11,691       11,029       11,048       10,881       11,063       10,952       10,560        7,949
Provision for loan losses            750          750          840          750          363          363          288          246
                              ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------

Net interest income after
  provision for loan losses       10,941       10,279       10,208       10,131       10,700       10,589       10,272        7,703
Other income                       2,604        2,606        2,740        2,772        2,168        2,749        2,582        1,563
Other expense                      9,107        8,719        8,958        8,961        8,596        9,109        8,792        7,063
                              ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------

Income before income taxes         4,438        4,166        3,990        3,942        4,272        4,229        4,062        2,203
Applicable income taxes            1,304        1,216        1,156        1,255        1,390        1,352        1,311          759
                              ----------   ----------   ----------   ----------   ----------   ----------   ----------   ----------
Net income available
  to common stockholders      $    3,134   $    2,950   $    2,834   $    2,687   $    2,882   $    2,877   $    2,751   $    1,444
                              ==========   ==========   ==========   ==========   ==========   ==========   ==========   ==========

Common Share Data:
Basic earnings
  per common share            $     0.44   $     0.42   $     0.40   $     0.38   $     0.41   $     0.41   $     0.39   $     0.28
Weighted average
  common shares
  outstanding                  7,064,515    7,064,515    7,064,515    7,064,515    7,064,515    7,064,515    7,064,515    5,126,289

</TABLE>


                                       17
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATION

     THE FOLLOWING IS A DISCUSSION AND ANALYSIS OF THE COMPANY'S FINANCIAL
POSITION AND RESULTS OF OPERATION AND SHOULD BE READ IN CONJUNCTION WITH THE
INFORMATION SET FORTH UNDER "GENERAL" IN ITEM 1., QUANTATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK IN ITEM 7A. AND THE CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS REPORT. AS DESCRIBED IN
NOTE 2, IN CONNECTION WITH THE MERGER OF COAL CITY CORPORATION WITH AND INTO
AVONDALE FINANCIAL CORP., POST-MERGER HISTORICAL FINANCIAL STATEMENTS OF THE
COMBINED COMPANY ARE COAL CITY'S AS THE ACCOUNTING ACQUIRER, AND INCLUDES THE
OPERATING RESULTS OF AVONDALE SINCE THE MERGER DATE, FEBRUARY 1999.

     GENERAL

     The profitability of the Company's operations depends primarily on its net
interest income, which is the difference between total interest earned on
interest earning assets and total interest paid on interest bearing liabilities.
The Company's net income is affected by its provision for loan losses as well as
other income and other expenses. The provision for loan losses reflects the
amount thought to be adequate to cover estimated credit losses in the loan
portfolio. Non-interest income or other income consists of loan service fees,
deposit service fees, net lease financing income, net gains (losses) on the sale
of securities available for sale, increase in cash surrender value of life
insurance and other operating income. Other expenses include salaries and
employee benefits along with occupancy and equipment expense, intangibles
amortization expense and other operating expenses.

     The amount of net interest income is affected by changes in the volume and
mix of earning assets, the level of interest rates earned on those assets, the
volume and mix of interest bearing liabilities, and the level of interest rates
paid on those interest bearing liabilities. The provision for loan losses is
dependent on changes in the loan portfolio and management's assessment of the
collectibility of the loan portfolio, as well as economic and market conditions.
Other income and other expenses are impacted by growth of operations and growth
in the number of accounts through both acquisitions and core banking business
growth. Growth in operations affects other expenses as a result of additional
employees, branch facilities and promotional marketing expense. Growth in the
number of accounts affects other income including service fees as well as other
expenses such as computer services, supplies, postage, telecommunications and
other miscellaneous expenses.


                                       18
<PAGE>

     NET INTEREST INCOME

     The following table presents, for the periods indicated, the total dollar
amount of interest income from average interest earning assets and the resultant
yields, as well as the interest expense on average interest bearing liabilities,
and the resultant costs, expressed both in dollars and rates (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                  -------------------------------------------------------------------------------------------------
                                                2000                            1999                            1998
                                  ---------------------------- --------------------------------- ----------------------------------
                                    AVERAGE               YIELD/    AVERAGE              YIELD/    AVERAGE                  YIELD/
                                    BALANCE    INTEREST    RATE     BALANCE    INTEREST   RATE     BALANCE     INTEREST      RATE
                                  ----------   --------   ------    ----------  --------  ------   ----------   ----------   ------
<S>                               <C>          <C>         <C>     <C>          <C>       <C>     <C>          <C>           <C>
INTEREST EARNING ASSETS:
Loans (1) (2)                     $  970,198   $ 86,017    8.87%   $  781,718   $63,887   8.17%   $  534,141   $   44,929    8.41%
Taxable investment securities        260,021     17,677    6.80       280,666    17,228   6.14       210,826       11,787    5.59
Investment securities exempt
  from federal income taxes (3)        5,181        475    9.17         5,734       492   8.58         4,448          469   10.55
Federal funds sold                        53          3    6.31        16,712       796   4.76        11,335          611    5.39
Other interest bearing deposits        1,416         84    5.92         1,167        60   5.14            --           --      --
                                  ----------   --------             ----------  --------           ----------   ----------
  Total interest earning assets    1,236,869    104,256    8.43     1,085,997    82,463   7.59       760,750       57,796    7.60
                                               --------                         --------                        ----------
  Non-interest earning assets        152,655                          104,687                         79,753
                                  ----------                        ----------                     ----------
  Total assets                    $1,389,524                       $1,190,684                      $ 840,503
                                  ==========                       ==========                      ==========
INTEREST BEARING LIABILITIES:
Deposits:
  NOW and money market deposit    $  171,732      4,996    2.91    $  171,749     4,714   2.74    $  141,628        4,517    3.19
  Savings deposit                    141,159      3,304    2.34       147,597     3,718   2.52        84,092        2,077    2.47
  Time deposits                      523,459     31,398    6.00       440,982    22,627   5.13       286,718       15,725    5.48
Short-term borrowings                266,863     17,091    6.40       109,375     5,381   4.92       100,391        5,118    5.10
Long-term borrowings                  32,264      2,652    8.22        92,270     5,327   5.77        29,923        2,389    7.98
                                  ----------   --------             ---------- --------           ----------   ----------
  Total interest bearing
    liabilities                    1,135,477     59,441    5.23       961,973    41,767   4.34       642,752       29,826    4.64
                                               --------                        --------                        ----------
Demand deposits
  - non-interest bearing             148,209                          136,662                        127,013
Other non-interest bearing
  liabilities                         22,087                           19,842                         14,687
Stockholders' equity                  83,751                           72,207                         56,051
                                  ----------                        ----------                    ----------
  Total liabilities and
    stockholders equity           $1,389,524                       $1,190,684                     $  840,503
                                  ==========                       ==========                     ==========
  Net interest
    income/interest rate
    Spread (4)                                 $ 44,815    3.20                 $40,696   3.25                 $   27,970    2.96
                                               ========    ====                 =======   ====                 ==========    ====
  Net interest margin on a
    fully tax
    equivalent basis (5)                                   3.62%                          3.75%                              3.68%
                                                           ====                           ====                               ====
  Net interest margin (5)                                  3.61%                          3.73%                              3.66%
                                                           ====                           ====                               ====
</TABLE>


     (1)  Non-accrual loans are included in average loans.

     (2)  Interest income includes loan origination fees of $1.5 million, $1.0
          million and $769 thousand for the years ended December 31, 2000, 1999
          and 1998, respectively.

     (3)  Non-taxable investment income is presented on a fully tax equivalent
          basis assuming a 35% tax rate.

     (4)  Interest rate spread represents the difference between the average
          yield on interest earning assets and the average cost of interest
          bearing liabilities and is presented on a fully tax equivalent basis.

     (5)  Net interest margin represents net interest income as a percentage of
          average interest earning assets.


                                       19
<PAGE>

     For the year ended December 31, 2000, net interest income increased $4.1
million to $44.6 million from $40.5 million for the year ended December 31,
1999. The increase in net interest income was due to growth in the Company's
commercial and lease banking businesses as well as year-to-date net interest
income in 1999 only reflected ten months of the net interest income attributable
to the interest earning assets and interest bearing liabilities acquired in the
merger with Avondale Financial Corp. ("Avondale") discussed under "General" in
Item 1. hereof ("Avondale merger"). Net interest income included an increase in
interest income of $21.8 million, or 26.5%, partially offset by an increase in
interest expense of $17.7 million, or 42.3%. Interest income increased due to a
$150.9 million, or 13.9%, increase in average interest earning assets consisting
of a $188.5 million increase in average loans partially offset by a $21.2
million decrease in average investment securities available for sale and a $16.7
million decrease in average federal funds sold. Increased lending rates based on
a higher prime rate for the year ended December 31, 2000 also attributed to the
increase in interest income. Interest expense rose as a result of a $173.5
million, or 18.0%, increase in average interest bearing liabilities due to an
$82.5 million increase in average time deposits of $100 thousand or more (of
which $60.3 million consisted of brokered certificates of deposits and state and
political deposits) and a $97.5 million increase in average borrowings primarily
from federal funds purchased and Federal Home Loan Bank advances. Increased
deposit and borrowing rates for the year ended December 31, 2000 also attributed
to the increase in interest expense. The net interest margin was 3.61% for the
year ended December 31, 2000 and 3.73% for the year ended December 31, 1999.
Excluding the effect of investing in life insurance for which the Company
reports the related income in other income versus net interest income, the net
interest margin would have been 3.75% for the year ended December 31, 2000.

     For the year ended December 31, 1999, net interest income increased $12.7
million to $40.5 million from $27.8 million for the year ended December 31,
1998. The increase in net interest income resulted from an increase in interest
income of $24.7 million, or 42.8%, partially offset by an increase in interest
expense of $11.9 million, or 40.0%. Approximately $9.8 million of the increase
related to loans acquired through the Avondale merger while approximately $2.9
million was from the Company's continued growth in its commercial and lease
banking businesses. Interest income increased due to a $325.2 million, or 42.8%,
increase in average interest earning assets, while interest expense rose as a
result of a $319.2 million, or 49.7%, increase in average interest bearing
liabilities. Approximately $295.0 million of the increase in average interest
earning assets and approximately $257.0 million of the increase in average
interest bearing liabilities was due to the Avondale merger. The remaining
increase in average interest earning assets and average interest bearing
liabilities was due to growth in the Company's commercial and lease banking
businesses. The net interest margin increased from 3.66% for the year ended
December 31, 1998 to 3.73% for the year ended December 31, 1999.


                                       20
<PAGE>

     VOLUME, MIX AND RATE ANALYSIS OF NET INTEREST INCOME

     The following table presents the extent to which changes in volume, changes
in mix and changes in interest rates of interest earning assets and interest
bearing liabilities have affected the Company's interest income and interest
expense during the periods indicated. Information is provided on changes in each
category due to (i) changes attributable to changes in volume (current period
volume, less current mix percentage multiplied by prior period total volume,
multiplied by prior period rate), (ii) changes attributable to changes in mix
(current mix percentage multiplied by total prior period volume, less prior
period volume multiplied by prior period rate) and (iii) changes attributable to
changes in rate (changes in rate multiplied by current period volume) (in
thousands).

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                   -----------------------------------------------------------------------------------------
                                             2000 COMPARED TO 1999                         1999 COMPARED TO 1998
                                  -------------------------------------------    -------------------------------------------
                                   CHANGE     CHANGE      CHANGE                  CHANGE     CHANGE      CHANGE
                                   DUE TO     DUE TO      DUE TO      TOTAL       DUE TO     DUE TO      DUE TO      TOTAL
                                   VOLUME      MIX         RATE       CHANGE      VOLUME       MIX        RATE       CHANGE
                                  --------   --------    --------    --------    --------   --------    --------    --------
<S>                               <C>        <C>         <C>         <C>         <C>        <C>         <C>         <C>
INTEREST EARNING ASSETS:
Loans                             $  9,436   $  5,038    $  7,656    $ 22,130    $ 19,693   $  1,132    $ (1,867)   $ 18,958
Taxable investment securities        1,947     (3,214)      1,716         449       4,700       (795)      1,536       5,441
Taxable investment securities
  exempt from federal income
  taxes (1)                             55       (102)         30         (17)        181        (45)       (113)         23
Federal funds sold                      --       (794)          1        (793)        270         20        (105)        185
Other interest bearing deposits          9          4          11          24          18         42          --          60
                                  --------   --------    --------    --------    --------   --------    --------    --------
  Total increase (decrease)
    in interest income              11,447        932       9,414      21,793      24,862        354        (549)     24,667
                                  --------   --------    --------    --------    --------   --------    --------    --------

INTEREST BEARING LIABILITIES:
NOW and money market
  deposit accounts                     712       (762)        332         282       1,818       (857)       (764)        197
Savings deposits                       544       (706)       (252)       (414)      1,210        359          72       1,641
Time deposits                        4,350      1,497       2,924       8,771       8,026        435      (1,559)      6,902
Short-term borrowings                2,006      5,742       3,962      11,710       1,850     (1,392)       (195)        263
Long-term borrowings                   285     (3,749)        789      (2,675)      2,445      2,533      (2,040)      2,938
                                  --------   --------    --------    --------    --------   --------    --------    --------
  Total increase (decrease)
    in interest expense              7,897      2,022       7,755      17,674      15,349      1,078      (4,486)     11,941
                                  --------   --------    --------    --------    --------   --------    --------    --------
  Increase (decrease) in
    net interest income           $  3,550   $ (1,090)   $  1,659    $  4,119    $  9,513   $   (724)   $  3,937    $ 12,726
                                  ========   ========    ========    ========    ========   ========    ========    ========

</TABLE>

     (1)  Non-taxable investment income is presented on a fully tax equivalent
          basis assuming a 35% tax rate.


                                       21
<PAGE>

     OTHER INCOME

     For the year ended December 31, 2000, other income increased $1.6 million,
or 18.3%, to $10.7 million from $9.1 million for the year ended December 31,
1999. The $1.7 million increase was attributable to the increase in cash
surrender value of life insurance, $1.2 million increase in the Company's lease
financing income (approximately $530 thousand of which was the result of gains
on residual dispositions at the end of lease terms, and $336 thousand was due to
a write down in the residual value of lease equipment in the fourth quarter of
1999) and a $750 thousand increase in other operating income (including a $196
thousand gain on the sale of other real estate owned and a $130 thousand
increase in automated teller machine fees). Offsetting these increases was a
$2.1 million decrease in loan service fees (primarily due to a $975 thousand
write down in the value of interest only receivables and a $962 thousand
decrease in servicing fees due to anticipated principal paydowns of home equity
loans and reductions in related fees).

     For the year ended December 31, 1999, other income decreased $878 thousand
to $9.1 million from $9.9 million for the year ended December 31, 1998. Other
income for the year ended December 31, 1998 included a $4.1 million gain
resulting from the sale of Coal City National Bank and a $200 thousand gain on
the sale of a trust business in the first quarter of 1998. Without these special
items in 1998, other income for the year ended December 31, 1998 would have been
$5.6 million. Loan service fees increased $3.2 million for the year ended
December 31, 1999 due to the acquisition of loan servicing activities acquired
through the Avondale merger. Other operating income increased $793 thousand for
the year ended December 31, 1999 from other income for the year ended December
31, 1998 due to a $631 thousand increase in brokerage fees and a $278 thousand
increase in automated teller machine fees resulting from the expansion of
brokerage servicing fee activities and additional branch facilities acquired
through the Avondale merger. Offsetting these increases were a $694 thousand
decrease in net lease financing due to a $336 thousand write down in the
residual value of specific lease equipment as well as some gains for equipment
sold at the end of the lease terms during 1998.

     OTHER EXPENSE

     For the year ended December 31, 2000, other expense increased $2.2 million,
or 6.5%, to $35.7 million from $33.6 million for the year ended December 31,
1999. The increase was due to a $1.2 million increase in salaries and employee
benefits and a $698 thousand increase in occupancy and equipment expenses mainly
due to the Avondale merger, and an $835 thousand increase in advertising and
marketing. Partially offsetting this increase was a $517 thousand decrease in
intangibles amortization expense as the Company utilizes an accelerated
intangible amortization method which amortizes a greater amount of purchase
premium related to the core deposit intangible in early years than in later
years.

     For the year ended December 31, 1999, other expense increased $6.5 million
to $33.6 million from $27.1 million for the year ended December 31, 1998. The
increase was primarily due to operating costs associated with the five
additional branches and personnel acquired through the Avondale merger. Salaries
and employee benefits increased $4.3 million, occupancy and equipment expenses
increased $1.7 million and other operating expenses increased $1.1 million for
the year ended December 31, 1999 compared to the year ended December 31, 1998.
The increase in other operating expenses included a $362 thousand increase in
computer services due to improvements made to the Company's computer systems, a
$312 thousand increase in loan collection expenses, a $177 thousand increase in
advertising and marketing, $125 thousand increase in automated teller machine
("ATM") expense, the result of distributing new ATM's in the Company's network,
$167 thousand increase in FDIC premiums as well as $157 thousand increase in
stationery, printing and supplies expense. In addition, intangible amortization
expense decreased $782 thousand for the year ended December 31, 1999 compared to
the year ended December 31, 1998. The decrease in intangible amortization
represents a decrease in goodwill amortization of $137 thousand and a decrease
in core deposit intangible amortization of $645 thousand.


                                       22
<PAGE>

     INCOME TAXES

     Income tax expense for the year ended December 31, 2000 was $4.9 million
compared to $4.8 million for the same period in 1999. The effective tax rate
decreased to 29.8% for the twelve months ended December 31, 2000 from 32.6% for
the same period in 1999 due to the cash surrender value of life insurance tax
treatment, as noted above.

     For the year ended December 31, 1999, the Company recorded income tax
expense of $4.8 million compared to $3.6 million for the same period for 1998.
Income before taxes for the year ended December 31, 1999 increased $4.9 million
compared to the same period for 1998. The effective tax rate decreased to 32.6%
for the year ended December 31, 1999 from 36.6% for the year ended December 31,
1998.

     INVESTMENT SECURITIES

     The primary purpose of the investment portfolio is to provide a source of
earnings for liquidity management purposes, and to control interest rate risk.
In managing the portfolio, the Company seeks to obtain the objectives of safety
of principal, liquidity, diversification and maximized return on funds. See
Liquidity and Capital Resources under Item 7. hereof and "Asset Liability
Management" under Item 7A. hereof.

     The following table sets forth the amortized cost and fair value of the
Company's securities by accounting classification category and by type of
security as indicated (in thousands):

<TABLE>
<CAPTION>

                                           AT DECEMBER 31, 2000    AT DECEMBER 31, 1999    AT DECEMBER 31, 1998
                                           ---------------------------------------------------------------------
                                           AMORTIZED     FAIR      AMORTIZED     FAIR      AMORTIZED     FAIR
                                              COST       VALUE        COST       VALUE       COST        VALUE
                                           ---------   ---------   ---------   ---------   ---------   ---------
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>

 Securities Available for Sale:
   U.S. Treasury securities                $      --   $      --   $      --   $      --   $ 128,630   $ 128,748
   U.S. Government agencies                   85,044      84,221      99,891      97,691      80,089      80,411
   States and political subdivisions           4,505       4,650       5,164       5,366          --          --
   Mortgage-backed securities                 93,248      92,456     120,114     118,948       2,779       2,861
   Corporate bonds                            43,085      39,250      43,092      40,564          --          --
   Other securities                            1,088       1,280         962         958          --          --
   Investment in equity lines of
     credit trusts                            11,206      11,206       7,786       7,786          --          --
                                           ---------   ---------   ---------   ---------   ---------   ---------
     Total securities available for sale   $ 238,176   $ 233,063   $ 277,009   $ 271,313   $ 211,498   $ 212,020
                                           =========   =========   =========   =========   =========   =========

Securities Held to Maturity:
  States and political subdivisions        $      --   $      --   $      --   $      --   $   5,524   $   5,912
  Mortgage-backed securities                      --          --          --          --       4,651       4,648
  Other securities                                --          --          --          --         967         969
                                           ---------------------------------------------------------------------
    Total securities held to maturity      $      --   $      --   $      --   $      --   $  11,142   $  11,529
                                           =====================================================================
</TABLE>

     U.S. Treasury securities and securities of U.S. Government agencies
generally consist of fixed rate securities with maturities of three months to
three years. States and political subdivisions investment securities consist of
investment grade and local non-rated issues with maturities of less than five
years. The average term of mortgage-backed securities generally ranges between
five and ten years; however, certain mortgage-backed securities acquired through
the Avondale merger include maturities greater than ten years. Corporate bonds
were acquired through the Avondale merger and included some maturities ranging
from five years through ten years and after ten years.

     There were no securities of any single issuer, other than U.S. Government
agencies and mortgage backed securities, which had a book value in excess of
10.0% of the Company's stockholders' equity at December 31, 2000.


                                       23
<PAGE>

         The following table sets forth certain information regarding
contractual maturities and the weighted average yields of the Company's
portfolio at December 31, 2000 (dollars in thousands):

<TABLE>
<CAPTION>

                                                         DUE AFTER ONE    DUE AFTER FIVE
                                       DUE IN ONE        YEAR THROUGH      YEARS THROUGH         DUE AFTER
                                      YEAR OR LESS        FIVE YEARS         TEN YEARS           TEN YEARS
                                   ------------------  ----------------  -----------------  -------------------
                                             WEIGHTED          WEIGHTED           WEIGHTED             WEIGHTED
                                              AVERAGE           AVERAGE            AVERAGE              AVERAGE
                                   BALANCE     YIELD   BALANCE   YIELD   BALANCE    YIELD   BALANCE     YIELD
                                   -------   --------  ------- --------  -------  --------  --------  ---------
<S>                                <C>         <C>     <C>       <C>     <C>        <C>     <C>          <C>
SECURITIES AVAILABLE FOR SALE:
U.S. Government agencies           $54,771     5.43%   $12,259    6.09%  $16,185    6.26%   $  1,006     7.00%
  States and political
    subdivision (1)                  1,888     5.34%     2,509    7.80%       --      --         253     3.46%
  Mortgage-backed securities (2)        --       --        551    7.00%    5,464    5.89%     86,441     7.03%
  Corporate bonds                    4,978     7.13%     2,790   13.37%       --      --      31,482     8.51%
  Other securities                      25     7.63%       873    6.17%       --      --         382       --
  Investments in equity lines of
    credit trusts                       --       --     11,206    6.19%       --      --          --       --
                                   -------             -------           -------            --------
    Total                          $61,662             $30,188           $21,649            $119,564
                                   =======             =======           =======            ========
</TABLE>

     (1)  Yield is reflected on a fully tax equivalent basis utilizing a 35% tax
          rate.

     (2)  These securities are presented based upon contractual maturities.

     LOAN PORTFOLIO

     The following table sets forth the composition of the loan portfolio
(dollars in thousands):

<TABLE>
<CAPTION>

                                                                           AT DECEMBER 31,
                           -------------------------------------------------------------------------------------------------------
                                    2000                   1999                1998                 1997               1996
                           ---------------------- ---------------------- ---------------------- ----------------------------------
                              AMOUNT     PERCENT    AMOUNT    PERCENT    AMOUNT   PERCENT     AMOUNT   PERCENT    AMOUNT   PERCENT
                           -----------   -------  ---------   -------  ---------  -------   ---------  -------   --------  -------
<S>                        <C>            <C>     <C>          <C>     <C>          <C>     <C>          <C>     <C>         <C>
Manufacturers Bank --
  core business:
  Commercial               $   229,239    21.68%  $ 154,833    17.14%  $ 122,094    22.27%  $ 112,010    21.24%  $ 94,066    24.22%
  Commercial loans
    collateralized
    by assignment of
    lease payments             245,212    23.20%    186,895    20.69%     89,301    16.28%     85,658    16.25%   113,960    29.35%
  Commercial real estate       312,714    29.58%    249,107    27.58%    226,455    41.30%    162,487    30.81%    91,251    23.50%
  Residential real estate      105,436     9.97%    129,040    14.29%     54,741     9.98%     94,587    17.94%    67,541    17.39%
  Construction real
  estate                        46,664     4.41%     58,447     6.47%     21,059     3.84%     37,079     7.03%     7,057     1.82%
  Installment and other         57,014     5.39%     39,583     4.38%     34,703     6.33%     35,500     6.73%    14,427     3.72%
                           -----------    -----   ---------    -----   ---------    -----   ---------    -----   --------    -----
Total loans --
  core business                996,279    94.23%    817,905    90.55%    548,353   100.00%    527,321   100.00%   388,302   100.00%
                           -----------    -----   ---------    -----   ---------    -----   ---------    -----   --------    -----
Acquired from Avondale
  Federal Savings Bank --
    non-core business:
  Residential real estate       12,589     1.19%     14,593     1.62%         --       --          --       --         --       --
  Credit scored
  residential real estate       19,587     1.86%     34,254     2.83%         --       --          --       --         --       --
  Credit scored
  installment (1)               22,226     2.11%     25,482     3.79%         --       --          --       --         --       --
  Installment and other          6,482     0.61%     10,892     1.21%         --       --          --       --         --       --
                           -----------    -----   ---------    -----   ---------    -----   ---------    -----   --------    -----
Total loans --
  non-core business             60,884     5.77%     85,221     9.45%         --       --          --       --         --       --
                           -----------    -----   ---------    -----   ---------    -----   ---------    -----   --------    -----
Gross loans                  1,057,163   100.00%    903,126   100.00%    548,353   100.00%    527,321   100.00%   388,302   100.00%
Allowance for loan losses      (13,837)             (12,197)              (6,344)              (7,922)             (4,692)
                           -----------            ---------            ---------             --------            --------
Net loans                  $ 1,043,326            $ 890,929            $ 542,009             $519,399            $383,610
                           ===========            =========            =========             ========            ========

</TABLE>

(1)      Credit scored installment loans consist of home equity lines of credit.

     At December 31, 2000 total loans of $1.1 billion included $996.3 million in
Manufacturers Bank core business loans (loan types the Company intends to
originate in the future) and $60.9 million in non-core business loans acquired
from Avondale Federal Savings Bank (loan types the Company will not originate in
the future). Increases in the Company's loan portfolio for the years 1996
through 2000 was primarily due to internal loan growth as well as the Avondale
merger in 1999 and the acquisition of U.S. Bancorp in 1997.


                                       24
<PAGE>

     LOAN MATURITIES

     The following table sets forth the maturity or repricing information for
commercial and construction real estate loans outstanding at December 31, 2000
(in thousands):

<TABLE>
<CAPTION>
                                        DUE IN ONE YEAR    DUE AFTER ONE YEAR       DUE AFTER
                                            OR LESS        THROUGH FIVE YEARS       FIVE YEARS
                                     -------------------   ------------------   -------------------
                                       FIXED    FLOATING    FIXED    FLOATING    FIXED     FLOATING
                                       RATE       RATE      RATE      RATE       RATE        RATE     TOTAL
                                     --------   --------   --------  --------   --------   --------  --------
<S>                                  <C>        <C>        <C>        <C>       <C>        <C>       <C>

Commercial loans, commercial loans
  collateralized by assignment of
  lease payments and
  construction real estate loans     $131,340   $223,279   $164,925   $    --   $  1,571   $    --   $521,115

</TABLE>

     ASSET QUALITY

     The following table sets forth the amounts of non-performing loans and
non-performing assets at the dates indicated (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                           AT DECEMBER 31,
                                                                                           ---------------
                                                                          2000       1999       1998       1997       1996
                                                                        -------    -------    -------    -------    -------
<S>                                                                     <C>        <C>        <C>        <C>        <C>
   Non-accruing loans:
   Manufacturers Bank - core business                                   $ 2,529    $ 3,670    $ 4,789    $ 9,879    $   454
      Acquired from Avondale Federal Savings Bank - non-core business     2,852      7,031         --         --         --
                                                                        -------    -------    -------    -------    -------
   Total non-accruing loans                                               5,381     10,701      4,789      9,879        454
                                                                        -------    -------    -------    -------    -------
   Loans 90 days or more past due, still accruing interest:
      Manufacturers Bank - core business                                    239         --         85          2        903
      Acquired from Avondale Federal Savings Bank - non-core business        --         --         --         --         --
                                                                        -------    -------    -------    -------    -------
   Total loans 90 days or more past due, still accruing interest            239         --         85          2        903
                                                                        -------    -------    -------    -------    -------

   Total non-performing loans                                             5,620     10,701      4,874      9,881      1,357
                                                                        -------    -------    -------    -------    -------
   Other real estate owned:
      Manufacturers Bank - core business                                     --        159        442      3,726         --
      Acquired from Avondale Federal Savings Bank - non-core business        --        194         --         --         --
                                                                        -------    -------    -------    -------    -------
   Total other real estate owned                                             --        353        442      3,726         --
                                                                        -------    -------    -------    -------    -------
Other repossessed assets:
   Acquired from Avondale Federal Savings Bank - non-core business          101         --         --         --         --
                                                                        -------    -------    -------    -------    -------

Total non-performing assets                                             $ 5,721    $11,054    $ 5,316    $13,607    $ 1,357
                                                                        =======    =======    =======    =======    =======
   Total non-performing loans to total loans                               0.53%      1.18%      0.89%      1.87%      0.35%
   Allowance for loan losses to non-performing loans                     246.21%    113.98%    130.16%     80.17%    345.76%
   Total non-performing assets to total assets                             0.39%      0.84%      0.61%      1.70%      0.23%

</TABLE>


                                       25
<PAGE>

     NON-PERFORMING LOANS. Non-performing loans include (i) loans accounted
for on a non-accrual basis, (ii) accruing loans contractually past due 90
days or more as to interest and principal; and (iii) loans whose terms have
been renegotiated to provide reduction or deferral of interest or principal
because of a deterioration in the financial position of the borrower.
Management reviews the loan portfolio for problem loans on an ongoing basis.
During the ordinary course of business, management becomes aware of borrowers
that may not be able to meet the contractual requirements of loan agreements.
Such loans are placed under close supervision with consideration given to
placing the loan on a non-accrual status, increasing the allowance for loan
losses, and (if appropriate) partial or full charge-off. After a loan is
placed on non-accrual status, any current year interest previously accrued
but not yet collected is reversed against current income. If interest
payments are received on non-accrual loans, such payments will be applied to
principal and not taken into income. Loans will not be placed back on accrual
status unless all back interest and principal payments are made. If interest
on non-accrual loans had been accrued, such income would have amounted to
$1.3 million and $876 thousand for the years ended December 31, 2000 and
1999, respectively. Manufacturers Bank's policy is to place loans 90 days
past due on non-accrual status. An exception is made when management believes
the loan will become current and there is documented evidence of the
borrower's ability to repay. Non-accrual loans are further classified as
impaired when underlying collateral is not sufficient to cover the loan
balance and it is probable that Manufacturers Bank will not fully collect all
principal and interest.

     Non-performing assets also consist of other repossessed assets and other
real estate owned ("OREO"). OREO represents properties acquired through
foreclosure or other proceedings and is recorded at the lower of cost or fair
value less the estimated cost of disposal. OREO is evaluated regularly to ensure
that the recorded amount is supported by its current fair value. Valuation
allowances to reduce the carrying amount to fair value less estimated costs of
disposal are recorded as necessary. Revenues and expenses from the operations of
OREO and changes in the valuation are included in other income and other
expenses on the income statement.

     At December 31, 2000, non-performing assets decreased $5.4 million to $5.7
million from $11.1 million at December 31, 1999 due to a $5.1 million decrease
in non-performing loans resulting from the Company's diligent collection
efforts. At December 31, 1999, non-performing assets increased $5.8 million to
$11.1 million from $5.3 million at December 31, 1998 due to a $5.8 million
increase in non-performing loans partially offset by an $89 thousand decrease in
OREO. The increase in non-performing loans was due to a $7.0 million increase in
non-accruing loans acquired from Avondale Federal Savings Bank (non-core
business) offset by a $1.1 million decrease in Manufacturers Bank's non-accruing
loans (core business). Manufacturers Bank's non-accruing loans (core business)
decreased for the year ended 1999 compared to the same period in 1998 as certain
non-accruing loans were deemed uncollectible and charged-off.

     ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is an amount that
management believes will be adequate to absorb estimated losses on existing
loans, based on an evaluation of the collectibility of loans and prior loss
experience. This evaluation also takes into consideration such factors as
changes in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific problem loans, and current economic conditions that
may affect the borrower's ability to pay. While management uses the best
information available to make its evaluation, future adjustments to the
allowance may be necessary if there are significant changes in economic
conditions. In addition, regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowance for loan
losses, and may require the Company to make additions to the allowance based on
their judgment about information available to them at the time of their
examinations.


                                       26
<PAGE>

     The following table presents an analysis of the allowance for loan losses
     for the periods presented (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31,
                                                         -------------------------------------------------------------------------
                                                            2000             1999           1998           1997          1996
                                                         -----------     -----------    -----------    -----------    -----------
<S>                                                      <C>             <C>            <C>            <C>            <C>
Balance at beginning of period                             $  12,197     $     6,344    $     7,922    $     4,692    $     4,134
Decreases resulting from sale of subsidiary                       --              --           (399)            --             --
Additions resulting from acquisitions                             --              --             --          2,574             --
Additions resulting from merger                                   --           9,489             --             --             --
Provision for loan losses                                      3,090           1,260            750            971            572
Charge-offs:
  Manufacturers Bank - core business:
      Commercial                                                 120             126              5            178             --
      Commercial loans collateralized by assignment
        of lease payments                                         --             377            841             --             --
      Commercial real estate                                      --             139            776             --             --
      Residential real estate                                     --             259            133             97             --
      Construction real estate                                   524             972            315             --             --
      Installment and other                                       17              25             20             68             29
                                                         -----------     -----------    -----------    -----------    -----------
  Total charge-offs - core business                              661           1,898          2,090            343             29
                                                         -----------     -----------    -----------    -----------    -----------
  Acquired from Avondale Federal Savings Bank --
    non-core business:
      Residential real estate                                    189               4             --             --             --
      Credit scored mortgage loans                             1,961           3,039             --             --             --
      Installment and other                                      164             557             --             --             --
                                                         -----------     -----------    -----------    -----------    -----------
  Total charge-offs - non-core business                        2,314           3,600             --             --             --
                                                         -----------     -----------    -----------    -----------    -----------

Total charge-offs                                              2,975           5,498          2,090            343             29
                                                         -----------     -----------    -----------    -----------    -----------
Recoveries:
   Manufacturers Bank - core business:
     Commercial                                                   21              --             35             --             15
     Commercial loans collateralized by
       assignment of lease payments                              128              --             --             --             --
     Commercial real estate                                      341              33             --             --             --
     Residential real estate                                       4               5             89             --             --
     Construction real estate                                    (11)             --             --             10             --
     Installment and other                                        13               7             37             18             --
                                                         -----------     -----------    -----------    -----------    -----------
  Total recoveries - core business                               496              45            161             28             15
                                                         -----------     -----------    -----------    -----------    -----------
  Acquired from Avondale Federal Savings Bank --
    non-core business:
    Residential real estate                                       --               2             --             --             --
    Credit scored mortgage loans                                 975             549             --             --             --
    Installment and other                                         54               6             --             --             --
                                                         -----------     -----------    -----------    -----------    -----------
  Total recoveries - non-core business                         1,029             557             --             --             --
                                                         -----------     -----------    -----------    -----------    -----------
Total recoveries                                               1,525             602            161             28             15
                                                         -----------     -----------    -----------    -----------    -----------
Net charge-offs                                                1,450           4,896          1,929            315             14
                                                         -----------     -----------    -----------    -----------    -----------
Balance at December 31,                                  $    13,837     $    12,197    $     6,344    $     7,922    $     4,692
                                                         ===========     ===========    ===========    ===========    ===========
Total loans at December 31,                              $ 1,057,163     $   903,126    $   548,353    $   527,321    $   388,302
  Ratio of allowance to total loans                             1.31%           1.35%          1.16%          1.50%          1.21%

</TABLE>


                                       27
<PAGE>

     For the year ended December 31, 2000 compared to 1999, net charge-offs
decreased $3.4 million to $1.5 million due to a $2.5 million decrease in total
charge-offs and a $923 thousand increase in total recoveries. The $1.5 million
decrease in net charge-offs for credit scored mortgage loans (non-core business)
occurred as the portfolio continues to run-off and the remaining loans are more
mature with fewer credit issues. The provision for loan losses increased $1.8
million for the year ended 2000 compared to 1999 as a reflection of management's
evaluation of non-performing loans (core-business) as well as growth in the
Company's commercial and lease banking businesses. For the years ended December
31, 1999 and 1998, there were net charge-offs of $4.9 million and $1.9 million,
respectively. The $3.0 million increase in net charge-offs was primarily due to
net charge-offs on loans acquired from Avondale Federal Savings Bank (non-core
business). In addition, at the effective date of the Avondale merger in 1999,
Avondale Federal Savings Bank's allowance for loan losses was $9.5 million. At
that time, management reviewed Avondale Federal Savings Bank's calculation,
based on credit scoring and other criteria, and concluded that the allowance for
loan losses related to loans acquired through the Avondale merger was adequate.
At December 31, 2000, losses associated with the loan portfolio acquired from
Avondale Federal Savings Bank are consistent with estimated losses indicated by
the credit scoring models and other criteria at the merger date.

     The following table sets forth the allocation of the allowance for loan
losses for the periods presented and the percentage of loans in each category to
total loans. An allocation for a loan classification is only for internal
analysis of the adequacy of the allowance and is not an indication of expected
or anticipated losses (dollars in thousands):

<TABLE>
<CAPTION>
                                                                          AT DECEMBER 31,
                                 -------------------------------------------------------------------------------------------------
                                       2000                 1999               1998                 1997                1996
                                 -------------------------------------------------------------------------------------------------
                                 AMOUNT    PERCENT    AMOUNT   PERCENT   AMOUNT    PERCENT   AMOUNT     PERCENT   AMOUNT    PERCENT
                                 -------   ------    -------   ------    -------   ------    -------    ------    -------   ------
<S>                              <C>        <C>      <C>        <C>      <C>        <C>      <C>         <C>      <C>        <C>
Commercial                       $ 1,842    21.68%   $ 1,141    17.14%   $ 1,018    22.27%   $ 1,430     21.24%   $ 1,030    24.22%
Commercial loans
collateralized by
  assignment of lease payments       847    23.20%       746    20.69%       281    16.28%       215     16.25%       285    29.35%

Real estate                        3,761    42.60%     3,625    46.32%     1,968    51.28%     2,695     48.75%       554    40.89%
Real estate construction           1,000     4.41%       395     6.47%        --     3.84%        --      7.03%        --     1.82%
Installment                        2,540     8.11%     3,684     9.38%       278     6.33%        73      6.73%        55     3.72%
Unallocated                        3,847       --      2,606       --      2,799       --      3,509        --      2,768       --
                                 -------   ------    -------   ------    -------   ------    -------    ------    -------   ------
Total                            $13,837   100.00%   $12,197   100.00%   $ 6,344   100.00%   $ 7,922    100.00%   $ 4,692   100.00%
                                 =======   ======    =======   ======    =======   ======    =======    ======    =======   ======

</TABLE>

     The Company maintains its allowance for loan losses at a level that
management believes will be adequate to absorb estimated losses on existing
loans based on an evaluation of the collectibility of loans and prior loss
experience. The Company further uses a risk rating system to evaluate the
adequacy of the allowance for loan losses. With this system, each loan is risk
rated between one and nine, by the originating loan officer or loan committee,
with one being the best case and nine being a loss or the worst case. Loan loss
reserve factors are multiplied against the balances in each risk-rating category
to determine an appropriate level for the allowance for loan losses. Loans with
risk ratings between six and eight are monitored much closer by the officers.
Control of the Company's loan quality is continually monitored by management and
is reviewed by the Board of Directors and loan committee of the Company on a
monthly basis, subject to oversight by the Company's Board of Directors through
its members who serve on the loan committee. Independent external review of the
loan portfolio is also conducted by regulatory authorities. The Company
consistently applies its methodology for determining the adequacy of the
allowance for loan losses, but may make adjustments to its system based on
historical information related to charge-offs and management's evaluation of the
current loan portfolio. When adjustments are made, they are carefully reviewed
by the loan committee before they are implemented.

     The unallocated reserve to loans was 0.29% of total loans at December 31,
1999 and increased to 0.36% of total loans at December 31, 2000. The amount of
additions to the allowance for loan losses, which are charged to earnings
through the provision for loan losses, is determined based on a variety of
factors, including specific reserves on problem loans, current loan risk
ratings, delinquent loans, historical loss experience and economic conditions in
Manufacturers Bank's market area. Although management believes the allowance for
loan losses is sufficient to cover probable losses inherent in the loan
portfolio, there can be no assurance that the allowance will prove sufficient to
cover actual loan losses in the future.


                                       28
<PAGE>

     POTENTIAL PROBLEM LOANS. Manufacturers Bank utilizes an internal asset
classification system as a means of reporting problem and potential problem
assets. At each scheduled Board of Directors meeting, a watch list is presented,
showing all loans listed as "Special Mention," "Substandard," "Doubtful" and
"Loss." An asset is classified 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 Manufacturers Bank will sustain some loss if the deficiencies
are not corrected. Assets classified as Doubtful have all 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
viewed as non-bankable assets, worthy of charge-off. Assets which do not
currently expose Manufacturers Bank to sufficient risk to warrant classification
in one of the aforementioned categories, but possess weaknesses which may or may
not be out of the control of the customer, are deemed to be Special Mention.

     Manufacturers Bank's determination as to the classification of its assets
and the amount of its valuation allowances is subject to review by Manufacturers
Bank's primary regulators, which can order the establishment of additional
general or specific loss allowances. The FDIC, in conjunction with the other
federal banking agencies, has adopted an interagency policy statement on the
allowance for loan losses. The policy statement provides guidance for financial
institutions on both the responsibilities of management for the assessment and
establishment of adequate allowances and guidance for banking agency examiners
to use in determining the adequacy of general valuation guidelines. Generally,
the policy statement recommends that (i) institutions have effective systems and
controls to identify, monitor and address asset quality problems; (ii)
management has analyzed all significant factors that affect the collectibility
of the portfolio in a reasonable manner; and (iii) management has established
acceptable allowance evaluation processes that meet the objectives set forth in
the policy statement. Management believes it has established an adequate
allowance for possible loan losses. Manufacturers Bank analyzes its process
regularly, with modifications made if needed, and reports those results four
times per year at Board of Directors meetings. However, there can be no
assurance that the regulators, in reviewing Manufacturers Bank's loan portfolio,
will not request Manufacturers Bank to materially increase its allowance for
loan losses at the time. Although management believes that adequate specific and
general loan loss allowances have been established, actual losses are dependent
upon future events and, as such, further additions to the level of specific and
general loan loss allowances may become necessary.

     The aggregate principal amounts of potential problem loans as of December
31, 2000 and 1999 were approximately $14.3 million and $16.6 million,
respectively. Included in these potential problem loan totals are non-accrual,
Special Mention, Substandard and Doubtful classifications, which represents the
watch list presented to the Board of Directors. All loans classified as Loss
have been charged-off. Loans in this category generally include loans that were
classified for regulatory purposes.


                                       29
<PAGE>

     CORE DEPOSIT INTANGIBLES AND GOODWILL

     In acquiring its subsidiary banks, the Company recorded a portion of the
purchase price as core deposit intangibles, which represented value assigned to
the existing deposit base for which the annual interest and servicing costs are
below market rates. In addition, the excess cost over fair value of net assets
acquired is recorded as goodwill.

     The following table sets forth for each acquisition the core deposit
intangibles and goodwill amortization expense for the last five years and the
expected expense for 2001 to 2005 (in thousands):

<TABLE>
<CAPTION>
                                                           PLANNED AMORTIZATION
                                                           YEAR ENDED DECEMBER 31,
                                                 ------------------------------------------
                                                  2005     2004     2003     2002     2001
                                                 ------   ------   ------   ------   ------
<S>                                              <C>      <C>      <C>      <C>      <C>
Manufacturers National Corporation (1992)        $  102   $  102   $  102   $  102   $  121
Peterson Bank (1995)                                313      318      368      530      730
U.S. Bancorp, Inc. (1997)                           472      606      712      725      828
Avondale Financial Corp. (1999)                      55       55       55       55       55
                                                 ------   ------   ------   ------   ------
        Total intangibles amortization expense   $  942   $1,081   $1,237   $1,412   $1,734
                                                 ======   ======   ======   ======   ======

<CAPTION>

                                                            ACTUAL AMORTIZATION
                                                           YEAR ENDED DECEMBER 31,
                                                 ------------------------------------------
                                                  2000     1999     1998     1997     1996
                                                 ------   ------   ------   ------   ------
<S>                                              <C>      <C>      <C>      <C>      <C>
Coal City National Bank (1984)                   $   --   $   --   $   --   $    9   $    9
Manufacturers National Corporation (1992)            87      124      267      382      497
Peterson Bank (1995)                                770    1,259    1,026    1,196    1,515
U.S. Bancorp, Inc. (1997)                         1,043    1,089    1,961    1,734       --
Avondale Financial Corp. (1999)                      55       --       --      --        --
                                                 ------   ------   ------   ------   ------
        Total intangibles amortization expense   $1,955   $2,472   $3,254   $3,321   $2,021
                                                 ======   ======   ======   ======   ======

</TABLE>


                                       30
<PAGE>

     INTEREST ONLY RECEIVABLES

     In 1996, 1997 and 1998, Avondale Federal Savings Bank securitized and sold
certain home equity lines of credit to investors with limited recourse,
retaining the right to service the underlying loans. Avondale Federal Savings
Bank received annual servicing fees and rights to future cash flows (interest
only receivables) arising after the investors in the securitization trusts
received the return for which they had contracted. In addition, Avondale Federal
Savings Bank retained a participation interest in the investor trusts,
reflecting the excess of the total amount of loans transferred to the trusts
over the portion represented by certificates sold to investors. Through the
Avondale merger the Company acquired servicing rights related to these loans,
the retained participation interest in the investor trusts and interest only
receivables. The annual servicing fees received by the Company approximate 0.75%
of the outstanding loan balance and approximate the Company's cost to service
the loans. The investors and their securitization trusts have no recourse to the
Company's other assets for failure of debtors to pay when due. Most of the
Company's retained interest in the investor trusts are generally restricted
until investors have been fully paid and is subordinate to investor's interest.
The retained interest is included with securities available for sale and is
reflected as investments in equity lines of credit trusts.

     At December 31, 2000, interest only receivables were $10.5 million. The
value of interest only receivables are subject to substantial credit,
prepayment, and interest rate risk on the transferred financial assets. On a
quarterly basis, the Company performs a review to determine the fair value of
its interest only receivables. As part of the review, the Company reviews its
assumptions of prepayment speeds, discount rates and the remaining anticipated
credit losses.

     The following table shows the results of the Company's assumptions used to
estimate the fair value at December 31, 2000 (dollars in thousands):

<TABLE>
<CAPTION>

                                                               INTEREST ONLY RECEIVABLES POOLS
                                               ------------------------------------------------------------------
                                                    96-1           97-1              97-2             98-1
                                               --------------   --------------    --------------   --------------
                                               Adjustable (1)   Adjustable (1)   Adjustable (1)   Adjustable (1)
                                               --------------   --------------    --------------   --------------
<S>                                               <C>              <C>              <C>              <C>
Estimated fair value                              $  2,867         $  2,477         $  2,294         $  2,900
Prepayment speed                                     35.00%           35.00%           35.00%           35.00%
Remaining weighted-average life (in years) (2)        0.99             1.20             1.63             1.96
Expected remaining credit losses (3)                  2.66%            5.21%            8.44%            7.05%
Residual cash flows discounted at                    12.00%           12.00%           12.00%           12.00%
Loans outstanding at December 31, 2000            $ 15,320         $ 19,081         $ 25,226         $ 44,060

</TABLE>

     (1)  Rates for these loans are adjusted based on the prime rate as
          published in the Wall Street Journal.

     (2)  The remaining weighted-average life in years of prepayable assets is
          calculated by summing (a) the principal collections expected in each
          future year multiplied by (b) the number of years until collection,
          and then dividing that sum by the initial principal balance. This is
          not explicitly assumed but it reflects the overall effect of
          prepayment assumptions.

     (3)  Assumed remaining credit losses over the life remaining on the loans
          outstanding at December 31, 2000 are $407 thousand, $995 thousand,
          $2.1 million and $3.1 million for 96-1, 97-1, 97-2 and 98-1,
          respectively. The estimated credit loss percentage is derived by
          dividing the remaining credit losses by the related loan balance
          outstanding in the pool.

     Subsequent to December 31, 2000 the Company purchased the investors
interest in the 97-2 pool. Upon purchase, the underlying loans were recorded on
Manufacturers Bank's balance sheet and the related participation interest in the
97-2 investor trust and interest only receivable that was recorded on
Manufacturers Bank's balance sheet was eliminated.


                                       31
<PAGE>

     SOURCES OF FUNDS

     GENERAL. Deposits, short-term and long-term borrowings, loan and investment
security repayments and prepayments, proceeds from the sale of securities, and
cash flows generated from operations are the primary sources of the Company's
funds for lending, investing, leasing and other general purposes. Loan
repayments are a relatively predictable source of funds except during periods of
significant interest rate declines, while deposit flows tend to fluctuate with
prevailing interests rates, money markets conditions, general economic
conditions and competition.

     DEPOSITS. The Company offers a variety of deposit accounts with a range of
interest rates and terms. Manufacturers Bank's core deposits consist of regular
(passbook) savings accounts, statement savings accounts, checking accounts, NOW
accounts, money market accounts and non-public certificates of deposit. These
deposits, along with public fund deposits, brokered deposits, and short-term and
long-term borrowings are used to support the Company's asset base. The Company's
deposits are obtained predominantly from the geographic trade areas surrounding
each of the Company's office locations. The Company relies primarily on customer
service and long-standing relationships with customers to attract and retain
deposits; however, market interest rates and rates offered by competing
financial institutions significantly affect the Company's ability to attract and
retain deposits.

     The following table sets forth the maturities of certificates of deposits
and other time deposits at December 31, 2000 and December 31, 1999 (in
thousands):

<TABLE>
<CAPTION>
                                                     AT                    AT
                                              DECEMBER 31, 2000   DECEMBER 31, 1999
                                              -----------------   -----------------
<S>                                              <C>                <C>
Maturing within three months                     $ 143,723          $  246,334
After three but within six months                  138,668             111,866
After six but within twelve months                 179,980              78,039
After twelve months                                139,307              37,639
                                                 ---------          ----------
                                                 $ 601,678          $  473,878
                                                 ---------          ----------
                                                 ---------          ----------

</TABLE>

     BORROWINGS. The Company has access to a variety of borrowing sources and
uses short-term and long-term borrowings to support its asset base. Short-term
borrowings include federal funds purchased, securities sold under agreements to
repurchase, U.S. Treasury demand notes, Federal Home Loan Bank advances and
correspondent bank lines of credit. From time to time, the Company enters into
short-term low-risk arbitrage transactions pursuant to which it purchases U.S.
Treasury securities as well as mortgage backed securities, and a few days later
permanently funds the purchase by entering into a reverse repurchase agreement
with a securities dealer. These transactions have the effect of inflating
short-term borrowings. The Company also offers a deposit account that sweeps
balances in excess of an agreed upon target amount into overnight repurchase
agreements. As business customers have grown more sophisticated in managing
their daily cash position, demand for the sweep product has increased.
Short-term borrowings increased $5.0 million at December 31, 2000 compared to
December 31, 1999.


                                       32
<PAGE>

     The following table sets forth certain information regarding the short-term
borrowings of the Company for the periods indicated (dollars in thousands):

<TABLE>
<CAPTION>

                                                                         AT DECEMBER 31,
                                                                         ---------------
                                                                  2000        1999        1998
                                                                  ----        ----        ----
<S>                                                             <C>         <C>         <C>
Federal funds purchased:
       Average balance outstanding                              $ 56,738    $  5,968    $  2,286
       Maximum outstanding at any month-end during the period     95,000      56,000      13,400
       Balance outstanding at end of period                       30,425      56,000          --
       Weighted average interest rate during the period             6.54%       5.78%       5.77%
       Weighted average interest rate at end of the period          6.66%       5.79%         --
Securities sold under agreements to repurchase:
       Average balance outstanding                              $ 59,761    $ 68,270    $ 91,180
       Maximum outstanding at any month-end during the period     70,779     131,244     179,023
       Balance outstanding at end of period                       60,788      55,681     127,288
       Weighted average interest rate during the period             6.58%       4.57%       5.09%
       Weighted average interest rate at end of the period          6.25%       5.31%       4.64%
U.S. Treasury demand notes:
       Average balance outstanding                              $  1,816    $  2,272    $  3,056
       Maximum outstanding at any month-end during the period      2,900       6,103       6,150
       Balance outstanding at end of period                        2,801       2,888       3,233
       Weighted average interest rate during the period             5.80%       4.58%       5.04%
       Weighted average interest rate at end of the period          6.41%       4.55%       4.77%
Federal Home Loan Bank advances:
       Average balance outstanding                              $141,612    $ 31,123    $     --
       Maximum outstanding at any month-end during the period    145,000     125,000          --
       Balance outstanding at end of period                      145,000     125,000          --
       Weighted average interest rate during the period             6.40%       5.54%         --
       Weighted average interest rate at end of the period          6.66%       5.82%         --
Correspondent bank lines of credit:
       Average balance outstanding                              $  6,936    $  1,742    $     --
       Maximum outstanding at any month-end during the period     10,600       5,000          --
       Balance outstanding at end of period                       10,600       5,000          --
       Weighted average interest rate during the period             7.40%       6.47%         --
       Weighted average interest rate at end of the period          8.25%       7.43%         --
Other short-term borrowings:
       Average balance outstanding                              $     --    $     --    $  3,869
       Maximum outstanding at any month-end during the period         --          --       5,937
       Balance outstanding at end of period                           --          --          --
       Weighted average interest rate during the period               --          --        4.99%
       Weighted average interest rate at end of the period            --          --          --

</TABLE>

     Long-term borrowings include notes payable to other banks to support a
portfolio of equipment that the Company owns and leases to other companies as
well as general debt incurred to fund recent corporate acquisitions. Long-term
borrowings decreased to $31.6 million at December 31, 2000 from $32.7 million at
December 31, 1999.


                                       33
<PAGE>

     LIQUIDITY

     BANK LIQUIDITY. Manufacturers Bank's primary sources of funds are retail
and commercial deposits, short-term and long-term borrowings, and funds
generated from operations. Funds from operations include principal and interest
payments received on loans and securities and proceeds from the sale of
securities and loans. While maturities and scheduled amortization of loans and
securities provide an indication of the timing of the receipt of funds, changes
in interest rates, economic conditions and competition strongly influence
mortgage prepayment rates and deposit flows, reducing the predictability of the
timing on sources of funds.

     Manufacturers Bank has no required regulatory liquidity ratios to maintain;
however, it adheres to a Liquidity Policy, approved by its Board of Directors,
which sets certain guidelines for liquidity purposes. This policy requires that
Manufacturers Bank maintain the following liquidity ratios:

     1.   Liquidity ratio (defined as cash, short-term investments, marketable
          securities and investment grade scheduled lease loan payments due in
          one year or less divided by deposits plus short-term liabilities)
          greater than 20%.

     2.   Loans to deposits ratio minus public funds ratio less than 100%.

     3.   Loans minus investment grade leases to deposits minus public funds
          less than 95%.

     At December 31, 2000, Manufacturers Bank was in substantial compliance with
the foregoing policy. Generally, when Manufacturers Bank's loan to deposit
ratios become higher than policy guidelines, Manufacturers Bank sells Lease
Loans to reduce the volume of total loans and to provide a source of funds. In
2000, Manufacturers Bank sold approximately $21.0 million of lease loan
participations to remain in compliance with the Liquidity Policy. Liquidity
management is monitored by the Asset/Liability Committee and Board of Directors
of Manufacturers Bank, which takes into account the marketability of assets, the
sources and stability of funding and the level of unfunded commitments.

     At December 31, 2000, Manufacturers Bank had outstanding origination loan
commitments and unused commercial and retail lines of credit of $307.3 million.
Manufacturers Bank anticipates that it will have sufficient funds available to
meet its current origination and other lending commitments. Certificates of
deposit that are scheduled to mature within one year totaled $462.4 million at
December 31, 2000. Manufacturers Bank expects a substantial majority of these
certificates of deposit to remain with Manufacturers Bank.

     In the event that additional short-term liquidity is needed, Manufacturers
Bank has established relationships with several large regional banks to provide
short-term borrowings in the form of federal funds purchases. While there were
no firm lending commitments in place, Manufacturers Bank has borrowed, and
management believes that Manufacturers Bank could again borrow, $130.0 million
for a short time from these banks on a collective basis. Additionally,
Manufacturers Bank is a member of the Federal Home Loan Bank ("FHLB") and has
the ability to borrow from the FHLB.

     CORPORATION LIQUIDITY. The Company's main sources of liquidity at the
holding company level are dividends from Manufacturers Bank passed on to the
Company through Manufacturers National Corporation and a line of credit
maintained with a large regional correspondent bank in the amount of $15.0
million. As of December 31, 2000, the Company had $4.4 million undrawn and
available under its line of credit.

     Manufacturers Bank is subject to various regulatory capital requirements
administered by federal and state banking agencies, which affect Manufacturers
Bank's ability to pay dividends to Manufacturers National Corporation and for
Manufacturers National Corporation to pay dividends to MB Financial. Failure to
meet minimum capital requirements can initiate certain mandatory and
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Additionally, Bank policy
requires that dividends cannot be declared in an amount that would cause
Manufacturers Bank's capital to fall below the minimum amount required for
Manufacturers Bank to be considered "well capitalized" for regulatory purposes.
At December 31, 2000, Manufacturers Bank could pay $4.7 million of dividends and
comply with such minimum regulatory capital requirements.


                                       34
<PAGE>

     CAPITAL RESOURCES

     Manufacturers Bank is subject to the risk based capital regulations
administered by the banking regulatory agencies. The risk based capital
guidelines are designed to make regulatory capital requirements more sensitive
to differences in risk profiles among banks to account for off-balance sheet
exposure and to minimize disincentives for holding liquid assets. Under the
regulations, assets and off-balance sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk weighted assets and off-balance
sheet items. Under the prompt corrective action regulations, to be adequately
capitalized a bank must maintain minimum ratios of total capital to
risk-weighted assets of 8.00%, Tier 1 capital to risk-weighted assets of 4.00%,
and Tier 1 capital to total assets of 4.00%. Failure to meet these capital
requirements can initiate certain mandatory, and possibly additional
discretionary, actions by regulators, that, if undertaken, could have a direct
material effect on Manufacturers Bank's financial statements. As of December 31,
2000, the most recent notification from the federal banking regulators
categorized Manufacturers Bank as well capitalized. A well capitalized
institution must maintain a minimum ratio of total capital to risk-weighted
assets of at least 10.00%, a minimum ratio of Tier 1 capital to risk weighted
assets of at least 6.00%, a minimum ratio of Tier 1 capital to total assets of
at least 5.00% and must not be subject to any written order, agreement or
directive requiring it to meet or maintain a specific capital level. There are
no conditions or events since that notification that management believes have
changed Manufacturers Bank's capital classification. The Company, on a
consolidated basis, must maintain a minimum ratio of Tier 1 capital to total
assets of 4.00%, and a minimum ratio of total capital to risk-weighted assets of
8.00%.

     The Company and Manufacturers Bank were in full compliance with all capital
adequacy requirements to which they are subject as of December 31, 2000. The
required and actual amounts and ratios for the Company and Manufacturers Bank as
of December 31, 2000 are presented below (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                              TO BE WELL
                                                                                           CAPITALIZED UNDER
                                                                      FOR CAPITAL          PROMPT CORRECTIVE
                                                 ACTUAL            ADEQUACY PURPOSES       ACTION PROVISIONS
                                             ---------------       -----------------       -----------------
                                             AMOUNT    RATIO       AMOUNT     RATIO       AMOUNT        RATIO
                                             ------    -----       ------     -----       ------        -----
<S>                                         <C>        <C>        <C>         <C>        <C>            <C>

As of December 31, 2000
Total capital (to risk-weighted assets):
  MB Financial, Inc.                        $119,682    9.60%      $ 99,749    8.00%      $     N/A        N/A%
  Manufacturers Bank                         129,342   10.38         99,675    8.00         124,593      10.00
Tier 1 capital (to risk-weighted assets):
  MB Financial, Inc.                         105,845    8.49         49,874    4.00             N/A        N/A
  Manufacturers Bank                         115,505    9.27         49,837    4.00          74,756       6.00
Tier 1 capital (to average assets):
  MB Financial, Inc.                         105,845    7.38         57,365    4.00             N/A        N/A
  Manufacturers Bank                         115,505    8.06         57,304    4.00          71,630       5.00

As of December 31, 1999
Total capital (to risk-weighted assets):
  MB Financial, Inc.                         105,291   10.01         84,134    8.00             N/A        N/A
  Manufacturers Bank                         108,506   10.34         83,978    8.00         104,972      10.00
Tier 1 capital (to risk-weighted assets):
  MB Financial, Inc.                          93,094    8.85         42,067    4.00             N/A        N/A
  Manufacturers Bank                          96,309    9.17         41,989    4.00          62,983       6.00
Tier 1 capital (to average assets):
  MB Financial, Inc.                          93,094    7.47         49,841    4.00             N/A        N/A
  Manufacturers Bank                          96,309    7.74         49,797    4.00          62,246       5.00

</TABLE>

N/A - not applicable


                                       35
<PAGE>

     CASH EARNINGS

     The purchase method of accounting has been used to record each of the
Company's acquisitions and the Avondale merger. As a result, the recorded basis
of the net assets of the acquired entities has been adjusted to fair value.
Adjustments included recording core deposit intangibles to reflect the
difference between the fair value and underlying basis of deposits purchased and
recording goodwill for the excess of the acquisition cost over the fair value of
net assets acquired. Core deposit intangibles and goodwill are being amortized
as a non-cash expense over periods of up to eight and 20 years, respectively.
Amortization expense reduces net income during the amortization periods.

     If the Company's acquisitions had met certain accounting rules, the pooling
of interest method of accounting would have been used to account for the
Company's acquisitions. Under this method of accounting, no goodwill or core
deposit intangibles would have been recorded. Consequently, net income is not
reduced for the amortization of core deposit intangibles or goodwill. Since
application of the two methods can result in dramatically different net income,
management, certain analysts and certain peer financial institutions have been
computing cash earnings in order to compare results. Cash earnings is not a
presently defined term or concept under generally accepted accounting
principles.

     Cash earnings is defined by management as net income excluding amortization
of core deposit intangibles and goodwill and the related deferred income tax
effect. Cash earnings should not be considered an alternative to operating or
net income as an indicator of the Company's performance or as an alternative to
cash flows from operating activities as a measure of liquidity in each case
determined in accordance with generally accepted accounting principles.

     The following table sets forth the Company's cash earnings (dollars in
thousands):

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                     --------------------------------------
                                                        2000          1999          1998
                                                     ----------    ----------    ----------
<S>                                                  <C>           <C>           <C>
Net Income                                           $   11,605    $    9,954    $    6,255
Goodwill amortization                                       832           815           952
Core deposit intangibles amortization (net of tax)          730         1,077         1,519
                                                     ----------    ----------    ----------
Cash earnings                                            13,167        11,846         8,726
Preferred dividends                                          --            --        (1,085)
                                                     ----------    ----------    ----------
Cash earnings to common stockholders                 $   13,167    $   11,846    $    7,641
                                                     ==========    ==========    ==========
Average tangible assets (3)                          $1,375,070    $1,175,002    $  822,294

Average tangible equity (4)                          $   73,695    $   57,939    $   37,842

Performance ratios: (1) (2)
   Cash return on average tangible assets                  0.96%         1.01%         0.93%
   Cash return on average tangible equity                 17.87%        20.45%        20.19%

</TABLE>

     (1)  The ratios for the year ended December 31, 1998 include the $4.1
          million pre-tax gain on sale of Coal City National Bank.

     (2)  Cash return on average tangible assets and equity for the year ended
          December 31, 1998, excluding the gain on sale of Coal City National
          Bank, would have been 0.61% and 13.06%, respectively.

     (3)  Tangible assets represents assets less the Company's intangible assets
          which include goodwill and core deposit intangibles. Core deposit
          intangibles is included on a fully tax equivalent basis.

     (4)  Tangible equity represents common stockholders equity plus retained
          earnings less the Company's intangible assets which include goodwill
          and core deposit intangibles. Core deposit intangibles is included
          on a fully tax equivalent basis.



                                       36
<PAGE>

     STATEMENT OF CASH FLOWS

     The Company's cash flows are composed of three classifications: cash flows
from operating activities, cash flows from investing activities, and cash flows
from financing activities. Net cash provided by operating activities was $32.9
million, $23.7 million and $12.7 million for the years ended December 31, 2000,
1999 and 1998, respectively. Net cash provided by (used in) investing activities
was ($167.5) million, $30.7 million and ($144.1) million for the years ended
December 31, 2000, 1999 and 1998. The $198.2 million increase in net cash (used
in) investing activities for the year ended 2000 compared to 1999 was due to a
$165.5 million decrease in net proceeds from sales, maturities and calls of
securities available for sale, a $65.9 million decrease in net proceeds from
federal funds sold, as well as a $30.0 million purchase of cash surrender value
of life insurance. The increase in net cash provided by investing activities for
the year ended December 31, 1999 compared to the same period for 1998 was
attributable to net proceeds from federal funds sold, an increase in net
proceeds from sales, maturities and calls of securities available for sale, and
cash acquired through the merger partially offset by increase in loans, net of
principal collections, and purchases of premises and equipment and lease
equipment. Net cash provided by (used in) financing activities financing
activities was $137.1 million, ($48.6) million and $118.8 million for the years
ended December 31, 2000, 1999 and 1998, respectively. The increase in cash
provided by financing activities for the year ended December 31, 2000 compared
to December 31, 1999 was primarily due to a net increase in interest bearing
deposits. Net cash (used in) financing activities for the year ended December
31, 1999 compared to the year ended December 31, 1998 increased due to principal
paid on long-term borrowings and a net decrease in interest bearing deposits.

     FORWARD LOOKING STATEMENTS

     Statements made about the Company's future economic performance, strategic
plans or objectives, revenues or earnings projections, or other financial items
and similar statements are not guarantees of future performance, but are forward
looking statements. By their nature, these statements are subject to numerous
uncertainties that could cause actual results to differ materially from those in
the statements. Important factors that might cause the Company's actual results
to differ materially include, but are not limited to, the following:


     o    Federal and state legislative and regulatory developments;

     o    Changes in management's estimate of the adequacy of the allowance for
          loan losses;

     o    Changes in management's valuation of the interest only receivables;

     o    Changes in the level and direction of loan delinquencies and
          write-offs;

     o    Interest rate movements and their impact on customer behavior and the
          Company's net interest margin;

     o    The impact of repricing and competitors' pricing initiatives on loan
          and deposit products;

     o    The Company's ability to adapt successfully to technological changes
          to meet customers' needs and developments in the market place;

     o    The Company's ability to access cost effective funding; and

     o    Changes in financial markets and general economic conditions.


                                       37
<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     ASSET LIABILITY MANAGEMENT

     The Company's net interest income is subject to "interest rate risk" to the
extent that it can vary based on changes in the general level of interest rates.
It is the Company's policy to maintain an acceptable level of interest rate risk
over a range of possible changes in interest rates while remaining responsive to
market demand for loan and deposit products. The strategy employed by the
Company to manage its interest rate risk is to measure its risk using an
asset/liability simulation model and adjust the maturity of securities in its
investment portfolio to manage that risk. Also, to limit risk, the Company
generally does not make fixed rate loans or accept fixed rate deposits with
terms of more than five years.

     Interest rate risk can also be measured by analyzing the extent to which
the repricing of assets and liabilities are mismatched to create an interest
sensitivity "gap". An asset or liability is said to be interest rate sensitive
within a specific time period if it will mature or reprice within that time
period. The interest rate sensitivity gap is defined as the difference between
the amount of interest earning assets maturing or repricing within a specific
time period and the amount of interest bearing liabilities maturing or repricing
within that same time period. A gap is considered positive when the amount of
interest rate sensitive assets exceeds the amount of interest rate sensitive
liabilities. A gap is considered negative when the amount of interest rate
sensitive liabilities exceeds the amount of interest rate sensitive assets.
During a period of rising interest rates, therefore, a negative gap would tend
to adversely affect net interest income. Conversely, during a period of falling
interest rates, a negative gap position would tend to result in an increase in
net interest income.


                                       38
<PAGE>

     The following table sets forth the amounts of interest earning assets and
interest bearing liabilities outstanding at December 31, 2000, which are
anticipated by the Company, based upon certain assumptions, to reprice or mature
in each of the future time periods shown. Except as stated below, the amount of
assets and liabilities shown which reprice or mature during a particular period
were determined based on the earlier of the term to repricing or the term to
repayment of the asset or liability. The table is intended to provide an
approximation of the projected repricing of assets and liabilities at December
31, 2000 on the basis of contractual maturities and scheduled rate adjustments
within a three-month period and subsequent selected time intervals. The loan
amounts in the table reflect principal balances expected to be reinvested and/or
repriced as a result of contractual amortization and rate adjustments on
adjustable-rate loans. Loan and investment security prepayments are not
considered significant; therefore, contractual maturities or repricing are not
adjusted for possible prepayments. While NOW, money market and savings deposit
accounts have adjustable rates, it is assumed that the interest rates on these
accounts will not adjust immediately to changes in other interest rates.
Therefore, the table is calculated assuming that these accounts will reprice as
follows: 25% in the first three months, 25% in the next nine months, and 50%
after one year (dollars in thousands):

<TABLE>
<CAPTION>

                                                               TIME TO MATURITY OR REPRICING
                                                               -----------------------------
                                           0 - 90        91 - 365          1 - 5          OVER 5
                                            DAYS           DAYS            YEARS           YEARS          TOTAL
                                         -----------    -----------     -----------     -----------    -----------
<S>                                      <C>            <C>             <C>             <C>            <C>

INTEREST EARNING ASSETS:
Loans (1)                                $   582,657    $   123,250     $   290,140     $    55,735    $ 1,051,782
Investment securities                         10,135         51,526          30,188         141,214        233,063
                                         -----------    -----------     -----------     -----------    -----------
    Total interest earning assets        $   592,792    $   174,776     $   320,328     $   196,949    $ 1,284,845
                                         ===========    ===========     ===========     ===========    ===========

INTEREST BEARING LIABILITIES:
NOW and money market deposit accounts    $    44,831    $    44,831     $    89,662     $        --    $   179,324
Savings deposits                              32,756         32,756          65,513              --        131,025
Time deposits                                143,723        318,647          83,250          56,058        601,678
Short-term borrowings                        169,014         80,600              --              --        249,614
Long-term borrowings                              --          2,741           3,855          25,000         31,596
                                         -----------    -----------     -----------     -----------    -----------
    Total interest bearing liabilities   $   390,324    $   479,575     $   242,280     $    81,058    $ 1,193,237
                                         ===========    ===========     ===========     ===========    ===========

Rate sensitive assets (RSA)              $   592,792    $   767,568     $ 1,087,896     $ 1,284,845    $ 1,284,845
Rate sensitive liabilities (RSL)             390,324        869,899       1,112,179       1,193,237      1,193,237
Cumulative GAP                               202,468       (102,331)        (24,283)         91,608         91,608
(GAP=RSA-RSL)
RSA/Total assets                               40.65%         52.64%          74.60%          88.11%         88.11%
RSL/Total assets                               26.77%         59.65%          76.27%          81.83%         81.83%
GAP/Total assets                               13.88%         (7.02%)         (1.67%)          6.28%          6.28%
GAP/RSA                                        34.15%        (13.33%)         (2.23%)          7.13%          7.13%

</TABLE>

     (1)  Less non-accrual loans totaling $5.4 million.

     Certain shortcomings are inherent in the method of analysis presented in
the foregoing table. For example, although certain assets and liabilities may
have similar maturities or periods to repricing, they may react in different
degrees to changes in market interest rates. Also, the interest rates on certain
types of assets and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other types of assets may lag behind
changes in market rates. Additionally, in the event of a change in interest
rates, prepayment and early withdrawal levels would likely deviate significantly
from those assumed in calculating the table. Therefore, the Company does not
rely solely on a gap analysis to manage its interest rate risk, but rather it
uses what it believes to be the more reliable simulation model relating to
changes in net interest income.


                                       39
<PAGE>

     Based on simulation modeling at December 31, 2000 and 1999, the Company's
net interest income would change over a one-year time period due to changes in
interest rates as follows (dollars in thousands):

<TABLE>
<CAPTION>
               CHANGE IN NET INTEREST INCOME OVER ONE YEAR HORIZON
               ---------------------------------------------------
     CHANGES IN          AT DECEMBER 31, 2000            AT DECEMBER 31, 1999
      LEVELS OF         DOLLAR        PERCENTAGE         DOLLAR   PERCENTAGE
   INTEREST RATES       CHANGE          CHANGE           CHANGE     CHANGE
   --------------       ------          ------           ------     ------
<S>                     <C>            <C>            <C>           <C>
        + 2.00%         $ (728)        (1.54)%        $ (2,190)     (4.57)%
        + 1.00            (357)        (0.76)           (1,131)     (2.36)
         (1.00)            337          0.71             1,047       2.18
         (2.00)            584          1.24             2,131       4.44

</TABLE>

     Simulations used by the Company assume the following:

     1.   Changes in interest rates are immediate.

     2.   With the exception of NOW, money market and savings accounts, all
          interest rates change by the same amount at the same time.

     3.   NOW, money market and savings accounts rates change by 0.25% for every
          1.00% change in interest rates and by 0.50% for every 2.00% change in
          interest rates. Management believes, and experience has shown, that
          these deposit accounts take longer to change rates when economic
          conditions change and do not change rates as much as other general
          interest rates, such as the prime or federal funds rates. It is
          Manufacturers Bank's policy that interest rate exposure due to a 2.00%
          interest rate rise or fall be limited to 7.50% of Manufacturers Bank's
          annual net interest income as forecasted by the simulation model. As
          demonstrated by the table above, Manufacturers Bank's interest rate
          risk exposure was within this policy at December 31, 2000.

     4.   Changes in net interest income between December 31, 2000 and December
          31, 1999 reflect changes in the composition of interest earning assets
          and interest bearing liabilities, related interest rates, repricing
          frequencies, and the fixed or variable characteristics of the interest
          earning assets and interest bearing liabilities.


                                       40
<PAGE>

 ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                               MB FINANCIAL, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2000


                                       41
<PAGE>

                       MB FINANCIAL, INC. AND SUBSIDIARIES

                              FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

                                      INDEX

<TABLE>
<CAPTION>

                                                                      Page
                                                                      ----
<S>                                                                   <C>
STATEMENT OF MANAGEMENT RESPONSIBILITY...........................       43

INDEPENDENT AUDITOR'S REPORT.....................................       44

FINANCIAL STATEMENTS

   Consolidated balance sheets ..................................       45

   Consolidated statements of income ............................       46

   Consolidated statements of changes in stockholders' equity ...       47

   Consolidated statements of cash flows ........................       48

   Notes to consolidated financial statements ...................       50

</TABLE>


                                       42

<PAGE>

[MB FINANCIAL LOGO]

                     STATEMENT OF MANAGEMENT RESPONSIBILITY

     MB Financial, Inc.'s management is responsible for the preparation,
integrity and fair presentation of its published financial statements. The
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles and, as such, include amounts based on
judgments and estimates made by management. Management also prepared other
information included in the annual report and is responsible for its accuracy
and consistency with the consolidated financial statements.

     The consolidated financial statements have been audited by an independent
accounting firm, McGladrey & Pullen, LLP, which has been given unrestricted
access to all financial records and related data, including minutes of all
meetings of stockholders, the Board of Directors and committees of the Board.
Management believes that representations made to the independent auditors during
their audit were valid and appropriate.

     Management maintains a system of internal controls over the preparation of
its published financial statements, which is intended to provide reasonable
assurance to the Company's Board of Directors and officers regarding preparation
of consolidated financial statements presented fairly in conformity with
generally accepted accounting principles.

     Management has long recognized its responsibility for conducting the
Company's affairs in a manner, which is responsive to the interest of employees,
stockholders, investors and society in general. This responsibility is included
in the statement of policy on ethical standards which provides that the Company
will fully comply with laws, rules and regulations of every community in which
it operates and adhere to the highest ethical standards. Officers, employees and
agents of the Company are expected and directed to manage the business of the
Company with complete honesty, candor and integrity.

     Internal auditors monitor the operation of the internal control system, and
actions are taken by management to respond to deficiencies as they are
identified. The Board, operating through its audit committee, which is composed
entirely of directors who are not officers or employees of the Company, provides
oversight to the financial reporting process.

     Even effective internal controls, no matter how well designed, have
inherent limitations, such as the possibility of human error or of circumvention
or overriding of controls, and the consideration of cost in relation to benefit
of a control. Further, the effectiveness of an internal control can change with
circumstances.

     MB Financial, Inc.'s management periodically assesses the internal controls
for inadequacy. Based upon these assessments, MB Financial, Inc.'s management
believes that, in all material respects, its internal controls relating to
preparation of consolidated financial statements as of December 31, 2000
functioned effectively during the year ended December 31, 2000.

      /s/Mitchell Feiger                            /s/Jill E. York

      Mitchell Feiger                               Jill E. York
      PRESIDENT AND                                 VICE PRESIDENT AND
      CHIEF EXECUTIVE OFFICER                       CHIEF FINANCIAL OFFICER


                                       43
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders
MB Financial, Inc. and Subsidiaries
Chicago, Illinois


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

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 MB Financial, 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 generally accepted accounting
principles.


                                                         McGladrey & Pullen, LLP


Schaumburg, Illinois
February 9, 2001


                                       44
<PAGE>

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                     2000           1999
                                                 -----------    -----------
<S>                                              <C>            <C>

ASSETS

Cash and due from banks                          $    31,989    $    29,420
Other interest bearing deposits                        2,300          1,487
Investment securities available for sale             233,063        271,313
Stock in Federal Home Loan Bank                        7,290          6,290
Loans (net of allowance for loan losses
  of $13,837 at December 31, 2000 and
  $12,197 at December 31, 1999)                    1,043,326        890,929
Lease investments, net                                45,344         38,034
Premises and equipment, net                           15,465         15,304
Cash surrender value of life insurance                31,703             --
Interest only receivables                             10,538         13,821
Intangibles, net                                      14,466         16,265
Other assets                                          22,764         26,563
                                                 -----------    -----------
    TOTAL ASSETS                                 $ 1,458,248    $ 1,309,426
                                                 ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
  Deposits:
    Noninterest bearing                          $   157,237    $   145,059
    Interest bearing                                 912,027        791,016
                                                 -----------    -----------
    TOTAL DEPOSITS                                 1,069,264        936,075
  Short-term borrowings                              249,614        244,569
  Long-term borrowings                                31,596         32,698
  Other liabilities                                   16,033         16,706
                                                 -----------    -----------
    TOTAL LIABILITIES                              1,366,507      1,230,048
                                                 -----------    -----------

Stockholders' Equity
  Common stock ($.01 par value;
    authorized 20,000,000 shares;
    issued 7,064,515 shares)                              71             71
  Additional paid-in capital                          50,656         50,656
  Retained earnings                                   43,791         32,186
  Accumulated comprehensive loss                      (2,777)        (3,535)
                                                 -----------    -----------
    TOTAL STOCKHOLDERS' EQUITY                        91,741         79,378
                                                 -----------    -----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 1,458,248    $ 1,309,426
                                                 ===========    ===========

</TABLE>

See Notes to the Consolidated Financial Statements.


                                       45
<PAGE>

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

<TABLE>
<CAPTION>
                                                             2000         1999         1998
                                                          ----------   ----------   ----------
<S>                                                       <C>          <C>          <C>

Interest income:
  Loans, including fees                                   $   86,017   $   63,887   $   44,929
  Investment securities:
    Taxable                                                   17,677       17,228       11,787
    Nontaxable                                                   309          320          305
  Federal funds sold                                               3          796          611
  Other interest bearing deposits                                 84           60           --
                                                          ----------   ----------   ----------
    TOTAL INTEREST INCOME                                    104,090       82,291       57,632
                                                          ----------   ----------   ----------
Interest expense:
  Deposits                                                    39,698       31,059       22,319
  Short-term borrowings                                       17,091        5,381        5,118
  Long-term borrowings                                         2,652        5,327        2,389
                                                          ----------   ----------   ----------
    TOTAL INTEREST EXPENSE                                    59,441       41,767       29,826
                                                          ----------   ----------   ----------

    NET INTEREST INCOME                                       44,649       40,524       27,806

Provision for loan losses                                      3,090        1,260          750
                                                          ----------   ----------   ----------

    NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES       41,559       39,264       27,056
                                                          ----------   ----------   ----------
Other income:
  Loan service fees                                            1,445        3,532          374
  Deposit service fees                                         3,397        3,304        3,174
  Lease financing, net                                         1,926          724        1,418
  Increase in cash surrender value of life insurance           1,703           --           --
  Net gains on sale of securities available for sale              --            1          167
  Gain on sale of Coal City National Bank                         --           --        4,099
  Other operating income                                       2,251        1,501          708
                                                          ----------   ----------   ----------
                                                              10,722        9,062        9,940
                                                          ----------   ----------   ----------
Other expenses:
  Salaries and employee benefits                              18,396       17,214       12,954
  Occupancy and equipment expense                              6,783        6,085        4,402
  Intangibles amortization expense                             1,955        2,472        3,254
  Advertising and marketing expense                            1,745          910          730
  Other operating expenses                                     6,866        6,879        5,796
                                                          ----------   ----------   ----------
                                                              35,745       33,560       27,136
                                                          ----------   ----------   ----------
    INCOME BEFORE INCOME TAXES                                16,536       14,766        9,860

Income taxes                                                   4,931        4,812        3,605
                                                          ----------   ----------   ----------

    NET INCOME                                                11,605        9,954        6,255

Preferred stock dividend                                          --           --        1,085
                                                          ----------   ----------   ----------

    NET INCOME AVAILABLE TO COMMON STOCKHOLDERS           $   11,605   $    9,954   $    5,170
                                                          ==========   ==========   ==========

  Basic earnings per common share                         $     1.64   $     1.51   $     1.26
                                                          ==========   ==========   ==========

  Diluted earnings per common share                       $     1.64   $     1.51   $     1.25
                                                          ==========   ==========   ==========

  Weighted average common shares outstanding               7,064,515    6,586,596    4,093,254
                                                          ==========   ==========   ==========

  Weighted average common shares outstanding
    including dilutive shares                              7,072,134    6,598,058    4,130,996
                                                          ==========   ==========   ==========

</TABLE>

See Notes to Consolidated Financial Statements.


                                       46
<PAGE>

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(AMOUNTS IN THOUSANDS EXCEPT COMMON AND PREFERRED SHARE DATA)

<TABLE>
<CAPTION>

                                                                     ADDITIONAL              ACCUMULATED
                                             PREFERRED    COMMON      PAID-IN     RETAINED  COMPREHENSIVE
                                               STOCK       STOCK      CAPITAL     EARNINGS  INCOME (LOSS)    TOTAL
                                             ---------    --------   ----------   --------  -------------  --------
<S>                                           <C>         <C>         <C>         <C>         <C>          <C>
Balance, December 31, 1997                    $ 10,200    $    497    $ 24,446    $ 17,062    $    321     $ 52,526
                                                                                                           --------
  Purchase and retirement of 68
    shares of preferred stock                  (10,200)         --          --          --          --      (10,200)
                                                                                                           --------
  Purchase and retirement of 750
    shares of common stock                          --          (7)       (652)         --          --         (659)
                                                                                                           --------
  Dividends paid on preferred stock                 --          --          --      (1,085)         --       (1,085)
                                                                                                           --------
  Comprehensive income:
    Net income                                      --          --          --       6,255          --        6,255
    Other comprehensive income (loss):
    Unrealized securities gains arising
      during the year, net of tax of $77            --          --          --          --         133          133
    Reclassification adjustments for
      gains on sale of investments
      included in net income, net of
      tax of $57                                    --          --          --          --        (110)        (110)
                                                                                                           --------
    Comprehensive income                                                                                      6,278
                                              --------    --------    --------    --------    --------     --------
Balance, December 31, 1998                          --         490      23,794      22,232         344       46,860
                                                                                                           --------
  Purchase and retirement of 89 shares
    of common stock                                 --          --          (1)         --          --           (1)
                                                                                                           --------
  Merger with Avondale Financial Corp.              --        (419)     26,863          --          --       26,444
                                                                                                           --------
  Comprehensive income:
    Net income                                      --          --          --       9,954          --        9,954
    Other comprehensive income (loss):
    Unrealized securities losses arising
      during the year, net of tax of $2,172         --          --          --          --      (4,045)      (4,045)
    Unrealized interest only receivables
      gains arising during the year,
      net of tax of $90                             --          --          --          --         167          167
    Reclassification adjustments for gains
      on sale of investments included in
      net income, net of tax                        --          --          --          --          (1)          (1)
                                                                                                           --------
  Comprehensive income                                                                                        6,075
                                              --------    --------    --------    --------    --------     --------
Balance, December 31, 1999                          --          71      50,656      32,186      (3,535)      79,378
                                                                                                           --------
  Comprehensive income:
    Net income                                      --          --          --      11,605          --       11,605
    Other comprehensive income:
    Unrealized securities gains arising
      during the year, net of tax of $205           --          --          --          --         378          378
    Unrealized interest only receivables
      gains arising during the year, net
      of tax of $205                                --          --          --          --         380          380
                                                                                                           --------
  Comprehensive income                                                                                       12,363
                                              --------    --------    --------    --------    --------     --------
Balance, December 31, 2000                    $     --    $     71    $ 50,656    $ 43,791    $ (2,777)    $ 91,741
                                              ========    ========    ========    ========    ========     ========

</TABLE>

See Notes to Consolidated Financial Statements.


                                       47
<PAGE>

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       2000          1999         1998
                                                                     ---------    ---------    ---------
<S>                                                                  <C>          <C>          <C>

Cash Flows From Operating Activities
  Net income                                                         $  11,605    $   9,954    $   6,255
  Adjustments to reconcile net income to net cash
    provided by operating activities:
   Depreciation                                                         14,598       10,742        8,916
   (Gain) on disposal of premises and equipment and
     leased equipment                                                     (991)         (12)        (356)
   (Gain) on sale of Coal City National Bank                                --           --       (4,099)
   Amortization of intangibles                                           1,955        2,472        3,254
   Provision for loan losses                                             3,090        1,260          750
   Provision for deferred income taxes                                     842        2,692          158
   Bond (accretion), net                                                  (134)      (1,244)      (3,721)
   Securities (gains), net                                                  --           (1)        (167)
   (Gain) on sale of loans                                                  --           --         (139)
   Proceeds from sale of loans                                              --           --        8,855
   Loans originated for sale                                                --           --       (8,716)
   (Increase) in cash surrender value of life insurance                 (1,703)          --           --
   Write-down in the value of interest only receivables                    975           --           --
   Decrease in other assets                                              3,794        3,743        2,389
   (Decrease) in other liabilities                                        (673)      (5,873)        (702)
                                                                     ---------    ---------    ---------
          NET CASH PROVIDED BY OPERATING ACTIVITIES                     33,358       23,733       12,677
                                                                     ---------    ---------    ---------

Cash Flows From Investing Activities
  Proceeds from sales of securities available for sale                      --       30,040      255,006
  Proceeds from maturities and calls of securities
    available for sale                                                  42,577      178,058           --
  Proceeds from maturities and calls of securities held
    to maturity                                                             --        1,482        1,549
  Purchase of securities available for sale                             (3,860)     (71,218)    (341,905)
  Purchase of securities held to maturity                                   --           --       (7,553)
  Purchase of stock in Federal Home Loan Bank                           (1,000)      (1,000)      (1,999)
  Proceeds from redemption of stock in Federal Home Loan Bank               --        2,614           --
  Federal funds sold, net                                                   --       65,850       (2,450)
  Other interest bearing deposits, net                                    (813)         (15)          --
  Increase in loans, net of principal collections                     (156,412)    (155,108)     (41,209)
  Purchases of premises and equipment and leased equipment             (28,272)     (28,182)     (13,025)
  Proceeds from sales of premises and equipment and leased
    equipment                                                            6,578           79        3,628
  Principal collected on lease investments                                 544          388          659
  Purchase of minority interests                                          (156)          --       (2,328)
  Proceeds from sale of Coal City National Bank, net of
    cash retained by Coal City National Bank                                --           --        5,481
  Purchase of life insurance                                           (30,000)          --           --
  Cash acquired through merger with Avondale Financial Corp.                --        7,224           --
  Proceeds received from interest only receivables                       2,893          445           --
                                                                     ---------    ---------    ---------
          NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES         (167,921)      30,657     (144,146)
                                                                     ---------    ---------    ---------

Cash Flows From Financing Activities
  Net increase in noninterest bearing deposits                          12,178       16,841        3,153
  Net increase (decrease) in interest bearing deposits                 121,011      (69,388)      10,500
  Net increase in short-term borrowings                                  5,045      108,998      112,508
  Proceeds from long-term borrowings                                     2,786        2,414       32,667
  Principal paid on long-term borrowings                                (3,888)    (107,503)     (28,048)
  Purchase and retirement of common stock                                   --           (1)        (659)
  Purchase and retirement of preferred stock                                --           --      (10,200)
  Dividends paid on preferred stock                                         --           --       (1,085)
                                                                     ---------    ---------    ---------
          NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES          137,132      (48,639)     118,836
                                                                     ---------    ---------    ---------

          NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS         $   2,569    $   5,751    $ (12,633)

Cash and due from banks:
  Beginning                                                             29,420       23,669       36,302
                                                                     ---------    ---------    ---------
  Ending                                                             $  31,989    $  29,420    $  23,669
                                                                     =========    =========    =========

                                   (continued)
</TABLE>


                                       48
<PAGE>

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       2000          1999         1998
                                                                     ---------    ---------    ---------
<S>                                                                  <C>          <C>          <C>
Supplemental Disclosures of Cash Flow Information
  Cash payments for:
    Interest paid to depositors                                      $  37,059    $  31,344    $  22,363
    Other interest paid                                                 19,207       10,778        6,917
    Income taxes paid, net of refunds                                      511        4,799        4,310

Supplemental Schedule of Noncash Investing Activities
  Merger with Avondale Financial Corp.
    Noncash assets acquired:
      Securities available for sale                                               $ 183,700
      Stock in Federal Home Loan Bank                                                 5,290
      Federal funds sold                                                             45,500
      Other interest bearing deposits                                                 1,472
      Loans, net                                                                    203,355
      Premises and equipment                                                          2,939
      Accrued interest and other assets                                              20,358
      Intangibles, net                                                                  443
      Interest only receivables                                                      14,009
                                                                                   --------
                                                                                    477,066
                                                                                   --------
    Liabilities assumed:
      Interest bearing deposits                                                     342,961
      Short-term borrowings                                                           5,000
      Long-term borrowings                                                          100,803
      Other liabilities                                                               7,982
                                                                                   --------
                                                                                    456,746
          NET NONCASH ASSETS ACQUIRED                                                20,320
                                                                                   --------
          CASH ACQUIRED                                                           $   7,224
                                                                                  =========
Sale of Coal City National Bank
  Assets sold:
    Cash                                                                                        $   2,319
    Securities available for sale                                                                  15,418
    Securities held to maturity                                                                       173
    Federal funds sold                                                                             19,500
    Loans, net                                                                                     17,573
    Premises and equipment, net                                                                       696
    Other                                                                                             317
                                                                                                ---------
                                                                                                   55,996
                                                                                                ---------
  Liabilities sold:
    Deposits                                                                                       52,052
    Other                                                                                             243
                                                                                                ---------
                                                                                                   52,295
                                                                                                ---------

          NET ASSETS SOLD                                                                       $   3,701
                                                                                                =========
          CASH RECEIVED                                                                         $   7,800
                                                                                                =========

Transfer of long-term Federal Home Loan Bank advances
  to short-term classification                                       $      --    $      50    $      --
Real estate acquired in settlement of losses                         $     925    $     497    $     276

See Notes to Consolidated Financial Statements.

</TABLE>


                                       49
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 1.     SIGNIFICANT ACCOUNTING POLICIES

MB Financial, Inc. (the "Company") is a bank holding company providing financial
and other banking services to customers primarily located in Chicago, Illinois
including Chicago's north side, Chicago's south side and Chicago's southern and
western suburbs. See Note 2 for a discussion of the merger of Coal City
Corporation ("Coal City") with and into Avondale Financial Corp. ("Avondale") in
1999, with the resulting entity being renamed "MB Financial, Inc.".

BASIS OF FINANCIAL STATEMENT PRESENTATION: The consolidated financial statements
include the accounts of the Company and its subsidiaries. Significant
intercompany items and transactions have been eliminated in consolidation. The
accounting and reporting policies of the Company conform to generally accepted
accounting principles and general practices within the financial services
industry. In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the year. Actual results could differ from those estimates. Areas involving the
use of management's estimates and assumptions, and which are more susceptible to
change in the near term include the allowance for loan losses and fair value of
interest only receivables.

CASH AND CASH EQUIVALENTS: For purposes of reporting cash flows, cash and due
from banks includes cash on hand and amounts due from banks (including cash
items in process of clearing). Cash flows from loans originated by the Company,
deposits, and federal funds purchased and sold and short-term borrowings are
reported net.

SECURITIES AVAILABLE FOR SALE: Securities classified as available for sale are
those debt securities that the Company intends to hold for an indefinite period
of time, but not necessarily to maturity. Any decision to sell a security
classified as available for sale would be based on various factors, including
significant movements in interest rates, changes in the maturity mix of
Manufacturers Bank's assets and liabilities, liquidity needs, regulatory capital
considerations, and other similar factors.

Securities available for sale are reported at fair value with unrealized gains
or losses reported as accumulated comprehensive income, net of the related
deferred tax effect. The amortization of premiums and accretion of discounts,
computed by the interest method over their contractual lives, are recognized in
interest income. Realized gains or losses, determined on the basis of the cost
of specific securities sold, are included in earnings. In addition, if a loss is
deemed to be other than temporary, it is recognized as a realized loss in the
income statement.

LOANS HELD FOR SALE: Loans held for sale are those loans the Company intends to
sell in the foreseeable future. They are carried at the lower of aggregate cost
or market value. Gains and losses on sales of loans are recognized at settlement
dates and are determined by the difference between the sales proceeds plus the
value of the mortgage servicing rights compared to the carrying value of the
loans. All sales are made without recourse. There were no loans held for sale at
December 31, 2000 and 1999.

LOANS: Loans are stated at the amount of unpaid principal reduced by the
allowance for loan losses.

Loan origination and commitment fees and certain direct loan origination costs
are deferred and the net amount amortized as an adjustment of the related loan's
yield. The Company is amortizing these amounts over the contractual life of the
loan. Commitment fees based upon a percentage of a customer's unused line of
credit and fees related to standby letters of credit are recognized over the
commitment period.


                                       50
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 1.     SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Interest is accrued daily on the outstanding balances. For impaired loans,
accrual of interest is discontinued on a loan when management believes, after
considering collection efforts and other factors, that the borrower's financial
condition is such that collection of interest is doubtful. Cash collections on
impaired loans are credited to the loan balance, and no interest income is
recognized on those loans until the principal balance has been determined to be
collectible.

A loan is impaired when it is probable the Company will be unable to collect all
contractual principal and interest payments due in accordance with the terms of
the loan agreement. Impaired loans are measured based on the present value of
expected future cash flows discounted at the loan's effective interest rate or,
as a practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent. The amount of
impairment, if any, and any subsequent changes are included in the allowance for
loan losses.

The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the allowance for loan losses when
management believes that collectibility of the principal is unlikely. The
allowance is an amount that management believes will be adequate to absorb
estimated losses on existing loans, based on an evaluation of the collectibility
of loans and prior loss experience. The nature and volume of the loan portfolio,
overall portfolio quality, review of specific problem loans, and prevailing
economic conditions that may affect the borrower's ability to pay. While
management uses the best information available to make its evaluation, future
adjustments to the allowance may be necessary if there are significant changes
in economic conditions. In addition, regulatory agencies, as an integral part of
their examination process, periodically review Manufacturers Bank's allowance
for loan losses, and may require Manufacturers Bank to make additions to the
allowance based on their judgment about information available to them at the
time of their examinations.

LEASE INVESTMENTS: The Company's investment in assets leased to others is
reported as lease investments, net, using the direct finance and operating
methods of accounting. Direct financing leases are stated at the sum of
remaining minimum lease payments from lessees plus estimated residual values
less unearned lease income. On a quarterly basis, management reviews the lease
residuals for potential impairment. Unearned lease income on direct financing
leases is recognized over the lives of the leases using the level-yield method.
The investment in equipment in operating leases is stated at cost less
depreciation using the straight-line method generally over a five-year life.

PREMISES AND EQUIPMENT: Premises and equipment are stated at cost less
accumulated depreciation. Depreciation is computed primarily by the
straight-line method for buildings and computer equipment, and primarily by an
accelerated method for all other assets over their estimated useful lives.

INTEREST ONLY RECEIVABLES: Interest only receivables represents the present
value of future cash flows based on the "excess spread" between the yield of
underlying loans sold and the securities issued and reflect estimates of
prepayments, servicing fees, operating expenses, credit losses and other
factors. The interest only receivables are amortized as cash flows are received.
The fair value of the interest only receivables are evaluated on a quarterly
basis for impairment. The Company classifies its interest only receivables as
available-for-sale and any adjustment to the fair value of the receivable is
included in comprehensive income unless such adjustment is considered by
management to be other than temporary.

INTANGIBLES: In acquiring its subsidiaries, the portion of the purchase price
which represents value assigned to the existing deposit base for which the
annual interest and servicing costs are below market rates (core deposit
intangibles) is being amortized by the declining balance method over three to
nine years. The excess of cost over fair value of net assets acquired (goodwill)
is being amortized on the straight-line method over fifteen to twenty years. The
Company reviews its intangible assets annually to determine potential impairment
by comparing the carrying value of the intangibles with the anticipated future
cash flows.


                                       51
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 1.     SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES: Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and operating
loss carryforwards, and tax credit carryforwards and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.

EARNINGS PER COMMON SHARE: Basic earnings per share represents income available
to common stockholders divided by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share reflects additional
common shares that would have been outstanding if dilutive potential common
shares had been issued, as well as any adjustment to income that would result
from the assumed issuance. Potential common shares that may be issued by the
Company relate solely to outstanding stock options, and are determined using the
treasury stock method.

Earnings per common share have been computed for the years ended December 31,
2000, 1999 and 1998 based on the following (in thousands except common share
data):

<TABLE>
<CAPTION>

                                                                  2000         1999         1998
                                                               ----------   ----------   ----------
<S>                                                            <C>          <C>          <C>
Net income                                                     $   11,605   $    9,954   $    6,255
Less:  Preferred stock dividends                                       --           --        1,085
                                                               ----------   ----------   ----------
Net income applicable to common stock                          $   11,605   $    9,954   $    5,170
                                                               ==========   ==========   ==========
Weighted average common shares outstanding                      7,064,515    6,586,596    4,093,254
Effect of dilutive options                                          7,619       11,462       37,742
                                                               ----------   ----------   ----------
Weighted average common shares outstanding used to calculate
   diluted earnings per common share                            7,072,134    6,598,058    4,130,996
                                                               ==========   ==========   ==========

</TABLE>

As described in Note 2, in connection with the merger of Coal City Corporation
with and into Avondale Financial Corp., each share of Common Stock issued and
outstanding on February 26, 1999 was converted into 83.5 shares of Avondale
Financial Corp. Therefore, common share data prior to the merger date was
converted using an exchange ratio of 83.5 to l.

COMPREHENSIVE INCOME: Accounting principles generally require that recognized
revenue, expenses, gains and losses be included in net income. Although certain
changes in assets and liabilities, such as unrealized gains and losses on
available-for-sale securities, are reported as a separate component of the
equity section of the balance sheet, such items, along with net income, are
components of comprehensive income.

SEGMENT REPORTING: The Company is managed as one unit and does not have separate
operating segments.


                                       52
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)


NOTE 1.     SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS: Statement of Financial Accounting Standard
("SFAS") No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES,
as amended by SFAS 137 and 138 establishes accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. SFAS 133 requires that
changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate and assess the effectiveness of transactions
that receive hedge accounting. SFAS 133 is effective January 1, 2001. Management
believes that the adoption of this statement will have no effect on the
Company's financial statements.

SFAS 140, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENTS OF LIABILITIES, a replacement of SFAS 125, ACCOUNTING FOR
TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures, but it carries
over most of SFAS 125's provisions without reconsideration. SFAS 140 provides
consistent standards for distinguishing transfers of financial assets that are
sales from transfers that are secured borrowings. The provisions of SFAS 140 are
effective for transfers after March 31, 2001. It is effective for disclosures
about securitizations and collateral and for recognition and reclassification of
collateral for fiscal years ending after December 15, 2000. Management does not
believe implementation of this standard will have a material impact on the
Company's financial statements.

RECLASSIFICATIONS: Certain prior year amounts have been reclassified to conform
to the current year's presentation.


                                       53
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 2.     BUSINESS ACQUISITIONS AND DIVESTITURES

On February 8, 2001, the Company and its subsidiaries, Manufacturers National
Corporation and Manufacturers Bank, and FSL Holdings ("FSL") and its subsidiary,
First Savings & Loan Association of South Holland ("Association"), entered into
an Agreement and Plan of Merger pursuant to which Manufacturers National
Corporation will merge into FSL Holdings, which will survive the merger as a
wholly-owned subsidiary of the Company and each shareholder of FSL Holdings will
be paid $165 a share for each share of common stock held by such shareholder
(for an aggregate consideration of $41,305,275). The acquisition will be funded
through a combination of cash acquired through the acquisition and borrowings.

Consummation of the merger is subject to certain conditions, including certain
regulatory approvals of the merger agreement by the shareholders of FSL Holdings
and certain regulatory approvals. Subject to the foregoing conditions, the
merger currently is expected to occur in the second quarter of 2001.

On February 26, 1999, Coal City, the holding company for Manufacturers Bank, was
merged with and into Avondale, the holding company for Avondale Federal Savings
Bank ("Avondale merger"). The resulting entity was renamed MB Financial, Inc.
Simultaneously, Avondale Federal Savings Bank was merged into Manufacturers
Bank.

Since the Coal City stockholders owned more than 50% of the combined company,
the transaction was accounted for as a reverse acquisition using the purchase
method of accounting with Coal City being the accounting acquirer. As a result,
the post-merger historical financial statements of the combined company are Coal
City's as the accounting acquirer, and includes the operating results of
Avondale since the merger date. Total consideration based upon Avondale's shares
outstanding at the merger date times the estimated market value per share at the
merger announcement date, was $26.4 million plus $1.1 million of merger expenses
incurred by Coal City. Included in the purchase accounting adjustments was an
accrual of $4.4 million for merger related costs. The accrual included estimated
costs for termination of data processing contracts, professional fees, severance
and personnel related expenses and lease contracts. At December 31, 2000 and
1999, the remaining liability was approximately $68,000 and $975,000,
respectively, primarily for lease contracts and severance costs. The majority of
the remaining costs are scheduled to occur by the end of 2001.

The unaudited pro forma results of operation, which follow, assume that the
Avondale merger had occurred at January 1, 1998. In addition to combining the
historical results of operation of the companies, the pro forma calculations
include purchase accounting adjustments related to the acquisition. The pro
forma calculations do not include any anticipated cost savings as a result of
the merger.


                                       54
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 2.     BUSINESS ACQUISITIONS AND DIVESTITURES (CONTINUED)

Unaudited pro forma consolidated results of operation for the years ended
December 31, 1999 and 1998 are as follows (in thousands except earnings per
share data):

<TABLE>
<CAPTION>
                                               1999      1998
                                              -------   -------
<S>                                           <C>       <C>
Net interest income                           $43,057   $44,614
                                              =======   =======
Net income                                      8,222     1,115
                                              =======   =======
Net income available to common stockholders     8,222        30
                                              =======   =======
Basic earnings per common share               $  1.17   $  0.00
                                              =======   =======
Diluted earnings per common share             $  1.17   $  0.00
                                              =======   =======

</TABLE>

The pro forma results of operation are not necessarily indicative of the actual
results of operation that would have occurred had the Avondale merger actually
taken place at the beginning of the respective periods, or of results which may
occur in the future.

On January 28, 1998, the Company sold all of the issued and outstanding shares
of Coal City National Bank common stock for cash of $7,800,000. The net assets
of Coal City National Bank at January 28, 1998 were approximately $3,701,000.

NOTE 3.     RESTRICTIONS ON CASH AND DUE FROM BANKS

Manufacturers Bank is required to maintain reserve balances in cash or on
deposit with the Federal Reserve Bank, based on a percentage of deposits. The
total of those reserve balances was approximately $2,015,000 and $1,391,000 at
December 31, 2000 and 1999, respectively.


                                       55

<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 4.     INVESTMENT SECURITIES

Carrying amounts and fair values of securities available for sale are summarized
as follows:

<TABLE>
<CAPTION>
                                                            GROSS      GROSS
                                               AMORTIZED  UNREALIZED UNREALIZED    FAIR
AVAILABLE FOR SALE                               COST       GAINS     LOSSES       VALUE
                                               --------   --------   --------    --------
<S>                                            <C>        <C>        <C>         <C>

December 31, 2000:

U.S. Government agencies                       $ 85,044   $     98   $   (921)   $ 84,221
States and political subdivisions                 4,505        153         (8)      4,650
Mortgage-backed securities                       93,248        150       (941)     92,456
Corporate bonds                                  43,085        123     (3,959)     39,250
Other securities                                  1,088        192         --       1,280
Investments in equity lines of credit trusts     11,206         --         --      11,206
                                               --------   --------   --------    --------

    TOTALS                                     $238,176   $    716   $ (5,829)   $233,063
                                               ========   ========   ========    ========

December 31, 1999:

U.S. Government agencies                       $ 99,891   $     --   $ (2,200)   $ 97,691
States and political subdivisions                 5,164        202         --       5,366
Mortgage-backed securities                      120,114         --     (1,166)    118,948
Corporate bonds                                  43,092         --     (2,528)     40,564
Other securities                                    962         --         (4)        958
Investments in equity lines of credit trusts      7,786         --         --       7,786
                                               --------   --------   --------    --------
    TOTALS                                     $277,009   $    202   $ (5,898)   $271,313
                                               ========   ========   ========    ========

</TABLE>

Gross realized gains and losses from the sale of securities available for sale
are as follows:

<TABLE>
<CAPTION>
                         FOR THE YEARS ENDED DECEMBER 31,
                         --------------------------------
                             2000       1999     1998
                          ---------     -----    -----
<S>                       <C>           <C>      <C>
Realized gains            $     --      $  18    $ 169
Realized losses                 --        (17)      (2)
                          ---------     -----    -----
              NET GAINS   $     --      $   1    $ 167
                          =========     =====    =====

</TABLE>


                                       56
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)


NOTE 4.     INVESTMENT SECURITIES (CONTINUED)

The amortized cost and fair value of debt securities, as of December 31, 2000,
by contractual maturity are shown below. Maturities may differ from contractual
maturities in mortgage-backed securities because the mortgages underlying the
securities may be called or repaid without any penalties. Therefore, these
securities are not included in the maturity categories in the following maturity
summary.

<TABLE>
<CAPTION>

                                            AVAILABLE FOR SALE
                                            ------------------
                                           AMORTIZED      FAIR
                                             COST         VALUE
                                           --------     --------
<S>                                        <C>          <C>
Due in one year or less                    $ 61,878     $ 61,662
Due after one year through five years        29,541       29,637
Due after five years through ten years       16,455       16,185
Due after ten years                          37,054       33,123
Mortgage-backed securities                   93,248       92,456
                                           --------     --------

              TOTALS                       $238,176     $233,063
                                           ========     ========

</TABLE>

Securities with carrying amounts of $136,454,000 and $134,817,000 at December
31, 2000 and 1999, respectively, were pledged as collateral on public deposits
and for other purposes as required or permitted by law.

The Company, as a member of the Federal Home Loan Bank System, is required to
maintain an investment in capital stock of the Federal Home Loan Bank ("FHLB")
in an amount equal to the greatest of 1% of mortgage related assets, 5% of
outstanding FHLB advances or $500. Since there is no ready market for the stock
it is carried at cost.


                                       57
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 5.     LOANS

Loans consist of:

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                     ----------------------------
                                                                        2000             1999
                                                                     -----------      -----------
<S>                                                                  <C>              <C>

Manufacturers Bank - core business:
   Commercial                                                        $   474,451      $   341,728
   Commercial real estate                                                312,714          249,107
   Residential real estate                                               105,436          129,040
   Construction real estate                                               46,664           58,447
   Installment and other                                                  57,014           39,583
                                                                     -----------      -----------

Total Manufacturers Bank loans - core business                           996,279          817,905
                                                                     -----------      -----------

Acquired from Avondale Federal Savings Bank - non-core business:
   Residential real estate                                                12,589           14,593
   Credit scored mortgage loans                                           41,813           59,736
   Installment and other                                                   6,482           10,892
                                                                     -----------      -----------

Total Avondale Federal Savings Bank loans - non-core business             60,884           85,221
                                                                     -----------      -----------

Gross loans                                                            1,057,163          903,126

Allowance for loan losses                                                (13,837)         (12,197)
                                                                     -----------      -----------

    LOANS, NET                                                       $ 1,043,326      $   890,929
                                                                     ===========      ===========

</TABLE>

Loans are made to individuals as well as commercial and tax exempt entities.
Specific loan terms vary as to interest rate, repayment and collateral
requirements based on the type of loan requested and the credit worthiness of
the prospective borrower. Credit risk tends to be geographically concentrated in
that the majority of the loan customers are located in the market serviced by
Manufacturers Bank. At December 31, 2000 and 1999, commercial loans included
$245,212,000 and $186,895,000, respectively, of loans collateralized by
assignment of leases for various types of equipment.

Non-accrual loans were $5,381,000 and $10,701,000 at December 31, 2000 and 1999,
respectively. The reduction in interest income associated with loans on
non-accrual status was $1,316,000, $876,000 and $490,000 at December 31, 2000,
1999 and 1998, respectively.


                                       58
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 5.     LOANS (CONTINUED)

Information about impaired loans as of and for the years ended December 31, 2000
and 1999 are as follows:

<TABLE>
<CAPTION>

                                                             DECEMBER 31,
                                                             ------------
                                                     2000        1999        1998
                                                   --------    --------    -------
<S>                                                <C>         <C>         <C>

Loans for which there were related allowance
  for credit losses                                $  1,390    $  1,503    $ 2,263
Other impaired loans                                     --          41        --
                                                   --------    --------    -------

              TOTAL IMPAIRED LOANS                 $  1,390    $  1,544    $ 2,263
                                                   ========    ========    =======

Average monthly balance of impaired loans          $  1,823    $  2,088    $   290
Related allowance for credit losses                $     80    $    222    $   350
Interest income recognized on a cash basis         $    279    $    299    $   114

</TABLE>

Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>

                                                                            YEARS ENDED DECEMBER 31,
                                                                            ------------------------
                                                                          2000        1999        1998
                                                                        -------     -------     -------
<S>                                                                     <C>         <C>         <C>
Balance, beginning                                                      $12,197     $ 6,344     $ 7,922
   Decreases resulting from sale of subsidiary                               --          --        (399)
   Addition resulting from merger of Avondale Financial Corporation          --       9,489          --
   Provision for loan losses                                              3,090       1,260         750
   Charge-offs:
       Manufacturers Bank - core business                                   661       1,898       2,090
       Avondale Federal Savings Bank - non-core business                  2,314       3,600          --
                                                                        -------     -------     -------
    Total charge-offs                                                     2,975       5,498       2,090
                                                                        -------     -------     -------
    Recoveries:
       Manufacturers Bank - core business                                   496          45         161
       Avondale Federal Savings Bank - non-core business                  1,029         557          --
                                                                        -------     -------     -------
    Total recoveries                                                      1,525         602         161
                                                                        -------     -------     -------
    Net charge-offs                                                       1,450       4,896       1,929
                                                                        -------     -------     -------

Balance, ending                                                         $13,837     $12,197     $ 6,344
                                                                        =======     =======     =======

</TABLE>

Loans outstanding to executive officers and directors of Manufacturers Bank,
including companies in which they have management control or beneficial
ownership, at December 31, 2000 and 1999, were approximately $6,405,000 and
$2,297,000, respectively. In the opinion of management, these loans have similar
terms to other customer loans. An analysis of the activity related to these
loans for the year ended December 31, 2000 is as follows:

<TABLE>
<CAPTION>

<S>                                            <C>
Balance, beginning                             $ 2,297
   Additions                                     4,720
   Principal payments and other reductions        (612)
                                               -------

Balance, ending                                $ 6,405
                                               =======

</TABLE>


                                       59
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 6.     LEASE INVESTMENTS

The lease portfolio is made up of various types of equipment, general technology
related, such as computer systems, satellite equipment, and general
manufacturing equipment. The credit quality of the lessee generally must be in
one of the top four rating categories of Moody's or Standard & Poors, or the
equivalent. In most cases, during the early years of the lease, Manufacturers
Bank recognizes a loss on its investment due to funding costs, and as a lease
ages, a gain. Consequently, as Manufacturers Bank has built its leased equipment
portfolio, current earnings have been reduced. However, gains on leased
equipment periodically result when a lessee renews a lease or purchases the
equipment at the end of a lease, or the equipment is sold to a third party at a
profit. Individual lease transactions can, however, result in a loss. This
generally happens when, at the end of a lease, the lessee does not renew the
lease or purchase the equipment and the Company cannot realize the recorded
residual value. To mitigate this risk of loss, Manufacturers Bank usually limits
individual leased equipment residuals (expected lease book values at the end of
initial lease terms) to not exceed approximately $500 thousand in residuals per
transaction and seeks to diversify both the type of equipment leased and the
industries in which the lessees to whom such equipment is leased participate.

Lease investments by categories follow:

<TABLE>
<CAPTION>

                                               DECEMBER 31,
                                               ------------
                                            2000          1999
                                          --------      --------
<S>                                       <C>           <C>
Direct financing leases:
    Minimum lease payments receivable     $  1,925      $    250
    Estimated residual value                   297           288
    Less unearned lease income                (375)           (7)
                                          --------      --------
                                             1,847           531
                                          --------      --------
Operating leases:
   Equipment, at cost                       74,491        59,931
   Less accumulated depreciation           (30,994)      (22,428)
                                          --------      --------

                                            43,497        37,503
                                          --------      --------
   Lease investments, net                 $ 45,344      $ 38,034
                                          ========      ========

</TABLE>

The minimum lease payments receivable for direct financing leases and operating
leases are due as follows for the years ending December 31,:

<TABLE>
<CAPTION>

YEAR     DIRECT FINANCING       OPERATING
----     ----------------       ---------
<S>         <C>                  <C>
2001        $   700              $12,685
2002            700                9,122
2003            525                5,963
2004             --                3,784
2005             --                  490
2006             --                    4
            -------              -------
            $ 1,925              $32,048
            =======              =======

</TABLE>


                                       60
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 6.     LEASE INVESTMENTS (CONTINUED)

Income from lease investments is composed of:

<TABLE>
<CAPTION>

                                                                 YEARS ENDED DECEMBER 31,
                                                                 ------------------------
                                                            2000          1999          1998
                                                          --------      --------      --------
<S>                                                       <C>           <C>           <C>
Rental income on operating leases                         $ 13,333      $  9,255      $  8,051
Income from lease payments on direct financing leases           18            35            77
Gain on sale of leased equipment                               530             6           389
                                                          --------      --------      --------
Income on lease investments, gross                          13,881         9,296         8,517

Less:
   Write down of residual value of equipment                    --          (336)           --
   Depreciation on operating leases                        (11,955)       (8,236)       (7,099)
                                                          --------      --------      --------
Income from lease investments, net                        $  1,926      $    724      $  1,418
                                                          ========      ========      ========

</TABLE>

Lease investments are investments in equipment leased to other companies by
Manufacturers Bank. The Company has steadily grown its lease portfolio over the
past five years from virtually nothing to $45,344,000 at December 31, 2000.
Manufacturers Bank funds most of its lease equipment purchases itself, but has
some loans with other banks totaling $5,793,000 and $6,895,000 at December 2000
and 1999, respectively.

At December 31, 2000, the following schedule represents the residual values for
operating leases in the year initial lease terms end:


<TABLE>
<CAPTION>
END OF INITIAL LEASE TERMS      RESIDUAL VALUES
DECEMBER 31,
--------------------------      ---------------
<S>                               <C>
2000                              $    185
2001                                 2,066
2002                                   958
2003                                 1,238
2004                                 3,319
2005                                 3,166
2006                                    44
                                  --------
                                  $ 10,976
                                  ========

</TABLE>

There were approximately 136 operating lease schedules at December 31, 2000
compared to 115 at December 31, 1999. In addition, residual lease values for
operating leases were $10,976,000 and $9,300,000 at December 31, 2000 and
December 31, 1999, respectively, resulting in an average residual per lease
schedule of approximately $81,000 for both periods. Management monitors residual
values for possible impairments on a quarterly basis. For the year ended
December 31, 2000, the Company had approximately $530,000 in lease gains.
$386,000 of total lease gains related to equipment with residual values of
$453,000 that came to full term and was sold for $839,000. In addition, one
lease schedule that did not come to full term was purchased from the Company
creating a gain of $144,000.


                                       61
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 7.     INTEREST ONLY RECEIVABLES

In 1996, 1997 and 1998, Avondale Federal Savings Bank securitized and sold
certain home equity lines of credit to investors with limited recourse,
retaining the servicing rights to the underlying loans. Avondale Federal Savings
Bank received annual servicing fees and rights to future cash flows (interest
only receivables) arising after the investors in the securitization trusts
received their contractual return. In addition, Avondale Federal Savings Bank
retained a security interest in the investor trusts, reflecting the excess of
the total amount of loans transferred to the trusts over the portion represented
by certificates sold to investors. Through the Avondale merger the Company
acquired servicing rights related to these loans, the retained participation
interest in the investor trusts and interest only receivables. The annual
servicing fees received by the Company approximate 0.75% of the outstanding loan
balance and approximate the Company's cost to service the loans. The investors
and their securitization trusts have no recourse to the Company's other assets
for failure of debtors to pay when due. Most of the Company's retained interest
in the investor trusts is subordinate to investor's interest. The security
interest is included with investment securities available for sale and is
reflected as investments in equity lines of credit trusts.

At December 31, 2000 and 1999, interest only receivables were $10,538,000 and
$13,821,000, respectively. The value of interest only receivables is subject to
substantial credit, prepayment, and interest rate risk on the transferred
financial assets. On a quarterly basis, the Company performs a review to
determine the fair value of its interest only receivables, as these receivables
were accounted for as investment securities available for sale. As part of the
review, the Company reviews its assumptions of prepayment speeds, discount rates
and anticipated credit losses.

The following table shows the results of the Company's assumptions at December
31, 2000 and 1999 used in measuring its retained interest in the investor
trusts:

<TABLE>
<CAPTION>
                                                        INTEREST ONLY RECEIVABLES POOLS
                                                        -------------------------------
                                               96-1           97-1            97-2            98-1
                                          --------------  --------------  --------------  --------------
                                          Adjustable (1)  Adjustable (1)  Adjustable (1)  Adjustable (1)
                                          --------------  --------------  --------------  --------------
<S>                                       <C>             <C>             <C>             <C>

          AT DECEMBER 31, 2000
          --------------------
Estimated fair value                      $    2,867      $    2,477      $    2,294      $     2,900
Prepayment speed                               35.00%          35.00%          35.00%           35.00%
Remaining  weighted-average  life
  (in  years)(2)                                0.99            1.20            1.63             1.96

Expected remaining credit losses (3)            2.66%           5.21%           8.44%            7.05%
Residual cash flows discounted at              12.00%          12.00%          12.00%           12.00%
Loans outstanding at December 31, 2000    $   15,320      $   19,081      $   25,226      $    44,060

           AT DECEMBER 31, 1999
           --------------------
Estimated fair value                      $    2,636      $    2,578      $    4,059      $     4,548
Prepayment speed                               35.00%          37.00%          35.00%           32.00%
Remaining  weighted-average  life
  (in  years)(2)                                2.03            1.98            2.12             2.47

Expected remaining credit losses                5.08%           6.08%           6.30%            7.26%
Residual cash flows discounted at              12.00%          12.00%          12.00%           12.00%
Loans outstanding at December 31, 1999    $   23,068      $   28,272      $   39,631      $    68,451

</TABLE>

     (1)  Rates for these loans are adjusted based on the prime rate as
          published in the Wall Street Journal.

     (2)  The remaining weighted-average life in years of prepayable assets is
          calculated by summing (a) the principal collections expected in each
          future year multiplied by (b) the number of years until collection,
          and then dividing that sum by the initial principal balance. This is
          not explicitly assumed but it reflects the overall effect of
          prepayment assumptions.

     (3)  Remaining credit losses over the life remaining on the loans at
          December 31, 2000 are $407,000, $995,000, $2,128,000 and $3,108,000
          for Trusts 96-1, 97-1, 97-2 and 98-1, respectively. The estimated
          credit loss percentage is derived by dividing the remaining credit
          losses by the related loan balance outstanding in the pool.


                                       62
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 7.     INTEREST ONLY RECEIVABLES (CONTINUED)

The following presents the sensitivity of current fair values of residual cash
flows to immediate 10% and 20% adverse and favorable changes in assumptions used
in measuring the Company's retained interest in the investor trusts at December
31, 2000:

<TABLE>
<CAPTION>

                                                                       INTEREST ONLY RECEIVABLES POOLS
                                                                       -------------------------------
                                                           96-1          97-1         97-2         98-1        TOTAL
                                                         --------     --------     --------     --------     --------
<S>                                                      <C>          <C>          <C>          <C>          <C>
Estimated fair value                                     $  2,867     $  2,477     $  2,294     $  2,900     $ 10,538

Prepayment speed assumption (annual rate)                   35.00%       35.00%       35.00%       35.00%          --
       Impact on fair value of 10% adverse change             (16)         (32)         (84)        (220)        (352)
       Impact on fair value of 20% adverse change             (33)         (64)        (166)        (427)        (690)
       Impact on fair value of 10% favorable change            17           32           87          233          369
       Impact on fair value of 20% favorable change            33           64          177          479          753

Expected credit losses (annual rate)                         2.66%        5.21%        8.44%        7.05%          --
       Impact on fair value of 10% adverse change             (36)         (67)         (98)        (255)        (456)
       Impact on fair value of 20% adverse change             (72)        (133)        (193)        (510)        (908)
       Impact on fair value of 10% favorable change            37           67           99          254          457
       Impact on fair value of 20% favorable change            73          133          198          509          913

Residual cash flows discount rate (annual rate)             12.00%       12.00%       12.00%       12.00%          --
       Impact on fair value of 10% adverse change             (35)         (39)         (50)         (70)        (194)
       Impact on fair value of 20% adverse change             (70)         (76)         (99)        (137)        (382)
       Impact on fair value of 10% favorable change            36           39           52           72          199
       Impact on fair value of 20% favorable change            72           79          105          146          402

</TABLE>

These sensitivities are hypothetical and should be used with caution. As the
figures indicate, any change in fair value based on a 10% or 20% variation in
assumptions cannot be extrapolated because the relationship of the change in
assumption to the change in fair value is not linear. Also, in this table, the
effect of a variation in a particular assumption on the fair value of the
retained interest is calculated independent from any change in another
assumption; in reality, changes in one factor may result in changes in another,
which might magnify or counteract the sensitivities. Specifically, increased or
accelerated credit losses may increase prepayment speeds.

Changes in interest only receivables pools are summarized below for the years
ended December 31, 2000 and December 31, 1999:

<TABLE>
<CAPTION>

                                                     INTEREST ONLY RECEIVABLES POOLS
                                                     -------------------------------
                                                  96-1        97-1       97-2       98-1
                                                 -------    -------    -------    -------

<S>                                              <C>        <C>        <C>        <C>
Balance, December 31, 1998                       $    --    $    --    $    --    $    --
      Merger with Avondale Financial Corp.         2,544      2,864      4,113      4,488
      Cash flows                                      (5)       (84)       109       (465)
      Unrealized interest only receivables
        gains (losses) arising during the year        97       (202)      (163)       525
                                                 -------    -------    -------    -------
Balance, December 31, 1999                         2,636      2,578      4,059      4,548
      Cash flows                                     (91)      (482)    (1,357)      (963)
      Unrealized interest only receivables
        gains (losses) arising during the year       322        381        257       (375)

      Write-down in interest only
      receivables                                     --         --       (665)      (310)
                                                 -------    -------    -------    -------
Balance, December 31, 2000                       $ 2,867    $ 2,477    $ 2,294    $ 2,900
                                                 =======    =======    =======    =======

</TABLE>


                                       63
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 7.     INTEREST ONLY RECEIVABLES (CONTINUED)

The following presents quantitative information about delinquencies, net credit
losses, and components of securitized equity lines of credit and total managed
equity lines of credit:

<TABLE>
<CAPTION>

                                              TOTAL PRINCIPAL     PRINCIPAL AMOUNT OF
                                                  AMOUNT            LOANS 60 DAYS
                                                 OF LOANS         OR MORE PAST DUE (1)      NET CREDIT LOSSES
                                              AT DECEMBER 31,         AT DECEMBER 31,      DURING THE YEAR (2)
                                              ---------------         ---------------      -------------------
                                              2000       1999         2000       1999        2000     1999
                                           ---------  ----------    --------   --------     -------  -------
              INTEREST ONLY
            RECEIVABLES POOLS
            -----------------
<S>                                        <C>        <C>           <C>        <C>          <C>      <C>
                 96-1 (3)                  $  15,320  $   23,068    $    887   $  2,242     $   624  $   672
                 97-1 (3)                     19,081      28,272       1,260      3,484         999    1,081
                 97-2 (3)                     25,226      39,631       1,374      3,377       1,492    1,502
                 98-1 (3)                     44,060      68,451       2,365      4,097       2,246    2,384
                                           ---------  ----------    --------   --------     -------  -------
Total securitized equity lines of credit     103,687     159,422       5,886     13,200       5,361    5,639
Bank owned equity lines of credit             65,971      71,325       2,054      4,836         454    1,998
                                           ---------  ----------    --------   --------     -------  -------
Total managed equity lines of credit       $ 169,658  $  230,747    $  7,940   $ 18,036     $ 5,815  $ 7,737
                                           =========  ==========    ========   ========     =======  =======

</TABLE>

     (1)  Loans 60 days or more past due based upon end of period total loans.

     (2)  Net credit losses are net charge-offs for the year ended December 31,
          2000 and from the Avondale merger date for the year ended December 31,
          1999.

     (3)  Represents principal amount of loans underlying each securitization.

NOTE 8.     PREMISES AND EQUIPMENT

Premises and equipment consist of:

<TABLE>
<CAPTION>

                                   DECEMBER 31,
                                   ------------
                                2000        1999
                              --------    --------

<S>                           <C>         <C>
Land and land improvements    $  3,381    $  3,425
Buildings and improvements      11,351       9,516
Furniture and equipment          9,179       8,186
                              --------    --------
                                23,911      21,127
Accumulated depreciation        (8,446)     (5,823)
                              --------    --------

Premises and equipment, net   $ 15,465    $ 15,304
                              ========    ========

</TABLE>

Depreciation on premises and equipment totaled $2,642,000, $2,170,000 and
$1,817,000 for the years ended December 31, 2000, 1999 and 1998.


                                       64
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 9.     INTANGIBLES

Intangibles consist of the following as of December 31,:


<TABLE>
<CAPTION>
                                         2000
                           --------------------------------
                           CORE DEPOSIT  GOODWILL     TOTAL
                           ------------  --------     -----
<S>                          <C>         <C>         <C>
Cost                         $13,862     $17,195     $31,057
Accumulated amortization      11,597       4,994      16,591
                             -------     -------     -------
                             $ 2,265     $12,201     $14,466
                             =======     =======     =======
<CAPTION>
                                         1999
                           --------------------------------
                           CORE DEPOSIT  GOODWILL     TOTAL
                           ------------  --------     -----

Cost                         $13,862     $17,039     $30,901
Accumulated amortization      10,474       4,162      14,636
                             -------     -------     -------
                             $ 3,388     $12,877     $16,265
                             =======     =======     =======

</TABLE>

The amount included in deferred tax liabilities which pertains to the core
deposit intangible is approximately $792,000 and $1,186,000 at December 31, 2000
and 1999, respectively.

NOTE 10.     DEPOSITS

The composition of deposits is as follows:

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                                ------------
                                            2000            1999
                                         ----------     ----------
<S>                                      <C>            <C>
Demand deposits, noninterest bearing     $  157,237     $  145,059
NOW and money market accounts               179,324        167,012
Savings deposits                            131,025        150,126
Time certificates, $100,000 or more         313,181        192,132
Other time certificates                     288,497        281,746
                                         ----------     ----------
        TOTAL                            $1,069,264     $  936,075
                                         ==========     ==========

</TABLE>

At December 31, 2000, time certificates, $100,000 or more included $144,112,000
of brokerage deposits. There were no brokerage deposits at December 31, 1999.

At December 31, 2000, the scheduled maturities of time certificates are as
follows:

<TABLE>

<S>      <C>
2001     $ 462,371
2002       103,623
2003        16,819
2004        16,067
2005         2,798
         ---------
         $ 601,678
         =========

</TABLE>


                                       65
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 11.     SHORT-TERM BORROWINGS

Short-term borrowings consisted of:

<TABLE>
<CAPTION>

                                                                                DECEMBER 31,
                                                                                ------------
                                                                             2000         1999
                                                                           --------     --------
<S>                                                                        <C>          <C>
Federal funds purchased                                                    $ 30,425     $ 56,000
Securities sold under agreement to repurchase                                60,788       55,681
U.S. Treasury demand notes                                                    2,801        2,888
Federal Home Loan Bank advances due January 31, 2001, 6.88 fixed rate         5,000        5,000
Federal Home Loan Bank advances due February 28, 2001, 6.68 fixed rate       50,000       50,000
Federal Home Loan Bank advances due March 05, 2001, variable rate            20,000       20,000
Federal Home Loan Bank advances due April 26, 2001, variable rate            50,000       50,000
Federal Home Loan Bank advances due June 13, 2001, variable rate             20,000           --
Correspondent bank line of credit of $15.0 million                           10,600        5,000
                                                                           --------     --------
                                                                           $249,614     $244,569
                                                                           ========     ========

</TABLE>

Federal Home Loan Bank advances are fixed term except the advance due April 26,
2001 which is callable. The Federal Home Loan Bank advances are collateralized
by unpledged U.S. Treasury and U.S. Government agencies securities, first
mortgages of residential real estate and Federal Home Loan Bank stock.

NOTE 12.     LONG-TERM BORROWINGS

The Company had notes payable to banks totaling $5,793,000 and $6,895,000 at
December 31, 2000 and 1999 which accrue interest at rates ranging from 6.30% to
8.83% and require aggregate monthly payments of $374,965, including interest at
various dates through July 5, 2005. Equipment included in lease investments,
with a December 31, 2000 and 1999 depreciated cost of $8,128,000 and $8,813,000,
is pledged as collateral on these notes.

In July 1998, the Company issued $25,000,000 in floating rate Preferred Capital
Securities ("Capital Securities") through Coal City Capital Trust I ("Trust"), a
statutory business trust and wholly owned subsidiary of the Company. The Capital
Securities pay cumulative cash distributions quarterly at a rate per annum,
reset quarterly, equal to the 3-month LIBOR plus 180 basis points. The effective
rate at December 31, 2000 was 8.54%. Proceeds from the sale of the Capital
Securities were invested by the Trust in floating rate (3-month LIBOR plus 180
basis points, the three month LIBOR rate effective at December 31, 2000 was
6.74%) Junior Subordinated Deferrable Interest Debentures ("Debentures") issued
by the Company which represents all of the assets of the Trust. The Capital
Securities are subject to mandatory redemption, in whole or in part, upon
repayment of the Junior Subordinated Debentures at the stated maturity in the
year 2028 or their earlier redemption, in each case at a redemption price equal
to the aggregate liquidation preference of the Capital Securities plus any
accumulated and unpaid distributions thereon to the date of redemption. Prior
redemption is permitted under certain circumstances. At December 31, 2000 and
1999 $25,000,000 in Capital Securities were outstanding.


                                       66
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 12.     LONG-TERM BORROWINGS (CONTINUED)

At December 31, 2000 and 1999, the Company had advances from the Federal Home
Loan Bank of $803,000. The advances mature on June 8, 2003 and interest on the
advances is stated at 2.50%. Certain securities with a carrying amount of
approximately $564,000 were pledged as collateral for the Federal Home Loan Bank
advances, at December 31, 2000.

The principal payments are due as follows during the years ending December 31,

<TABLE>
<CAPTION>
                       AMOUNT
                     ----------
<S>                  <C>
2001                 $    2,741
2002                      1,415
2003                      1,707
2004                        586
2005                        147
Thereafter               25,000
                     ----------
                     $   31,596
                     ==========

</TABLE>

NOTE 13.     LEASE COMMITMENTS AND RENTAL EXPENSE

The Company leases office space for certain branch offices. The future minimum
annual rental commitments for these noncancelable leases and subleases of such
space are as follows:

<TABLE>
<CAPTION>

                                       NET
                                      RENTS
                                    --------

<S>                                 <C>
2001                                $  1,006
2002                                     658
2003                                     548
2004                                     523
2005                                     494
Thereafter                             1,536
                                    --------
                                    $  4,765
                                    ========

</TABLE>

Under the terms of these leases, the Company is required to pay its pro rata
share of the cost of maintenance and real estate taxes. Certain of these leases
also provide for increased rental payments based on increases in the Consumer
Price Index.

Net rental expense for the years ended December 31, 2000, 1999 and 1998 amounted
to $2,100,000, $1,800,000 and $483,000, respectively.


                                       67
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 14.     EMPLOYEE BENEFIT PLANS

The Company has a defined contribution 401(k) plan which covers all full-time
employees who have completed three months of service prior to the first day of
each month. The Company's contributions consist of a discretionary
profit-sharing contribution and a discretionary matching contribution of the
amounts contributed by the participants. The Company's contributions are
determined by the Board of Directors on an annual basis.

During 2000, the Company contributed on behalf of each participant a matching
contribution equal to 50% of each participant's contribution up to a maximum of
4% of their compensation along with a profit sharing contribution of 4% of total
compensation. Each participant under the plan may also contribute up to 15% of
his/her compensation on a pretax basis. The Company's contributions to the plan,
for the years ended December 31, 2000, 1999, and 1998, were $681,533, $320,200,
and $635,000, respectively. In addition, during 1999, the Company continued to
maintain the Avondale Federal Savings Bank 401(k) plan and contributed on behalf
of each participant under the Avondale Federal Savings Bank plan a matching
contribution equal to 50% for the first 2% of the participant's contribution and
25% for the next 4% of the participant's contribution up to a maximum of $500.
Each participant under the Avondale Federal Savings Bank plan, which was merged
into the Company's 401(k) plan on January 1, 2000, could also contribute 15% of
his/her compensation on a pretax basis. The Company's contribution to the
Avondale Federal Savings Bank plan for the year ended December 31, 1999 was
$109,500.

A supplemental/nonqualified retirement plan covers employees who hold the
position of vice president or higher. Contributions to the plan were $66,000,
$75,000 and $60,000 for the years ended December 31, 2000, 1999 and 1998,
respectively.

NOTE 15.     INCOME TAXES

The deferred taxes consist of:

<TABLE>
<CAPTION>

                                             DECEMBER 31,
                                             ------------
                                          2000          1999
                                        --------      --------
<S>                                     <C>           <C>
Deferred tax assets:
   Securities available for sale        $  1,789      $  1,994
   Allowance for loan losses               4,843         4,155
   Interest only receivables               1,805         1,203
   Deferred compensation                   1,019           998
   Accrued expenses                           24         1,078
   Net operating loss carryforwards        2,857         2,957
   Other items                               191           244
                                        --------      --------
                                          12,528        12,629
                                        --------      --------
Deferred tax liabilities:
   Securities discount accretion            (618)         (492)
   Loans                                    (262)         (360)
   Lease investments                      (2,826)       (2,588)
   Premises and equipment                 (1,106)         (143)
   Core deposit intangible                  (792)       (1,186)
   Interest only receivables                (295)          (90)
   Other items                              (395)         (284)
                                        --------      --------
                                          (6,294)       (5,143)
                                        --------      --------

           NET DEFERRED TAX ASSET       $  6,234      $  7,486
                                        ========      ========

</TABLE>

Net operating loss carryforwards were acquired through the Avondale merger and
expire in 2012.


                                       68
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 15.     INCOME TAXES (CONTINUED)

Income taxes consist of:

<TABLE>
<CAPTION>
                       YEARS ENDED DECEMBER 31,
                     ----------------------------
                      2000       1999       1998
                     ------     ------     ------
<S>                  <C>        <C>        <C>

Current expense:
   Federal           $4,089     $2,114     $3,351
   State                 --          6         96
                     ------     ------     ------
                      4,089      2,120      3,447
Deferred expense        842      2,692        158
                     ------     ------     ------
                     $4,931     $4,812     $3,605
                     ======     ======     ======

</TABLE>

The reconciliation between the statutory federal income tax rate and the
effective tax rate on consolidated income follows:

<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
                                               ------------------------------
                                               2000         1999         1998
                                               ----         ----         ----
<S>                                            <C>          <C>          <C>
Income tax at statutory rate                   35.0%        35.0%        35.0%
Increase (decrease) due to:
   Graduated tax rates                         (0.7)        (0.7)        (0.9)
   Tax exempt income                           (0.4)        (0.5)        (0.6)
   Nondeductible interest expense               0.1           --          0.1
   Nondeductible amortization                   1.8          1.9          3.5
   Nonincludable increase in cash
     surrender value of life insurance         (3.6)          --           --
   Other items, net                            (2.4)        (3.1)        (0.9)
                                               ----         ----         ----
Effective income tax rate                      29.8%        32.6%        36.2%
                                               ====         ====         ====

</TABLE>

NOTE 16.     COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ACTIVITIES

CREDIT-RELATED FINANCIAL INSTRUMENTS: The Company is a party to credit-related
financial instruments with off-balance-sheet risk in the normal course of
business to meet the financing needs of its customers. These financial
instruments include commitments to extend credit, standby letters of credit and
commercial letters of credit. Such commitments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in
the consolidated balance sheets.

The Company's exposure to credit loss is represented by the contractual amount
of these commitments. The Company follows the same credit policies in making
commitments as it does for on-balance-sheet instruments.

At December 31, 2000 and 1999, the following financial instruments were
outstanding whose contract amounts represent credit risk:

<TABLE>
<CAPTION>
                                                 CONTRACT AMOUNT
                                                2000         1999
                                               --------     --------
<S>                                            <C>          <C>
Commitments to grant loans                     $230,853     $189,898
Unfunded commitments under lines of credit       57,115       39,140
Commercial and standby letters of credit         19,375       13,949

</TABLE>


                                       69
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 16. COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ACTIVITIES (CONTINUED)

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require a payment of a fee. The commitments for equity lines of credit may
expire without being drawn upon. Therefore, the total commitment amounts do not
necessarily represent future cash requirements. The amount of collateral
obtained, if it is deemed necessary by the Company, is based on management's
credit evaluation of the customer.

Unfunded commitments under commercial lines-of-credit, revolving credit lines
and overdraft protection agreements are commitments for possible future
extensions of credit to existing customers. These lines-of-credit are
uncollateralized and unusually do not contain a specified maturity date and may
not be drawn upon to the total extent to which the Company is committed.

Commercial and standby letters of credit are conditional commitments issued by
the Company to guarantee the performance of a customer to a third party. Those
letters-of-credit are primarily issued to support public and private borrowing
arrangements. Essentially all letters of credit issued have expiration dates
within one year. The credit risk involved in issuing letters-of-credit is
essentially the same as that involved in extending loan facilities to customers.
The Company generally holds collateral supporting those commitments if deemed
necessary.

CONCENTRATIONS OF CREDIT RISK: The majority of the loans, commitments to extend
credit, and standby letters of credit have been granted to customers in the
Company's market area. Investments in securities issued by states and political
subdivisions also involve governmental entities within the Company's market
area. The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Standby letters of credit were granted
primarily to commercial borrowers.

CONTINGENCIES: In the normal course of business, the Company is involved in
various legal proceedings. In the opinion of management, any liability resulting
from such proceedings would not have a material adverse effect on the Company's
consolidated financial statements.

NOTE 17.     REGULATORY MATTERS

The Company's primary source of cash is dividends from Manufacturers Bank.
Manufacturers Bank is subject to certain restrictions on the amount of dividends
that it may declare without prior regulatory approval. The dividends declared
cannot be in excess of the amount which would cause Manufacturers Bank to fall
below the minimum required for capital adequacy purposes. Manufacturers Bank
also has an internal policy that dividends declared will not be in excess of the
amounts which would cause Manufacturers Bank to fall below the minimum required
to be categorized as well capitalized.

The Company and Manufacturers Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and additional
discretionary - actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company's and Manufacturers Bank's assets, liabilities, and certain
off-balance-sheet items are calculated under regulatory accounting practices.
The Company's and Manufacturers Bank's capital amounts and classification are
also subject to qualitative judgments by the regulators about components, risk
weightings, and other factors. Prompt corrective action provisions are not
applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy
require the Company and Manufacturers Bank to maintain minimum amounts and
ratios (set forth in the table below) of total and Tier 1 capital (as defined in
the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as
defined) to average assets (as defined). Management believes the Company and
Manufacturers Bank meet all capital adequacy requirements to which they are
subject as of December 31, 2000.


                                       70
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 17.     REGULATORY MATTERS (CONTINUED)

As of December 31, 2000, the most recent notification from the Federal Deposit
Insurance Corporation categorized Manufacturers Bank as well capitalized under
the regulatory framework for prompt corrective action. To be categorized as well
capitalized Manufacturers Bank must maintain the total risk-based, Tier 1
risk-based, and Tier 1 leverage ratios as set forth in the well capitalized
column in the table below. There are no conditions or events since that
notification that management believes have changed Manufacturers Bank's
categories.

The required and actual amounts and ratios for the Company and Manufacturers
Bank 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
                                              ------       -----      ------        -----    ------       -----
<S>                                          <C>            <C>      <C>             <C>     <C>          <C>

As of December 31, 2000
Total capital (to risk-weighted assets):
       MB Financial, Inc.                    $ 119,682      9.60%     $   99,749      8.00%   $   N/A        N/A%
       Manufacturers Bank                      129,342     10.38          99,675      8.00     124,593     10.00
Tier 1 capital (to risk-weighted assets):
       MB Financial, Inc.                      105,845      8.49          49,874      4.00         N/A       N/A
       Manufacturers Bank                      115,505      9.27          49,837      4.00      74,756      6.00
Tier 1 capital (to average assets):
       MB Financial, Inc.                      105,845      7.38          57,365      4.00         N/A       N/A
       Manufacturers Bank                      115,505      8.06          57,304      4.00      71,630      5.00

As of December 31, 1999
Total capital (to risk-weighted assets):
       MB Financial, Inc.                      105,291     10.01          84,134      8.00         N/A       N/A
       Manufacturers Bank                      108,506     10.34          83,978      8.00     104,972     10.00
Tier 1 capital (to risk-weighted assets):
       MB Financial, Inc.                       93,094      8.85          42,067      4.00         N/A       N/A
       Manufacturers Bank                       96,309      9.17          41,989      4.00      62,983      6.00
Tier 1 capital (to average assets):
       MB Financial, Inc.                       93,094      7.47          49,841      4.00         N/A       N/A
       Manufacturers Bank                       96,309      7.74          49,797      4.00      62,246      5.00

</TABLE>

N/A - not applicable


                                       71
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 18.     FAIR VALUE INFORMATION

Fair values of financial instruments are management's estimate of the values at
which the instruments could be exchanged in a transaction between willing
parties. These estimates are subjective and may vary significantly from amounts
that would be realized in actual transactions. In addition, other significant
assets are not considered financial assets including deferred tax assets,
premises and equipment and intangibles. Further, the tax ramifications related
to the realization of the unrealized gains and losses can have a significant
effect on the fair value estimates and have not been considered in any of the
estimates.

The following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments:

      CASH AND SHORT-TERM INVESTMENTS: The carrying amounts reported in the
      balance sheet for cash and due from banks, other interest bearing deposits
      and federal funds sold approximate their fair values.

      SECURITIES AVAILABLE FOR SALE: Fair values for securities are based on
      quoted market prices, where available. If quoted prices are not available,
      fair values are based on quoted market prices of comparable instruments.

      STOCK IN FEDERAL HOME LOAN BANK: No ready market exists for the stock, and
      it has no quoted market value. The stock is redeemable at par; therefore;
      fair value equals cost.

      LOANS: Most commercial loans, and some real estate mortgage loans, are
      made on a variable rate basis. For those variable-rate loans that reprice
      frequently, and with no significant change in credit risk, fair values are
      based on carrying values. The fair values for fixed rate and all other
      loans are estimated using discounted cash flow analyses, using interest
      rates currently being offered for loans with similar terms to borrowers
      with similar credit quality.

      INTEREST ONLY RECEIVABLES: For interest-only receivables, cash flows are
      projected over the life of the securitized loans using prepayment,
      delinquency, default and interest rate assumptions that market
      participants would use for similar financial instruments subject to
      prepayment, credit and interest rate risk. These cash flows are then
      discounted using an interest rate that a purchaser unrelated to the seller
      of such financial instruments would demand.

      DEPOSIT LIABILITIES: The fair values disclosed for deposits with no
      defined maturities are equal to their carrying amounts, which represent
      the amount payable on demand. The carrying amounts for variable-rate,
      fixed-term money market accounts and certificates of deposit approximate
      their fair value at the reporting date. Fair values for fixed-rate
      certificates of deposit are estimated using a discounted cash flow
      calculation that applies interest rates currently being offered on
      certificates to a schedule of aggregated expected monthly maturities on
      time deposits.

      SHORT-TERM BORROWINGS: The carrying amounts of federal funds purchased,
      borrowings under repurchase agreements and other short-term borrowings
      approximate their fair values.

      LONG-TERM BORROWINGS: The fair values of the Company's long-term
      borrowings (other than deposits) are estimated using discounted cash flow
      analyses, based on the Company's current incremental borrowing rates for
      similar types of borrowing arrangements.

      ACCRUED INTEREST PAYABLE AND RECEIVABLE: The carrying amounts of accrued
      interest approximate their fair values.

      OFF-BALANCE-SHEET INSTRUMENTS: Fair values for the Company's
      off-balance-sheet lending commitments (guarantees, letters of credit and
      commitments to extend credit) are based on fees currently charged to enter
      into similar agreements, taking into account the remaining terms of the
      agreements and the counterparties' credit standing.


                                       72
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 18.     FAIR VALUE INFORMATION AND INTEREST RATE RISK (CONTINUED)

The estimated fair value of financial instruments is as follows:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                                  ------------
                                                        2000                           1999
                                                        ----                           ----
                                                CARRYING                     CARRYING
                                                 AMOUNT       FAIR VALUE      AMOUNT         FAIR VALUE
                                                 ------       ----------      ------         ----------
<S>                                            <C>            <C>            <C>            <C>

Financial Assets
   Cash and due from banks                     $   31,989     $   31,989     $   29,420     $   29,420
   Other interest bearing deposits                  2,300          2,300          1,487          1,487
   Securities available for sale                  233,063        233,063        271,313        271,313
   Stock in Federal Home Loan Bank                  7,290          7,290          6,290          6,290
   Loans                                        1,043,326      1,040,785        890,929        889,869
   Accrued interest receivable                     10,298         10,298          8,146          8,146
   Interest only receivables                       10,538         10,538         13,821         13,821

Financial Liabilities
   Deposits                                     1,069,264      1,069,464        936,075        931,016
   Short-term borrowings                          249,614        249,614        244,569        244,569
   Long-term borrowings                            31,596         31,596         32,698         32,649
   Accrued interest payable                         5,645          5,645          2,461          2,461

Off-balance-sheet instruments,
   loan commitments and standby letters of
   credit                                              --             --             --             --

</TABLE>

NOTE 19.     STOCK OPTION PLAN

Through the Avondale merger, the Company adopted the Omnibus Incentive Plan of
Avondale (the "Plan") which was established in 1997 and modified February 10,
1999. Options outstanding under the Company's previous plan adopted in 1995 were
transferred to the Plan with the number of options and exercise prices being
converted using a ratio of 83.5 to 1. The Plan reserves 1,000,000 shares of
common stock for issuance to key employees of the Company or any of its
subsidiaries. A grant under the Plan may be options intended to be incentive
stock options ("ISO"), non-qualified stock options ("NQSO"), stock appreciation
rights or restricted stock. A committee, appointed by the Board of Directors,
administers the Plan.


                                       73
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 19.     STOCK OPTION PLAN (CONTINUED)

Options granted under the Plan may be exercised at such times and be subject to
such restrictions and conditions as the committee shall in each instance
approve, which may not be the same for each grant. Each option granted shall
expire at such time as the committee shall determine at the time of grant;
provided, however, that no option shall be exercisable later than the fifteenth
anniversary date of its grant (ten years if an ISO). The option price for each
grant of an option shall be determined by the committee, provided that the
option price shall not be less than 100% of the fair market value of a share on
the date the option is granted. In the event any holder of 10% or more of the
shares is granted an incentive stock option, the option price shall not be less
than 110% of the fair market value of a share on the date of grant. At December
31, 2000 and 1999, there were 841,767 and 748,434, respectively, outstanding
options under the Plan. There were no stock appreciation rights or restricted
shares outstanding as of December 31, 2000 and 1999.

Other pertinent information related to the Plan options is as follows:

<TABLE>
<CAPTION>

                                                       DECEMBER 31,
                                     -----------------------------------------------
                                             2000                      1999
                                     ---------------------     ---------------------
                                                  WEIGHTED                  WEIGHTED
                                                  AVERAGE                   AVERAGE
                                                  EXERCISE                  EXERCISE
                                     SHARES        PRICE       SHARES        PRICE
                                     -------     ---------     -------     ---------
<S>                                  <C>         <C>           <C>         <C>
Outstanding at beginning of year     748,434     $   14.66     133,016     $   11.46
Granted                              202,621         12.24     207,990         13.60
Exercised                                 --            --          --            --
Forfeited                            109,288         14.97      15,600         13.60
Options acquired through merger           --            --     423,028         16.15
                                     -------     ---------     -------     ---------
Outstanding at end of year           841,767     $   14.04     748,434     $   14.66
                                     =======     =========     =======     =========
Exercisable at end of year           536,004     $   14.76     564,656     $   14.98
                                     =======     =========     =======     =========
Weighted average fair value per
    option of options granted
    during the year                 $   6.56                $    7.70
                                    ========                =========

</TABLE>


                                       74
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 19.     STOCK OPTION PLAN (CONTINUED)

The following table presents certain information with respect to stock options
granted:

<TABLE>
<CAPTION>
                                    OPTIONS OUTSTANDING AND EXERCISABLE
                                    -----------------------------------
                                           WEIGHTED AVERAGE   WEIGHTED AVERAGE
                                NUMBER        REMAINING           EXERCISE
Range of Exercise Prices     OUTSTANDING   CONTRACTUAL LIFE         PRICE
------------------------     -----------   ----------------         -----
<S>      <C>                   <C>             <C>               <C>
$10.36 - $12.93                158,928         7.10              $ 11.53
$13.25 - $14.38                236,843         4.45                14.28
$16.00 - $17.38                 51,871         3.45                17.10
$19.35 - $22.28                 88,362         3.16                20.51

</TABLE>

As permitted under generally accepted accounting principles, grants under the
plan are accounted for following the provisions of APB Opinion No. 25 and its
related interpretations. Accordingly, no compensation cost has been recognized
for grants made to date. Had compensation cost been determined based on the fair
value method prescribed in FASB Statement No. 123, reported net income and
earnings per common share would have been reduced to the pro forma amounts shown
below:

<TABLE>
<CAPTION>
                                                 DECEMBER 31,
                                        -----------------------------
                                          2000        1999      1998
                                        --------    -------   -------
<S>                                     <C>         <C>       <C>

Net income
   As reported                          $ 11,605    $ 9,954   $ 6,255
   Pro forma                              11,192      9,270     6,105
Basic earnings per common share
   As reported                          $   1.64    $  1.51   $  1.26
   Pro forma                                1.58       1.41      1.23
Diluted earnings per common share
   As reported                          $   1.64    $  1.51   $  1.25
   Pro forma                                1.58       1.41      1.22

</TABLE>

In determining the pro forma amounts above, the value of each grant is estimated
at the grant date using the binomial method, with the following weighted-average
assumptions for December 31, 2000, December 31, 1999 and December 31, 1998,
respectively: risk-free interest rate of 6.0%, 6.2% and 6.2% and an expected
price volatility of 31%, 37% and 37%. Weighted average assumptions for all years
presented were 0% for the dividend rate and 10 years for the expected life.


                                       75
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 20.     CONDENSED PARENT COMPANY FINANCIAL INFORMATION

The condensed financial statements of MB Financial, Inc. (parent company only)
are presented below:

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                         DECEMBER 31,
                                                         ------------
                                                     2000          1999
                                                   --------     --------
ASSETS
<S>                                                <C>          <C>
Cash                                               $    408     $  1,274
Investments in subsidiaries                         125,060      106,553
Other assets                                          2,222        1,863
                                                   --------     --------
    TOTAL ASSETS                                   $127,690     $109,690
                                                   ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings                              $ 10,600     $  5,000
Long-term borrowings                                 25,000       25,000
Liabilities, other                                      349          312
Stockholders' equity                                 91,741       79,378
                                                   --------     --------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $127,690     $109,690
                                                   ========     ========

</TABLE>

                              STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                             YEARS ENDED DECEMBER 31,
                                                             ------------------------
                                                         2000          1999          1998
                                                       --------      --------      --------
<S>                                                    <C>           <C>           <C>
Dividends from subsidiaries                            $  1,100      $  1,000      $  2,888
Interest and other income                                    --            --         4,660
Interest and other expense                               (3,292)       (2,411)       (1,902)
                                                       --------      --------      --------
    INCOME (LOSS) BEFORE INCOME TAX EXPENSE
      (CREDITS) AND EQUITY IN UNDISTRIBUTED
      NET INCOME OF SUBSIDIARIES                         (2,192)       (1,411)        5,646
Income tax expense (credits)                             (1,204)         (921)          870
                                                       --------      --------      --------
    INCOME (LOSS) BEFORE EQUITY IN UNDISTRIBUTED
      NET INCOME OF SUBSIDIARIES                           (988)         (490)        4,776
Equity in undistributed net income of subsidiaries       12,593        10,444         1,479
                                                       --------      --------      --------

    NET INCOME                                         $ 11,605      $  9,954      $  6,255
                                                       ========      ========      ========

</TABLE>


                                       76
<PAGE>

MB FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLE AMOUNTS IN THOUSANDS EXCEPT COMMON SHARE DATA)

NOTE 20.     CONDENSED PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                                     ------------------------
                                                                   2000        1999        1998
                                                                 --------    --------    --------
<S>                                                              <C>         <C>         <C>

Cash Flows From Operating Activities
  Net income                                                     $ 11,605    $  9,954    $  6,255
  Adjustments to reconcile net income to net cash (used in)
    operating activities:
  Depreciation and amortization                                      (248)       (214)          1
  Equity in undistributed net income of subsidiaries              (12,593)    (10,444)     (1,479)
  Gain on sale of Coal City National Bank                              --          --      (4,099)
  Change in other assets and other liabilities                        (74)        (59)     (1,358)
                                                                 --------    --------    --------
    NET CASH (USED IN) OPERATING ACTIVITIES                        (1,310)       (763)       (680)
                                                                 --------    --------    --------

  Cash Flows From Investing Activities
  Sale of interest in grantor trust                                    --          --         309
  Cash received from subsidiary for preferred stock redemption         --          --       2,000
  Purchase of minority interests                                     (156)         --      (2,328)
  Proceeds from sale of Coal City National Bank                        --          --       7,800
  Cash received from Avondale Merger                                   --         359          --
                                                                 --------    --------    --------
    NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES              (156)        359       7,781
                                                                 --------    --------    --------
Cash Flows From Financing Activities
  Purchase and retirement of common stock                              --          (1)       (659)
  Purchase and retirement of preferred stock                           --          --     (10,200)
  Dividends paid                                                       --          --      (1,085)
  Contributed capital in excess of par to subsidiary               (5,000)         --          --
  Proceeds from short-term borrowings                               5,600       5,000          --
  Proceeds from long-term borrowings                                   --       1,000      28,700
  Principal paid on long-term borrowings                               --      (4,500)    (24,009)
                                                                 --------    --------    --------
    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES               600       1,499      (7,253)
                                                                 --------    --------    --------
    NET INCREASE (DECREASE) IN CASH                                  (866)      1,095        (152)

Cash:
  Beginning                                                         1,274         179         331
                                                                 --------    --------    --------
  Ending                                                         $    408    $  1,274    $    179
                                                                 ========    ========    ========

</TABLE>


                                       77
<PAGE>

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

     None

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     DIRECTORS - The information with respect to Directors set forth under
"Directors and Executive Management" up to the sub-caption "Executive Officers"
in the Company's proxy statement for its 2001 Annual Meeting of Stockholders
("Proxy Statement") is incorporated herein by reference.

     EXECUTIVE OFFICERS - The information with respect to Executive Officers set
forth under the sub-caption "Executive Officers" under "Directors and Executive
Management" in the Proxy Statement is incorporated herein by reference.

     Compliance with Section 16(a) of the Exchange Act - The information set
forth under the sub-caption "Section 16(a) Beneficial Ownership Reporting
Compliance" under "Directors and Executive Management" in the Proxy Statement is
incorporated herein by reference.


ITEM 11.      EXECUTIVE COMPENSATION

     The information set forth under "Directors and Executive Management" in
the Proxy Statement following the sub-caption "Meetings and Committees of the
Board of Directors" up to the sub-caption "Certain Transactions" (excluding
the sub-caption "Section 16(a) Beneficial Ownership Reporting Compliance") is
incorporated herein by reference.

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information set forth under the caption "Voting Securities and Certain
Holders Thereof" in the Proxy Statement is incorporated herein by reference.

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information set forth under the sub-caption "Certain Transactions"
under "Directors and Executive Management" in the Proxy Statement is
incorporated herein by reference.


                                       78
<PAGE>

                                     PART IV

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

     (a).1 Financial Statements:  See Part II--Item 8. Financial Statements and
             Supplementary Data

     (a).2 Financial Statement Schedule.

     (a).3 Exhibits:  See Item 14(c).

     (b) Reports on Form 8-K:  None

     (c) Exhibits:


<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
 ------                           -----------
<S>      <C>
2.1      Agreement and Plan of Merger, dated as of October 12, 1998, by and
         between Avondale Financial Corp. ("Avondale") and Coal City Corporation
         (incorporated by reference to Exhibit 2 to Current Report on Form 8-K
         of MB Financial, Inc. (the "Company") filed with the Securities and
         Exchange Commission on October 16, 1998 (No. 0-24566)). The Company
         hereby agrees to furnish supplementally to the Commission, upon
         request, copies of any schedule to such agreement.

2.2      Agreement and Plan of Merger, dated February 8, 2001, by and among the
         Company, Manufacturers National Corporation, Manufacturers Bank, FSL
         Holdings, Inc. and First Savings & Loan Association of South Holland.
         The Company hereby agrees to furnish supplementally to the Commission,
         upon request, copies of any schedule to such agreement.

3.1      Certificate of Incorporation of the Company (incorporated by reference
         to Exhibit 3.1 to Registration Statement on Form S-1 of the Company
         (No. 33-80774))

3.2      Certificate of Merger of Avondale and Coal City Corporation
         (incorporated by reference to Exhibit 3(i) to the Current Report on
         Form 8-K of the Company dated February 26, 1999 (No. 0-24566))

3.3      Certificate of Amendment of Certificate of Incorporation of the Company
         (incorporated by reference to Exhibit 3(ii) to the Current Report on
         Form 8-K of the Company dated February 26, 1999 (No. 0-24566))

3.4      Bylaws of the Company (incorporated by reference to Exhibit 3.2 to
         Registration Statement on Form S-1 of the Company (No. 33-80774))

3.5      Amendment to the Bylaws of the Company (incorporated by reference to
         Exhibit 3(iii) to the Current Report on Form 8-K of the Company dated
         February 26, 1999 (No. 0-24566))

4.1      Specimen Common Stock Certificate

4.2      The Company hereby agrees to furnish to the Commission, upon request,
         the instruments defining the rights of the holders of each issue of
         long-term debt of the Company and its consolidated subsidiaries.
</TABLE>

                                       79
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                           DESCRIPTION
 ------                           -----------
<S>      <C>
10.1     Employment Agreement between the Company and Robert S. Engelman, Jr.
         (incorporated by reference to Exhibit 10.2 to the Registration
         Statement on Form S-4 of the Company (No. 333-70017))

10.2     Form of Change of Control Severance Agreement between Manufacturers
         Bank and Thomas Panos and Others (incorporated by reference to pages
         A-24 to A-27 of the Company's Definitive Proxy Statement for its 1999
         Annual Meeting of Stockholders (No. 0-24566))

10.3     Form of Change in Control Severance Agreement between Manufacturers
         Bank and Howard A. Jaffe (incorporated by reference to Exhibit 10.4 to
         the Registration Statement on Form S-4 of the Company (No. 333-70017))

10.4     Form of Employment Agreement between the Company and Mitchell Feiger
         (incorporated by reference to Exhibit 10.5 to the Registration
         Statement on Form S-4 of the Company (No. 333-70017)

10.5     Form of Employment Agreement between the Company and Burton Field
         (incorporated by reference to Exhibit 10.5 to the Company's Annual
         Report on Form 10-K for the year ended December 31, 2000 (No. 0-24566))

10.6     1995 Stock Option and Incentive Plan (incorporated by reference to
         Exhibit 4.3 to the Registration Statement on Form S-8 of the Company
         (No. 33-98860))

10.7     Recognition and Retention Plan (incorporated by reference to Exhibit
         4.3 to the Registration Statement on Form S-8 of the Company (No.
         33-98862))

10.8     Avondale Federal Savings Bank 401(k) Plan (incorporated by reference to
         Exhibit 4.3 to the Registration Statement on Form S-8 of the Company
         (No. 333-4592))

10.9     Unfunded Deferred Compensation Plan for Directors and Executive
         Officers (incorporated by reference to Exhibit 99 to Avondale Financial
         Corp.'s Annual Report on Form 10-K for the year ended December 31, 1995
         (No. 0-24566))

10.10    Omnibus Plan (incorporated by reference to Exhibit 10.1 to the
         Company's Annual Report on Form 10-K for the year ended December 31,
         1996 (No. 0-24566))

10.11    Supplemental Executive Retirement Plan Agreement (incorporated by
         reference to Exhibit 10.2 to Avondale's Annual Report on Form 10-K for
         the year ended December 31, 1996 (No. 0-24566))

21       Subsidiaries

23       Consent of McGladrey & Pullen, LLP

24       Power of Attorney executed by directors and certain officers of the
         Company

</TABLE>

(d)      The financial statement schedules are filed (as a separate section of
         this report).


                                       80
<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 HEREUNTO DULY AUTHORIZED.

MB FINANCIAL, INC.
(registrant)

By:     /s/  Mitchell Feiger
        ---------------------
        Mitchell Feiger
        President and Chief Executive Officer
        (Principal Executive Officer)

Date:  March 21, 2001

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.

<TABLE>
<CAPTION>
              SIGNATURE                                      TITLE
              ---------                                      -----
<S>                                     <C>                                                         <C>

/s/   Mitchell Feiger                   Director, President and Chief Executive Officer
----------------------------------       (Principal Executive Officer), March 21, 2001
       MITCHELL FEIGER


/s/   Jill E. York                            Vice President and Chief Financial Officer
----------------------------------      (Principal Financial Officer and Principal Accounting
       JILL E. YORK                                   Officer), March 21, 2001

/s/   Robert S. Engelman, Jr. *          Director                                                   )  March 21, 2001
----------------------------------                                                                  )
       ROBERT S. ENGELMAN, JR.                                                                      )
                                                                                                    )
/s/   R. Thomas Eiff *                   Director                                                   )
----------------------------------                                                                  )
       R. THOMAS EIFF                                                                               )
                                                                                                    )
/s/   Alfred Feiger *                    Director                                                   )
----------------------------------                                                                  )
       ALFRED FEIGER                                                                                )
                                                                                                    )
/s/   Burton J. Field *                  Director                                                   )
----------------------------------                                                                  )
       BURTON J. FIELD                                                                              )
                                                                                                    )
/s/   Lawrence E. Gilford *              Director                                                   )
----------------------------------                                                                  )
       LAWRENCE E. GILFORD                                                                          )
                                                                                                    )
/s/   Richard I. Gilford *               Director                                                   )
----------------------------------                                                                  )
       RICHARD I. GILFORD                                                                           )
                                                                                                    )
/s/   David L. Husman *                  Director                                                   )
----------------------------------                                                                  )
       DAVID L. HUSMAN                                                                              )
                                                                                                    )
/s/   Arthur L. Knight, Jr. *            Director                                                   )
----------------------------------                                                                  )
       ARTHUR L. KNIGHT, JR.                                                                        )
                                                                                                    )
/s/   Peter G. Krivkovich *              Director                                                   )
----------------------------------                                                                  )
       PETER G. KRIVKOVICH                                                                          )
                                                                                                    )
/s/   Clarence Mann *                    Director                                                   )
----------------------------------                                                                  )
       CLARENCE MANN                                                                                )
                                                                                                    )
/s/   Hipolito Roldan *                  Director                                                   )
----------------------------------                                                                  )
       HIPOLITO ROLDAN                                                                              )
                                                                                                    )
*By:  /s/ Mitchell Feiger                Individually and Attorney-in-Fact                          )

</TABLE>


                                       81
<PAGE>

                       MB FINANCIAL, INC. AND SUBSIDIARIES

                                    FORM 10-K

                      FOR THE YEAR ENDED DECEMBER 31, 2000

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

 EXHIBITS                                                                 PAGE
 --------                                                                 ----
<S>           <C>                                                          <C>
    2.2       Agreement and Plan of Merger, dated February 8, 2001
                by and among the Company, Manufacturers National
                Corporation, Manufacturers Bank, FSL Holdings, Inc.
                and First Savings & Loan Association of South
                Holland                                                     83
   4.1        Specimen Common Stock Certificate                            134
   21         Subsidiaries of the Company                                  135
   23         Consent of Independent Accountants                           136
   24         Power of Attorney executed by the directors and certain
               officers of the Company                                     137

</TABLE>


                                       82