SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1997

                               PARK BANCORP, INC.
             (Exact name of registrant as specified in its charter)

                                    DELAWARE
                            (State of incorporation)

                                   36-4082530
                        (IRS Employer Identification No.)

                   5400 SOUTH PULASKI ROAD, CHICAGO, ILLINOIS
                    (Address of Principal Executive Offices)

                                      60632
                                   (ZIP Code)

                                 (773) 582-8616
              (Registrant's telephone number, including area code)

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

                                      None.

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

                    COMMON STOCK, $0.01, PAR VALUE PER SHARE
                              (Title of each 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 the Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The  aggregate  market value of the voting stock of the  Registrant  held by  
non-affiliates  was  approximately  $42,203,066  as of March 13, 1998.

As of March 13, 1998, the Registrant had outstanding  2,332,649 shares of common
stock.


                       DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the definitive Proxy Statement for the Registrant's  Annual
Meeting of  Stockholders  to be held on April 21, 1998.  Incorporated  into Part
III.

                                       1


<PAGE>


                                     PART I


ITEM 1.       BUSINESS

Park Bancorp,  Inc. (the  "Company")  is a bank holding  company  engaged in the
business of banking through its  wholly-owned  subsidiary,  Park Federal Savings
Bank (the "Bank").  The Bank is engaged in the business of retail banking,  with
operations conducted through its main office and two branches located in Chicago
and Westmont, Illinois.

All table amounts throughout the Form 10-K are in thousands except share and per
share data.

GENERAL

On August 9, 1996,  Park  Federal  Savings Bank (the  "Bank")  converted  from a
federally  chartered mutual savings bank to a federally  chartered stock savings
bank (the "Conversion").  In connection with the Conversion, the Bank issued all
of its common stock to the Company and concurrently the Company issued 2,701,441
shares  of  common  stock  at  $10.00  per  share.  As part  of the  Conversion,
approximately  50% of the net proceeds,  or $13.5 million,  was used to purchase
the common stock of the Bank.

The  Bank  attracts  retail  deposits  from  the  general  public  in  the  area
surrounding  its  offices  and  invests  those  deposits,  together  with  funds
generated   from   operations,   primarily  in   fixed-rate   one-to-four-family
residential mortgage loans and securities. The Bank invests, on a limited basis,
in  multi-family  mortgage,  commercial  real estate,  construction,  land,  and
consumer loans. The Bank's revenues are derived principally from interest on its
mortgage loans and interest and dividends on its securities.  The Bank's primary
sources  of funds are  deposits,  advances  from the  Federal  Home  Loan  Bank,
securities sold under repurchase agreements, and principal and interest payments
from loans and  securities.  The Bank also  engages in real  estate  development
activities through its subsidiary. The Bank's investment in real estate held for
development  totaled $2.3 million, or 1.3% of total assets at December 31, 1997.
During 1997, the Bank continued sales of its primary development  project,  Rose
Hill Farm,  and  completed  development  and began  sales  efforts of its latest
project,  Prairie  Ridge.  During the years ended  December 31, 1997,  1996, and
1995, the Bank recorded income of $276,000, $60,000, and $523,000, respectively,
related to real estate development.

MARKET AREA AND COMPETITION

The Bank is a  community-oriented  savings  bank.  The  Bank's  primary  deposit
gathering area is concentrated in the communities surrounding its offices, while
its lending activities primarily include areas throughout Cook, DuPage, and Will
counties.

The Bank's market area is both an urban and suburban area with the manufacturing
industry as the major industrial  group,  followed by the services  sector,  and
then the  wholesale/retail  sector.  The Bank's  Chicago  offices are located in
diverse  communities which have a high percentage of customers of various ethnic
backgrounds.  Management  of the Bank believes  that its urban  communities  are
stable,   residential   neighborhoods   of   predominantly    one-to-four-

                                       2


<PAGE>


family residences, and low to middle income families. The Bank's Westmont office
is located in DuPage  County  which  consists  predominantly  of middle to upper
income families.

The Bank does not formally track real estate value or construction starts in its
primary  market area;  however,  the officers and directors of the Bank maintain
relationships  with area contractors and real estate agents which enable them to
continually monitor the trends in housing  construction and real estate sales in
its primary  market area.  In addition,  the Bank  obtains  information  on real
estate  sales on a weekly  basis  through  the  publication  of public  records.
Management is not aware of any material  adverse trends in real estate values in
its market area.

The Bank's  primary  market area is a highly  competitive  market for  financial
services and the Bank faces significant  competition both in making loans and in
attracting deposits. The Bank faces direct competition from a significant number
of financial  institutions  operating in its market area, many with a state-wide
or regional  presence,  and in some cases,  a national  presence.  Many of these
financial  institutions  are  significantly  larger and have  greater  financial
resources than the Bank. The Bank's competition for loans comes principally from
savings  institutions,  mortgage  banking  companies,  and commercial  banks. In
addition, the Bank faces increasing competition for deposits and other financial
products  from  nonbank  institutions  such as  brokerage  firms  and  insurance
companies  in such  areas  as  short-term  money  market  funds,  corporate  and
government  securities funds, mutual funds, and annuities.  Competition may also
increase as a result of the lifting of restrictions on the interstate operations
of financial institutions.

LENDING ACTIVITIES

Loan  Portfolio  Composition.  The Bank's loan portfolio  consists  primarily of
conventional first mortgage loans secured by one-to-four-family  residences.  At
December 31, 1997, the Bank had total gross loans  outstanding of $70.2 million,
of which $55.6 million were  one-to-four-family  residential  mortgage loans, or
79.2% of the Bank's total gross loans.  The remainder of the portfolio  consists
of $7.9 million of  multi-family  mortgage loans, or 11.3% of total gross loans;
$1.8 million of commercial real estate loans, or 2.5% of total gross loans; $3.4
million of  construction  and land  loans,  or 4.9% of total  gross  loans;  and
consumer  loans of $1.5 million,  or 2.1% of total gross loans.  At December 31,
1997,  90.0% of the Bank's loan portfolio had fixed interest rates. The Bank had
no loans held for sale at December 31, 1997.

The types of loans that the Bank may  originate are subject to federal and state
laws and  regulations.  Interest rates charged by the Bank on loans are affected
by the  demand  for such  loans,  the  supply  of money  available  for  lending
purposes,  and the rates  offered by  competitors.  These  factors are, in turn,
affected by, among other things,  economic  conditions,  fiscal  policies of the
federal  government,  the monetary  policies of the Federal  Reserve Board,  and
legislative tax policies.

                                       3


<PAGE>
<TABLE>
<CAPTION>

The following  table sets forth the  composition of the Bank's loan portfolio in
dollar amounts and as a percentage of the portfolio at the dates indicated.

                           -------------------------------------------------------AT DECEMBER 31,-----------------------------------
                           --------1997--------  --------1996---------  --------1995--------  -------1994--------- ---------1993----
                                       Percent                 Percent               Percent              Percent            Percent
                             Amount   of Total      Amount    of Total   Amount     of Total   Amount    of Total   Amount  of Total
                             ------   --------      ------    --------   ------     --------   ------    --------   ------   -------

<S>                       <C>       <C>         <C>          <C>      <C>          <C>       <C>        <C>      <C>       <C>

Real estate
    Residential
       One-to-four-
         family            $ 55,634      79.24%    $ 53,757    78.88%  $ 48,577      77.42%  $ 44,655     75.88%  $ 45,786    77.34%
       Multi-family           7,860      11.19        8,168    11.99      6,163       9.82      5,907     10.04      7,483    12.64
    Commercial                1,794       2.56        1,716     2.52      1,750       2.79      1,426      2.42        774     1.31
    Construction and
      land                    3,421       4.87        3,284     4.82      5,133       8.18      6,038     10.26      4,213     7.12
Consumer                      1,501       2.14        1,223     1.79      1,179       1.79        825      1.40        942     1.59
                            -------    -------      -------   ------    -------    -------    -------   -------    -------  -------

    Total loans, gross       70,210     100.00%      68,148   100.00%    62,742     100.00%    58,851    100.00%    59,198   100.00%
                                        ======              ========               =======              =======             =======

Undisbursed loan
  funds                      (1,042)                 (1,043)             (1,148)               (1,493)              (1,633)
Unamortized
  discounts, net                 (4)                     (8)                (23)                  (51)                 (86)
Deferred loan
  origination fees             (337)                   (418)               (460)                 (474)                (533)
Allowance for
 loan losses                   (500)                   (500)               (573)                  (275)               (250)
                           --------                --------              -------            ---------              --------

    Total loans, net       $ 68,327                $ 66,179             $ 60,538             $ 56,558             $ 56,696
                           ========                ========             ========            =========              ========

</TABLE>

                                       4


<PAGE>
<TABLE>
<CAPTION>

Loan  Maturity.  The  following  table shows the  contractual  maturity of
the Bank's gross loans at December 31,  1997.  The table does not include
principal prepayments.

                                      One-to-                              Construction                  Total
                                       Four-       Multi-                       and                      Loans
                                      Family       Family     Commercial       Land       Consumer    Receivable
                                   ----------  -----------   -----------  -------------  ----------  -----------

<S>                                <C>          <C>          <C>           <C>          <C>          <C>

Amounts due
    One year or less                $     583    $        -   $      320   $    1,833   $      300   $    3,036

    After one year
       More than one year
         to three years                   610            85          308        1,483          655        3,141
       More than three years
         to five years                  2,146            36           64          105          179        2,530
       More than five years
         to ten years                   7,878           934          685            -           54        9,551
       More than ten years
         to twenty years               12,256         3,944          380            -          313       16,893
       More than twenty years          32,161         2,861           37            -            -       35,059
                                    ---------    ----------   ----------   ----------   ----------   ----------

          Total due after
            December 31, 1998          55,051         7,860        1,474        1,588        1,201       67,174
                                    ---------    ----------   ----------   ----------   ----------   ----------

              Gross loans
                receivable          $  55,634    $    7,860   $    1,794   $    3,421   $    1,501   $   70,210
                                    =========    ==========   ==========   ==========   ==========   ==========
</TABLE>
<TABLE>
<CAPTION>

The  following  table sets forth at December 31, 1997 the dollar amount of total
gross loans  receivable  contractually  due after  December 31, 1998 and whether
such loans have fixed interest rates or adjustable interest rates.

                                                  ------Due After December 31, 1998---
                                                      Fixed     Adjustable     Total
                                                  ----------   -----------   ---------

<S>                                              <C>         <C>           <C>

    Real estate loans
       Residential
          One-to-four-family                      $   48,374   $    6,677   $   55,051
          Multi-family                                 7,860            -        7,860
       Commercial                                      1,437           37        1,474
       Construction and land                           1,588            -        1,588
    Consumer                                             888          313        1,201
                                                  ----------   ----------   ----------

       Total gross loans receivable               $   60,147   $    7,027   $   67,174
                                                  ==========   ==========   ==========

</TABLE>

Origination and Purchase of Loans.  The Bank's mortgage  lending  activities are
conducted through its home office and two branch offices.  Although the Bank may
originate adjustable-rate mortgage loans, the substantial majority of the Banks'
loan originations are fixed-rate mortgage loans. The Bank's ability to originate
loans  is  dependent  upon  the  relative  customer  demand  for  fixed-rate  or
adjustable-rate  mortgage  loans,  which is affected by the current and expected
future level of interest rates.  While the Bank retains for its portfolio all of
the  mortgage  loans  that it  originates,  the Bank may,  in the  future,  sell
mortgage  loans  that it  originates  depending  on  market  conditions  and the
financial  condition  of the Bank.  At December  31,  1997,  there were no loans
categorized as held for sale. In addition, the Bank also originates construction
loans.  

                                       5


<PAGE>


From time to time, the Bank has purchased loans or participated in loans
originated  by other  institutions  based upon the Banks'  investment  needs and
market opportunities.

The  following  table sets forth the Bank's loan  originations,  purchases,  and
principal repayments for the periods indicated:

<TABLE>
<CAPTION>

                                                         ---For the Year Ended December 31,---
                                                            1997         1996        1995
                                                            ----         ----        ----

<S>                                                    <C>          <C>          <C>

    Gross loans
       Beginning balance                               $   68,148   $   62,742   $   58,851
          Loans originated
              One-to-four-family                            8,382       14,305       11,571
              Multi-family                                  2,958        3,076        1,104
              Commercial                                      488          290        1,767
              Construction and land                         5,932        6,001        5,484
              Consumer                                        217          415          674
                                                       ----------   ----------   ----------
                 Total loans originated                    17,977       24,087       20,600
          Loans purchased                                     538          118          182
                                                       ----------   ----------   ----------
                                                           18,515       24,205       20,782

       Principal prepayments                              (18,208)     (20,677)     (19,142)
       Transfer to REO                                       (129)        (269)           -
       Change in undisbursed loan funds                         1          105          345
       Change in allowance for loan losses                      -           73         (298)
                                                       ----------   ----------   ----------

          Ending balance, net                          $   68,327   $   66,179   $   60,538
                                                       ==========   ==========   ==========

</TABLE>

ONE-TO-FOUR-FAMILY  MORTGAGE LENDING.  The Bank offers mortgage loans secured by
one-to-four-family  residences  located in the Bank's primary market area.  Loan
originations  are obtained by the Bank's loan  officers and their  contacts with
the local real estate industry,  existing or past customers,  and members of the
local communities.

The Bank's policy is to originate one-to-four-family  residential mortgage loans
in amounts up to 80% of the lower of the appraised value or the selling price of
the property  securing the loan and up to 95% of the appraised  value or selling
price if private mortgage insurance is obtained.  The residential mortgage loans
originated  by the Bank are for  maturity  terms of up to 30 years.  The maximum
one-to-four-family  loan amount is $350,000,  unless  otherwise  approved by the
Board of Directors.

The Bank  offers ARM loans as a means of  reducing  its  exposure  to changes in
interest  rates,  however,  the volume and types of ARM loans  originated by the
Bank have been affected by such market  factors as the level of interest  rates,
competition,  consumer  preferences,  and the  availability  of funds. In recent
years, the Bank has not originated a significant amount of ARM loans as compared
to its  originations of fixed-rate  loans. ARM loans pose credit risks different
from the risks inherent in fixed rate loans, primarily because as interest rates
rise,  the  underlying  payments of the borrower  rise,  thereby  increasing the
potential  for  default.  The ARM loans  offered by the Bank do not  provide for
initial deep discount "teaser"  interest rates.  Although the Bank will continue
to offer ARM loans,  there can be no assurance  that in the future the Bank will
be  able  to  originate  a  sufficient  volume  of ARM  loans  to  constitute  a
significant portion of the Bank's loan portfolio.

                                       6


<PAGE>


MULTI-FAMILY LENDING. The Bank originates multi-family mortgage loans secured by
properties located in the Bank's primary market area. The amount of multi-family
loans originated by the Bank depends upon market conditions.

In  reaching  its  decision  on whether to make a  multi-family  loan,  the Bank
considers  a number  of  factors  including:  the net  operating  income  of the
mortgaged premises before debt service and depreciation;  the debt service ratio
(the  ratio of net  operating  income  to debt  service);  and the ratio of loan
amount to appraised value. Pursuant to the Bank's current underwriting policies,
a multi-family mortgage loan may be made in an amount up to 80% of the appraised
value of the underlying  property.  In addition,  the Bank generally  requires a
debt  service  ratio  of  120%.  Properties  securing  a  multi-family  loan are
appraised by an independent appraiser. Title and property insurance are required
on all multi-family loans.

When  evaluating a  multi-family  loan,  the Bank also  considers  the financial
resources and income level of the borrower,  the borrower's experience in owning
or  managing  similar  property,  and the  Bank's  lending  experience  with the
borrower.  The Bank's underwriting policies require that the borrower be able to
demonstrate  strong  management  skills and the ability to maintain the property
for current rental income.  The borrower is required to present  evidence of the
ability to repay the mortgage and a satisfactory  credit history.  In making its
assessment  of the  creditworthiness  of the  borrower,  the  Bank  reviews  the
financial  statements  and the  employment and credit history of the borrower as
well as other related documentation.

Loans secured by multi-family residential properties generally involve a greater
degree of risk  than  one-to-four-family  residential  mortgage  loans.  Because
payments on loans  secured by  multi-family  properties  are often  dependent on
successful  operation or management of the  properties,  repayment of such loans
may be subject  to a greater  extent to adverse  conditions  in the real  estate
market or the  economy.  The Bank seeks to  minimize  these  risks  through  its
underwriting  policies,  which require such loans to be qualified at origination
on the basis of the property's income and debt coverage ratio.

The Bank's largest  multi-family loan at December 31, 1997 had an outstanding  
balance of $711,000 and was secured by a 48-unit building which is current as to
the repayment of principal and interest.

COMMERCIAL  REAL  ESTATE  LENDING.  On a  limited  basis,  the  Bank  originates
commercial  real estate loans that are generally  secured by properties used for
business purposes such as small office buildings or retail facilities located in
its  primary  market  area.  The Bank's  underwriting  procedures  provide  that
commercial  real estate  loans may be made in amounts up to the lesser of 80% of
the appraised value of the property or the sales price. The Bank's  underwriting
standards and  procedures  are similar to those  applicable to its  multi-family
loans,  whereby the Bank considers the net operating  income of the property and
the  borrower's  expertise,  credit  history,  and  profitability.  The Bank has
generally  required that the properties  securing  commercial  real estate loans
have debt service coverage ratios of at least 120%. The largest  commercial real
estate loan in the Bank's  portfolio  at December  31, 1997 was $195,000 and was
secured by commercial  retail  property.  The loan was current and performing in
accordance with its contractual terms at December 31, 1997.

                                       7


<PAGE>


Loans secured by commercial real estate properties, like multi-family loans, are
generally  larger and involve a greater  degree of risk than  one-to-four-family
residential mortgage loans. Because payments on loans secured by commercial real
estate  properties are often dependent on successful  operation or management of
the  properties,  repayment  of such loans may be  subject to a great  extent to
adverse  conditions in the real estate market or the economy.  The Bank seeks to
minimize  these risks  through its  underwriting  standards,  which require such
loans to be  qualified  on the basis of the  property's  income and debt service
ratio.

CONSTRUCTION  AND  LAND  LENDING.  The  Bank  originates  construction  and land
development loans to contractors and individuals in its primary market area. The
Bank's  construction loans primarily are made to finance real estate development
and the construction of one-to-four-family  residential properties.  These loans
are  primarily  fixed-rate  loans with  maturities  of three years or less.  The
Bank's policies provide that construction loans may be made in amounts up to 80%
of the appraised value of the property for  construction  of  one-to-four-family
residences.  These loans  typically  have terms of less than one year.  The Bank
requires an independent  appraisal of the property.  Loan proceeds are disbursed
in increments as construction  progresses and as inspections  warrant.  The Bank
requires regular inspections to monitor the progress of construction. Land loans
are determined on an individual  basis,  but generally they do not exceed 75% of
the actual cost or current  appraised value of the property,  whichever is less.
The largest  construction  and land loan in the Bank's portfolio at December 31,
1997 had a balance of $376,000.  This loan is currently performing in accordance
with its terms.

Construction  and land  financing is  considered  to involve a higher  degree of
credit risk than long-term  financing on improved,  owner-occupied  real estate.
Risk of loss on a  construction  loan is dependent  largely upon the accuracy of
the initial  estimate of the property's  value at completion of  construction or
development compared to the estimated cost (including interest) of construction.
If the estimate of value  proves to be  inaccurate,  the Bank may be  confronted
with a project,  when completed,  having a value which is insufficient to assure
full repayment.

CONSUMER AND OTHER  LENDING.  The Bank's  originated  consumer  loans  generally
consist  of  automobile  loans,  second  mortgage  loans,  and loans  secured by
deposits.

The Bank from time to time purchases  one-to-four-family mortgage loans and loan
participations from other financial  institutions in its primary market area. At
December 31, 1997,  the Bank had $1.2  million in purchased  mortgage  loans and
loan  participations  serviced  by  others,  totaling  1.7%  of the  total  loan
portfolio at that date, primarily secured by one-to-four-family  residences. The
Bank may  purchase  loans to  supplement  reduced loan demand as needed and must
meet the same underwriting criteria as loans originated by the Bank.

LOAN APPROVAL PROCEDURES AND AUTHORITY.  The Board of Directors  establishes the
lending policies of the Bank and delegates lending authority and  responsibility
to the Executive Committee,  a management committee of the Bank. All real estate
loans must be approved by the  Executive  Committee  or the Board of  Directors.
Loans of  $350,000  or more must have Board  ratification  prior to  commitment.
Pursuant  to Office  of Thrift  Supervision  ("OTS")  regulations,  loans to one
borrower cannot exceed 15% of the Bank's unimpaired  capital and surplus without
regulatory  notification.  The Bank has no  loans  to one  borrower  that are in
excess of regulatory limits.

                                       8


<PAGE>


DELINQUENCIES AND CLASSIFIED  ASSETS.  The Board of Directors performs a monthly
review  of all  delinquent  loans  sixty  days or more past  due.  In  addition,
management reviews on an ongoing basis all loans thirty or more days delinquent.
The procedures taken by the Bank with respect to delinquencies vary depending on
the nature of the loan and period of delinquency.  When a borrower fails to make
a  required  payment  on a loan,  the Bank  takes a number  of steps to have the
borrower cure the delinquency  and restore the loan to current status.  The Bank
sends the borrower a written  notice of nonpayment  after the loan is first past
due. If the loan is not brought current and it becomes necessary for the Bank to
take legal  action,  which occurs after a loan is delinquent at least 60 days or
more, the Bank will commence  foreclosure  proceedings against any real property
that secures the loan. If a foreclosure action is instituted and the loan is not
brought current,  paid in full, or refinanced  before the foreclosure  sale, the
real property securing the loan is foreclosed upon and sold.

Federal regulations and the Bank's  Classification of Assets Policy require that
the Bank utilize an internal asset classification system as a means of reporting
problem and potential problem assets. The Bank has incorporated the OTS internal
asset  classifications  as a part of its  credit  monitoring  system.  The  Bank
currently  classifies  problem and potential  problem  assets as  "Substandard",
"Doubtful",  or "Loss" assets,  depending  upon the severity of the  delinquency
status or repayment  capacity of the borrower.  The  likelihood of collection on
the loan declines with each classification,  and assets classified as "Loss" are
those considered "uncollectible" and of such little value that their continuance
as  assets  without  the  establishment  of a  specific  loss  allowance  is not
warranted.  Assets  which do not  currently  expose the insured  institution  to
sufficient  risk  to  warrant   classification  in  one  of  the  aforementioned
categories  but  possess  weaknesses  are  required  to be  designated  "Special
Mention".

The Bank's Executive  Committee reviews and classifies the Bank's assets monthly
and  reports  the  results  of its  review to the Board of  Directors.  The bank
classifies assets in accordance with the management  guidelines described above.
Real Estate Owned (REO) is  classified as  "Substandard".  At December 31, 1997,
the Bank had $348,000 of assets  classified as "Special  Mention" and $60,000 of
assets classifies as  "Substandard".  No assets were classified as "Doubtful" or
"Loss".

Non-Accrual  and Past-Due  Loans.  The  following  table sets forth  information
regarding  nonaccrual loans,  troubled-debt  restructurings,  and REO. It is the
policy of the Bank to cease accruing interest on loans 90 days or more past due.
For the years ended December 31, 1997, 1996, 1995, 1994, and 1993, respectively,
the amount of interest  income  that would have been  recognized  on  nonaccrual
loans  if  such  loans  had  continued  to  perform  in  accordance  with  their
contractual  terms  was  $20,000,   $13,000,   $83,000,  $33,000,  and  $16,000,
respectively, none of which was recognized.

                                       9


<PAGE>
<TABLE>
<CAPTION>


                                      -----------------------------At December 31,--------------------------
                                          1997          1996           1995           1994            1993
                                          ----          ----           ----           ----            ----

<S>                                   <C>           <C>            <C>           <C>              <C>

Nonaccrual loans
     Residential real estate
         One-to-four-family           $    241       $     93       $    416       $    603        $   303
         Multi-family                       99            190             71             67              -
     Commercial                              -              -            430              -              -
     Construction and land                   -              -              -              -              -
     Consumer                                8             16              -             18             18
                                      --------       --------       --------       --------        -------
Total nonperforming loans                  348            299            917            688            321
REO                                         60             60             50             50            157
                                      --------       --------       --------       --------        -------

Total nonperforming assets            $    408       $    359       $    967       $    738       $    478
                                      ========       ========       ========       ========        =======

Allowance for loan losses
  as a percent of gross loans
  receivable                              0.71%          0.73%          0.91%          0.47%          0.42%

Allowance for loan losses as
  a percent of total
  nonperforming loans(1)                143.68         167.22          62.49          39.97          77.88

Nonperforming loans as
  a percent of gross loans
  receivable(1)                           0.50           0.44           1.46           1.17           0.54

Nonperforming assets as
  a percent of total assets(1)            0.23           0.20           0.61           0.51           0.35

<FN>
(1)  Nonperforming  assets consist of nonperforming  loans and REO.  
     Nonperforming loans consist of all loans 90 days or more past due and 
     all other nonaccrual loans.
</FN>
</TABLE>

Allowance for Loan Losses. The allowance for loan losses is established  through
a  provision  for loan  losses  based on  management's  evaluation  of the risks
inherent in the loan portfolio, its classifications of individual loans, and the
general  economy.  The  allowance  for loan  losses is  maintained  at an amount
management  considers  adequate to cover  estimated  losses in loans  receivable
which are deemed probable and estimable. The allowance is based upon a number of
factors,  including  current economic  conditions,  actual loss experience,  and
industry trends. In addition,  various regulatory agencies,  as an integral part
of their examination process,  periodically review the Bank's allowance for loan
losses.  Such agencies may require the Bank to make  additional  provisions  for
loan losses based upon information available at the time of the review. The Bank
will  continue to monitor and modify the allowance for loan losses as conditions
dictate.

                                       10


<PAGE>
<TABLE>
<CAPTION>

The following table sets forth activity in the Bank's  allowance for loan losses
for the period set forth in the table.

                                      -------------------------Year Ended December 31,------------------------
                                          1997          1996           1995           1994            1993
                                          ----          ----           ----           ----            ----

<S>                                   <C>            <C>            <C>              <C>          <C>

Balance at beginning
  of period                            $    500      $    573       $    275      $     250       $     175
Provision for loan losses                     -             -            298             48             140
Charge-offs
     Real estate
         One-to-four-family                   -             -              -            (23)              -
         Multi-family                         -           (73)             -              -               -
         Construction and land                -             -              -              -             (65)
     Consumer                                 -             -              -              -               -
                                      ---------     ---------     ----------    -----------       ---------
         Total                                -           (73)             -            (23)            (65)
Recoveries                                    -             -              -              -               -
                                      ---------     ---------     ----------    -----------       ---------

Balance at end of period              $     500      $    500       $    573      $     275        $    250
                                      =========     =========     ==========    ===========       =========

Net charge-offs to average
  gross loans outstanding                     -          0.12%             -           0.04%           0.11%

</TABLE>

                                       11


<PAGE>
<TABLE>
<CAPTION>

The following table sets forth  delinquencies in the Bank's loan portfolio 
as of the dates indicated.


                           -------------------At December 31, 1997---------      ---------------At December 31, 1996---------------
                                  60-89 DAYS               90 DAYS OR MORE(1)          60-89 DAYS             90 DAYS OR MORE(1)

                                      Principal                Principal                     Principal                    Principal
                            Number     Balance      Number      Balance           Number      Balance      Number          Balance
                           of Loans   of Loans     of Loans    of Loans          of Loans    of Loans     of Loans        of Loans
                           --------   --------     --------    --------          --------    --------     --------        --------

<S>                       <C>        <C>          <C>         <C>               <C>         <C>          <C>            <C>

One-to-four-family               5   $    310            4    $    241                6      $    344         2          $    93
Multi-family                     -          -            1          99                -             -         2              190
Commercial                       -          -            -           -                2           209         -                -
Construction and land            -          -            -           -                -             -         -                -
Consumer                         -          -            2           8                -             -         2               16
                          ---------  ---------    ---------    --------         ---------    --------     --------        --------

     Total                       5   $    310            7    $    348                8      $    553         6          $   299
                          =========  =========    =========    ========         =========    ========     ========        ========

Delinquent loans to
  total gross loans                      0.44%                    0.50%                          0.81%                      0.44%
                                     =========                 ========                      ========                     ========


<CAPTION>

                           -------------------At December 31, 1997---------      ---------------At December 31, 1996---------------
                                  60-89 DAYS               90 DAYS OR MORE(1)          60-89 DAYS             90 DAYS OR MORE(1)

                                      Principal                Principal                     Principal                    Principal
                            Number     Balance      Number      Balance           Number      Balance      Number          Balance
                           of Loans   of Loans     of Loans    of Loans          of Loans    of Loans     of Loans        of Loans
                           --------   --------     --------    --------          --------    --------     --------        --------

<S>                       <C>         <C>        <C>          <C>               <C>          <C>         <C>            <C>

One-to-four-family               3    $   391           5      $    416              4        $   214          6          $   603
Multi-family                     -          -           1            71              -              -          1               67
Commercial                       -          -           2           430              -              -          -                -
Construction and land            -          -           -             -              -              -          -                -
Consumer                         2          9           -             -              -              -          2               18
                          ---------  ---------    ---------    --------         ---------    --------     --------        --------

     Total                       5    $   400           8      $    917              4        $   214          9    $         688
                          =========  =========    =========    ========         =========    ========     ========        ========

Delinquent loans to
  total gross loans                      0.64%                     1.46%                         0.36%                       1.17%
                                     =========                 ========                      ========                     ========


<FN>
(1) Loans 90 days or more past due are included in nonaccrual loans.
</FN>
</TABLE>

                                       12


<PAGE>
<TABLE>
<CAPTION>


The  following  table sets forth the  amount of the  Bank's  allowance  for loan
losses,  the percent of allowance  for loan losses to total  allowance,  and the
percent of gross loans to total gross loans in each of the categories  listed at
the dates indicated.


                 ------------------------------------------At December 31,-------------------------------------------

                 ------------1997--------------     ------------1996--------------  -------------1995--------------- 
                                     Percent of                         Percent of                       Percent of  
                                        Gross                              Gross                            Gross    
                                      Loans in                           Loans in                         Loans in   
                                        Each                               Each                             Each     
                           Percent of Category               Percent of  Category             Percent of  Category   
                           Allowance  to Total                Allowance  to Total              Allowance  to Total   
                           to Total     Gross                 to Total     Gross               to Total     Gross    
                 Amount    Allowance    Loans       Amount    Allowance    Loans     Amount    Allowance    Loans    
                 ------    ---------    -----       ------    ---------    -----     ------    ---------    -----

<S>             <C>        <C>        <C>          <C>       <C>         <C>        <C>       <C>         <C>

One-to-four-
  family         $    278     55.60%    79.24%     $     269    53.80%     78.88%   $     245    42.76%     77.42%   
Multi-family           79     15.80     11.19             82    16.40      11.99          135    23.56       9.82    
Commercial             36      7.20      2.56             35     7.00       2.52           35     6.11       2.79    
Construction
  and land             68     13.60      4.87             65    13.00       4.82          103    17.98       8.18    
Consumer                4      0.80      2.14              6     1.20       1.79           17     2.96       1.79    
Unallocated            35      7.00        -              43     8.60          -           38     6.63         -     
                 --------  --------    -----       ---------  -------    -------    ---------  -------    -------    

   Total
     allowance
     for loan
     losses      $    500    100.00%   100.00%     $     500   100.00%    100.00%   $     573   100.00%    100.00%   
                 ========   =======   =======      =========  =======    =======    =========  =======    =======    

<CAPTION>

                         ----------------------At December 31,-----------------------------
                                                                
                         ---------------1994--------------   ------------1993--------------
                                              Percent of                       Percent of
                                                   Gross                            Gross  
                                                Loans in                         Loans in 
                                                    Each                             Each   
                                    Percent of  Category             Percent of  Category 
                                    Allowance   to Total             Allowance   to Total 
                                    to Total       Gross             to Total       Gross  
                          Amount    Allowance      Loans    Amount   Allowance      Loans  
                          ------    ---------      -----    ------   ---------      -----

<S>                   <C>           <C>       <C>        <C>        <C>       <C>

One-to-four-
  family                $     112    40.73%     75.88%   $     115    46.00%       77.34% 
Multi-family                   30    10.91      10.04           38    15.20        12.64  
Commercial                     15     5.45       2.42            8     3.20         1.31  
Construction
  and land                     61    22.18      10.26           43    17.20         7.12  
Consumer                       17     6.18       1.40           19     7.60         1.59  
Unallocated                    40    14.55         -            27    10.80           -   
                        ---------  -------     -------    ---------  -------      ------- 

   Total
     allowance
     for loan
     losses             $     275   100.00%    100.00%   $     250   100.00%      100.00% 
                        =========  =======    =======    =========  =======       =======  

</TABLE>

                                       13


<PAGE>


REAL ESTATE OWNED

At December 31, 1997,  the Bank had $60,000 of REO.  This  consisted of a single
family lot, which was appraised at $60,000.  If the Bank acquires any REO, it is
initially  recorded  at fair value less costs to sell,  and  thereafter,  REO is
recorded at the lower of the recorded  investment  in the loan or the fair value
of the related assets at the date of  foreclosure,  less costs to sell. If there
is a further  deterioration in value, the Bank provides for a specific valuation
allowance. The Bank relies on appraisals or market valuations in the disposition
of all REO.

INVESTMENT ACTIVITIES

The investment  policies of the Company and the Bank as established by the Board
of  Directors  attempt to provide and maintain  liquidity,  generate a favorable
return on investments without incurring undue interest rate and credit risk, and
complement the Bank's lending activities.  The policies provide the authority to
invest in United States Treasury and federal agency securities,  mortgage-backed
securities  guaranteed by the United States government and agencies thereof, and
equity securities.

Investments in mortgage-backed securities involve a risk that actual prepayments
will be greater than estimated  prepayments  over the life of the security which
may require  adjustments to the  amortization of any premium or accretion of any
discount   relating  to  such   instruments   thereby  reducing  or  increasing,
respectively,  the net yield on such securities. There is also reinvestment risk
associated  with the cash flows from such  securities.  In addition,  the market
value of such securities may be adversely affected by changes in interest rates.

The following  table sets forth  information  regarding the carrying  amount and
fair values of the Company's securities at the dates indicated.

<TABLE>
<CAPTION>

                                    ------------------------------At December 31,-------------------------------
                                    -----------1997--------   ----------1996--------    ----------1995----------
                                       Carrying      Fair        Carrying       Fair       Carrying       Fair
                                        Amount       Value        Amount        Value       Amount        Value
                                        ------       -----        ------        -----       ------        -----

<S>                                 <C>          <C>          <C>          <C>          <C>          <C>

Available-for-sale
    U.S. Treasury bills and notes   $         -  $        -   $    1,514   $    1,514   $    4,547   $    4,547
    U.S. government agency notes         29,167      29,167       39,371       39,371       28,358       28,358
    FNMA                                  4,166       4,166        5,078        5,078        1,335        1,335
    FHLMC                                 3,073       3,073        4,146        4,146        2,894        2,894
    Municipal securities                    287         287            -            -            -            -
    Equity securities                       408         408            -            -            -            -
                                    -----------  ----------   ----------   ----------   ----------   ----------

       Total available-for-sale     $    37,101  $   37,101   $   50,109   $   50,109   $   37,134   $   37,134
                                    ===========  ==========   ==========   ==========   ==========   ==========

Held-to-maturity
    U.S. government agency notes    $    44,975  $   45,088   $   34,134   $   34,017   $   24,635   $   24,521
    FNMA                                  5,651       5,566        6,290        6,206        7,497        7,431
    FHLMC                                 5,110       5,030        7,416        7,330       10,274       10,249
    CMOs                                      -           -            -            -           88           92
                                    -----------  ----------   ----------   ----------   ----------   ----------

       Total held-to-maturity       $    55,736  $   55,684   $   47,840   $   47,553   $   42,494   $   42,293
                                    ===========  ==========   ==========   ==========   ==========   ==========

</TABLE>

                                       14


<PAGE>


The table below sets forth certain  information  regarding the carrying  amount,
weighted average yields, and contractual  maturities of the Company's securities
and  mortgage-backed  securities as of December 31, 1997. Equity securities have
no stated maturity and are included in the total column only.

<TABLE>
<CAPTION>

                                 -----------------------------------------------At December 31, 1997-------------------------------
                                                       More than One      More than Five         More than
                                  One Year or Less   Year to Five Years  Years to Ten Years      Ten Years             Total
                                  ----------------   ------------------  ------------------      ---------             -----

                                          Weighted            Weighted             Weighted             Weighted            Weighted
                                 Carrying  Average   Carrying  Average  Carrying    Average   Carrying   Average   Carrying  Average
                                  Amount    Yield     Amount    Yield    Amount      Yield     Amount     Yield     Amount     Yield
                                  ------    -----     ------    -----    ------      -----     ------     -----     ------     -----


<S>                              <C>      <C>       <C>       <C>      <C>        <C>          <C>           <C>       <C>

Securities
    Available-for-sale
       U.S. government agency
         notes                   $ 1,991    5.37%     $ 17,166  6.30%   $ 6,020      7.03%     $ 3,990     7.34%    $ 29,167   6.53%
       Municipal securities            -       -             -     -          -         -          287     5.35          287   5.35
       Equity securities               -       -             -     -          -         -            -        -          408   9.00
                                 -------    ----       -------  -----   -------     -----      -------    -----      -------   ----
       Total available-for-sale    1,991    5.37        17,166  6.30      6,020      7.03        4,277     7.20       29,862   6.55

    Held-to-maturity
       U.S. government agency
         notes                     6,000    5.38         3,999  7.21     19,987      7.34       14,989     7.52       44,975   7.13
                                 -------    ----       -------  -----   -------     -----      -------    -----       ------   ----

       Total securities          $ 7,991    5.38%     $ 21,165  6.47%   $26,007      7.27%     $19,266     7.45%    $ 74,837   6.90%
                                 =======    ====       =======  =====   =======     =====      =======    =====       ======   ====


Mortgage-backed securities
    Available-for-sale
       FNMA      $                     -       -%     $  3,271  6.71%   $     -         -%     $   895     6.89%    $  4,166   6.75%
       FHLMC                       1,425    6.06         1,648  6.70          -         -            -        -        3,073   6.40
                                 -------    ----       -------  -----   -------     -----      -------    -----       ------   ----
        Total available-for-sale   1,425    6.06         4,919  6.71          -         -          895     6.89        7,239   6.60
    Held-to-maturity
       FNMA                            -       -             -     -          -         -        5,651     7.12        5,651   7.12
       FHLMC                           -       -             -     -          -         -        5,110     6.77        5,110   6.77
                                 -------    ----       -------  -----   -------     -----      -------    -----       ------   ----
          Total held-to-maturity       -       -             -     -          -         -       10,761     6.95       10,761   6.95
                                 -------    ----       -------  -----   -------     -----      -------    -----       ------   ----

            Total mortgage-
              backed securities  $ 1,425    6.06%$       4,919  6.71%   $     -         -%     $11,656     6.95%    $ 18,000   6.81%
                                 =======    ====       =======  =====   =======     =====      =======    =====       ======   ====

</TABLE>

                                       15


<PAGE>


SOURCES OF FUNDS

General.  Deposits,  loan repayments and prepayments,  cash flows generated from
operations, and, to a significantly lesser extent, FHLB advances are the primary
sources of the Bank's funds for use in lending, investing, and for other general
purposes.

Deposits. The Bank offers a variety of deposit accounts with a range of interest
rates and terms. The Bank's deposits consist of passbook savings,  NOW accounts,
money market accounts, and certificates of deposit. The term of the certificates
of deposit  offered by the Bank varies from three  months to seven years and the
offering rates are established by the Bank on a weekly basis.  Specific terms of
an individual account vary according to the type of account, the minimum balance
required,  the time period funds must remain on deposit,  and the interest rate,
among other factors. The flow of deposits is influenced significantly by general
economic conditions,  changes in money market rates,  prevailing interest rates,
and competition. At December 31, 1997, the Bank had $62.0 million of certificate
accounts  maturing  in less than one year.  The  Bank's  deposits  are  obtained
predominantly  from the areas  surrounding its banking offices.  The Bank relies
primarily on customer service and long-standing  relationships with customers to
attract and retain these  deposits;  however,  market  interest  rates and rates
offered by  competitors  significantly  affect the Bank's ability to attract and
retain deposits.

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

<TABLE>
<CAPTION>

                                                                     ----------YEAR ENDED DECEMBER 31,--------
                                                                         1997            1996           1995
                                                                         ----            ----           ----

<S>                                                                 <C>             <C>            <C>

     Net deposits (withdrawals)                                      $     1,933    $    (7,086)   $     7,200
     Interest credited on deposit accounts                                 5,330          5,435          4,782
                                                                     -----------    -----------    -----------

         Total increase (decrease) in deposit accounts               $     7,263    $    (1,651)   $    11,982
                                                                     ===========    ===========    ===========
</TABLE>

At December 31, 1997,  the Bank had  approximately  $11.6 million in certificate
accounts in amounts of $100,000 or more maturing as follows:

<TABLE>
<CAPTION>

                                                              Weighted
                                                               Average
          Maturity Period                        Amount         Rate
          ---------------                        ------         ----

    <S>                                        <C>              <C>

     Three months or less                      $     2,004       5.76%
     Over three through six months                   3,020       5.97
     Over six through twelve months                  2,637       5.91
     Over twelve months                              3,973       6.24
                                               -----------       ----

         Total                                 $    11,634       6.01%
                                               ===========       ====

</TABLE>

                                       16


<PAGE>
<TABLE>
<CAPTION>

The following table sets forth the  distribution of the Bank's deposit  accounts
for the periods indicated.

                                       ---------------------------------------Year Ended December 31,-----------------------------
                                       -----------1997------------  ------------1996--------------    -----------1995-------------
                                                       Percent of                      Percent of                      Percent of
                                          Amount          Total        Amount             Total          Amount           Total
                                          ------          -----        ------             -----          ------           -----

<S>                                    <C>             <C>            <C>              <C>          <C>             <C>

Passbook accounts $                       32,155          23.62%       $ 33,875          26.29%     $     34,798          26.66%
Money market savings accounts              4,002           2.94           4,041           3.14             4,014           3.08
NOW accounts                               5,708           4.20           5,672           4.40             5,630           4.31
Non-interest-bearing accounts              1,115           0.82           1,088           0.84             1,352           1.04
                                       ---------       --------       ---------         ------          --------        -------
     Total                                42,980          31.58          44,676          34.67            45,794          35.09

Certificate accounts
     4.00% to 4.99%                            -              -           1,056           0.82             5,513           4.22
     5.00% to 5.99%                       76,199          59.10          56,516          43.86            42,123          32.28
     6.00% to 6.99%                       12,432           9.13          25,785          20.01            34,436          26.39
     7.00% to 7.99%                          254           0.19             354           0.28             1,270           0.97
     8.00% to 8.99%                            -              -             465           0.36             1,108           0.85
     9.00% and over                            -              -               -              -               259           0.20
                                       ---------       --------       ---------         ------          --------        -------

         Total certificate accounts       88,885          68.42          84,176          65.33            84,709          64.91
                                       ---------       --------       ---------         ------          --------        -------

              Total deposits           $ 131,865         100.00%       $128,852         100.00%     $    130,503         100.00%
                                       =========       ========       =========         ======          ========        =======

</TABLE>
<TABLE>
<CAPTION>

The  following  table  presents,  by  various  rate  categories,  the  amount of
certificate  accounts  outstanding  at the dates  indicated  and the  periods to
maturity of the certificate accounts outstanding at December 31, 1997.

                                        -----------------------Period to Maturity From December 31,-----------------------------
                                         Less than       1 to         2 to         3 to         4 to       More than
                                          1 Year        2 Years      3 Years      4 Years      5 Years      5 Years        Total
                                          ------        -------      -------      -------      -------      -------        -----

<S>                                     <C>          <C>          <C>           <C>          <C>          <C>         <C>

Certificate accounts
    5.00% to 5.99%                      $   55,842   $   15,450   $    2,802    $   1,022    $      937   $      146   $   76,199
    6.00% to 6.99%                           1,647        7,068        2,483          233         1,001            -       12,432
    7.00% to 7.99%                             254            -            -            -             -            -          254
                                        ----------   ----------   ----------    ---------    ----------   ----------   ----------

       Total                            $   57,743   $   22,518   $    5,285    $   1,255    $    1,938   $      146   $   88,885
                                        ==========   ==========   ==========    =========    ==========   ==========   ==========

</TABLE>

                                       17


<PAGE>


Borrowings.  Periodically,  the Bank has obtained advances from the Federal Home
Loan Bank of Chicago  ("FHLB") as an alternative to retail deposit funds and may
do so in the  future  as part of its  operating  strategy.  These  advances  are
collateralized  primarily  by the Bank's  mortgage  loans which are less than 90
days past due.  Such  advances  are made  pursuant to several  different  credit
programs,  each of which has its own interest rate and range of maturities.  The
maximum amount that the FHLB will advance to member  institutions  fluctuates in
accordance  with the  policies  of the OTS and the FHLB.  There were no advances
outstanding at December 31, 1997.

The  Bank's  borrowings  may,  from time to time,  also  include  collateralized
borrowings  through  securities  sold  under  repurchase  agreements  whereby  a
customer will maintain deposit  balances in excess of federal deposit  insurance
limits and are secured by  securities  which are pledged to the depositor by the
Bank. The Bank maintains physical control over the securities. The Bank had $4.2
million of securities sold under repurchase  agreements  outstanding at December
31, 1997 which carried  interest  rates  ranging from 5.75% to 5.80%,  and terms
ranging from 30 to 90 days.

SUBSIDIARY ACTIVITIES

The Bank has two wholly-owned subsidiaries. GPS Development Corp. is an Illinois
corporation  which  participates  in the  residential  real  estate  development
projects.  GPS Corporation is an Illinois corporation  previously engaged in the
sale of retail insurance products. In December 1994, the Bank sold the insurance
policies to an unaffiliated insurance agency.  Presently,  the activities of GPS
Corporation are limited to recordkeeping and receipt of certain fees relating to
the sold policies.

GPS Development Corp. The Bank engages in the business of purchasing  unimproved
land for development  into residential  subdivisions of primarily  single-family
lots through its wholly-owned  subsidiary,  GPS Development Corp. ("GPS"), which
was  incorporated in 1993. The Bank and its subsidiary have been engaged in this
activity since 1985, and since that time,  have developed and sold over 440 lots
in four different subdivisions in the western suburbs of Chicago. Currently, GPS
acts as joint venture partner in its  developments.  For those joint ventures it
is engaged in, GPS has historically  provided essentially all of the capital for
a joint  venture in exchange for an ownership  interest  which  entitles it to a
percentage of the profit or loss  generated by the venture.  GPS only invests in
real estate development  projects which it believes it can monitor  effectively.
GPS has a percentage interest in the net profit of each joint venture, generally
50%,  with the  exact  percentage  based  upon a number  of  factors,  including
characteristics  of the venture,  the perceived risks involved,  and the time to
completion. The net profits are generally defined in the joint venture agreement
as the gross  profits of the joint venture from sales,  less all expenses,  loan
repayments,  capital contributions,  and an agreed-upon rate of return to GPS on
such capital contribution.

At December 31, 1997, GPS was involved in the Prairie Ridge development, located
in Naperville,  Illinois. This project consists of 88 single-family  residential
lots, and as of December 31, 1997, 14 single-family lots have been sold.


                                       18


<PAGE>


Real  estate  development  activities  involve  risks that could have an adverse
effect  on the  profitability  of the  Bank.  GPS  incurs  substantial  costs to
acquire,  improve,  and market the land prior to commencement  of  construction.
There are negative cash flows in the early stages of the project because it does
not  recoup  such  costs  until  sales  of  the  lots  are  closed.  During  the
construction  phase,  a number of factors could result in cost  overruns,  which
could decrease or possibly  eliminate the potential profit from the project.  In
addition,  the profit potential on any given project may cease if the project is
not completed,  the  underlying  value of the project or the general market area
declines,  the project is not sold or is sold over a longer  period of time than
initially contemplated,  or a combination of these factors occurs. Additionally,
the ability to generate income from such projects is dependent,  in part, on the
economy of the metropolitan  Chicago area. Although the economy in such area has
been stable in recent  years,  there can be no assurance  that such economy will
continue to be favorable. For the years ended December 31, 1997, 1996, and 1995,
gain on the sale of real estate held for development totaled $276,000,  $60,000,
and $523,000, respectively.

EMPLOYEES

At December 31, 1997,  the Company had a total of 40 full-time  employees and 16
part-time  employees.  None of the Company's  employees are  represented  by any
collective   bargaining  group.   Management  considers  its  relationship  with
employees to be excellent.

FEDERAL TAXATION

General.  The Company and the Bank report their income on a calendar  year basis
using the  accrual  method of  accounting  and are  subject  to  federal  income
taxation  in the  same  manner  as  other  corporations  with  some  exceptions,
including  particularly  the Bank's reserve for bad debts discussed  below.  The
following  discussion  of tax matters is intended only as a summary and does not
purport to be a  comprehensive  description  of the tax rules  applicable to the
Bank or the Company.

In August  1996,  legislation  was enacted  that  repeals the reserve  method of
accounting  used by many thrifts to calculate their bad debt reserve for federal
income tax purposes. As a result, the Bank is required to recapture that portion
of the reserve that exceeds the amount which could have been deducted  under the
experience  method for  post-1987  tax years,  and now account for bad debts for
federal income tax purposes on the same basis as commercial banks. The recapture
will occur over a six-year period beginning in 1998 since the institution  meets
certain  residential  lending  requirements.  The  legislation  did  not  have a
material impact on the Company or the Bank.

To the extent earnings appropriated to a savings association's bad debt reserves
for  "qualifying  real  property  loans" and  deducted  for  federal  income tax
purposes  exceed the  allowable  amounts  of such  reserves  computed  under the
experience method and to the extent of the association's  supplemental  reserves
for  losses  on loans  (Excess),  such  Excess  may  not,  without  adverse  tax
consequences,   be  utilized  for  the  payment  of  cash   dividends  or  other
distributions   to  a  shareholder   (including   distributions  on  redemption,
dissolution, or liquidation) or for any other purpose (except to absorb bad debt
losses).  As of December 31, 1997, the Company's Excess for tax purposes totaled
approximately $3.3 million.

                                       19


<PAGE>


Corporate Alternative Minimum Tax. The Internal Revenue Code of 1986, as amended
(the Code), imposes a tax on alternative minimum taxable income (AMTI) at a rate
of 20%. The excess of the bad debt reserve  deduction  using the  percentage  of
taxable income method over the deduction  that would have been  allowable  under
the experience  method is treated as a preference item for purposes of computing
the AMTI.  Only 90% of AMTI can be offset by net  operating  loss  carryovers of
which the Bank  currently has none.  AMTI is increased by an amount equal to 75%
of the amount by which the Bank's  adjusted  current  earnings  exceeds its AMTI
(determined  without  regard to this  preference  and prior to reduction for net
operating losses). The Bank does not expect to be subject to AMTI.

STATE AND LOCAL TAXATION

State of Illinois.  The Company and the Bank file a combined Illinois income tax
return.  For Illinois  income tax purposes,  they are taxed at an effective rate
equal to 7.18% of Illinois taxable income. For these purposes, "Illinois taxable
income" generally means federal taxable income,  subject to certain  adjustments
including the addition of interest income on state and municipal obligations and
the exclusion of interest income on United States Treasury and qualifying agency
obligations.  The exclusion of income on United States  Treasury and  qualifying
agency  obligations  has the effect of reducing  Illinois  taxable  income.  The
Company  is also  required  to file an  annual  report  with  and pay an  annual
franchise tax to the state of Illinois.

Delaware Taxation. As a Delaware holding company not earning income in Delaware,
the Company is exempted  from Delaware  corporate  income tax but is required to
file an  annual  report  with and pay an  annual  franchise  tax to the state of
Delaware.

REGULATION

The Bank is subject to extensive regulation, examination, and supervision by the
OTS, as its chartering  agency,  and the Federal Deposit  Insurance  Corporation
("FDIC"),  as the deposit insurer. The Bank's deposit accounts are insured up to
applicable  limits by the FDIC.  The Bank must file reports with the OTS and the
FDIC concerning its activities and financial  condition in addition to obtaining
regulatory approvals prior to entering into certain transactions such as mergers
with,  or  acquisitions  of, other  financial  institutions.  There are periodic
examinations by the OTS and the FDIC to test the Bank's  compliance with various
regulatory requirements. The Company, as a savings bank holding company, is also
required to file certain  reports with and  otherwise  comply with the rules and
regulations  of the OTS and of the Securities  and Exchange  Commission  ("SEC")
under the federal securities laws. This regulation and supervision establishes a
comprehensive  framework of activities in which a depository institution and its
holding  company can engage and is intended  primarily for the protection of the
insurance  fund  and  depositors.  The  regulatory  authorities  have  extensive
discretion in connection with their  supervisory and enforcement  activities and
examination  policies,  including polices with respect to the  classification of
assets and the  establishment  of adequate  loan loss  reserves  for  regulatory
purposes.  Any change in the regulatory  structure or the applicable statutes or
regulations,  or  policies,  whether  by the OTS,  the  FDIC,  the  SEC,  or the
Congress,  could  have a material  impact on the  Company,  the Bank,  and their
operations.

                                       20


<PAGE>


ITEM 2.       PROPERTIES

The Bank  conducts its  business  through  three  banking  offices.  The Company
believes  that the  current  facilities  are  adequate  to meet the  present and
immediately foreseeable needs of the Bank and the Company. In addition, the Bank
currently holds two properties, a vacant parcel near its Chicago branch facility
which is  currently  being  developed  as a parking lot with a net book value of
$162,000 and a property in a western suburb for a possible  future branch office
with a net book value of $145,000.

The following  table sets forth certain  information  regarding the Bank's three
banking offices, all of which are owned by the Bank.

<TABLE>
<CAPTION>

                                                                                    Net Book Value of Property
                         Location                         Date Acquired               At December 31, 1997
                         --------                         -------------               --------------------

             <S>                                           <C>                      <C>

              Home office:
                  5400 South Pulaski Road
                  Chicago, Illinois 60632                     1985                        $   945,000

              Branch offices:
                  2740 West 55th Street                       1954                             13,000
                  Chicago, Illinois 60632

                  21 East Ogden Avenue
                  Westmont, Illinois 60559                    1975                            650,000

</TABLE>

ITEM 3.       LEGAL PROCEEDINGS

The Bank is not  involved  in any  pending  proceedings  other  than  the  legal
proceedings occurring in the ordinary course of business. Such legal proceedings
in the  aggregate  are believed by  management to be immaterial to the Company's
financial condition or results of operations.


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

No matters were submitted to a vote of stockholders during the fourth quarter of
the year ended December 31, 1997.


                    EXECUTIVE OFFICERS OF PARK BANCORP, INC.

DAVID A. REMIJAS, age 45, has served as the President and Chief Executive
Officer of the Bank since 1993. Mr. Remijas also serves as a Director and
Chairman of the Board of the Bank. Mr. Remijas has been with the Bank since 1974
and has held various positions during that time. Mr. Remijas is the brother of
Richard J. Remijas, Jr.

                                       21


<PAGE>


RICHARD J. REMIJAS, JR., age 48, has served as Executive Vice President, Chief
Operating Officer, and Corporate Secretary since 1993. Mr. Remijas has served as
a Director of the Bank since 1977. Mr. Remijas was a principal in
Merrion-Remijas Realtors, Inc. from 1986 to 1995. Mr. Remijas is the brother of
David A. Remijas.

STEVEN J. POKRAK, age 38, joined the Bank in 1985 and has served as Treasurer
and Chief Financial Officer since 1993. Prior to joining the Bank, Mr. Pokrak
had four years of public accounting experience.

SANDRA L. REMIJAS, age 36, joined the Bank in 1986 and has served as Vice
President-Lending since 1993. Mrs. Remijas is the wife of David A. Remijas.

                                       22


<PAGE>


                                     PART II


ITEM 5.       MARKET FOR COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The Company's common stock is traded on the NASDAQ National Market under the
symbol "PFED" and has 284 shareholders as of December 31, 1997. The table below
shows the reported high and low sales price of the common stock during the
period indicated in 1997.

                                   High           Low
                                   ----           ---

       First quarter              $ 16.25       $ 12.75
       Second quarter               16.63         14.25
       Third quarter                18.00         15.88
       Fourth quarter               18.63         17.13


ITEM 6.       SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables set forth selected  historical  financial and other data of
the Company for the periods and at the dates indicated.  The information  should
be read in  conjunction  with the  Consolidated  Financial  Statements and Notes
thereto of the Company contained elsewhere herein.

<TABLE>
<CAPTION>

Selected Financial Data

                                            -----------------------------At December 31,-------------------------------
                                                1997            1996           1995           1994         1993
                                                ----            ----           ----           ----         ----

<S>                                         <C>               <C>            <C>           <C>         <C>

Total assets                            $      176,672  $     178,194  $     158,939  $      144,788  $     136,422
Cash and cash equivalents                        7,812          6,213         12,790           2,573         13,252
Securities available-for-sale                   37,101         50,109         37,134          14,958              -
Securities held-to-maturity                     55,736         47,840         42,494          65,896         58,528
Loans receivable, net(1)                        68,327         66,179         60,538          56,558         56,696
Deposits                                       131,865        128,852        130,503         118,521        119,679
Securities sold under repurchase
  agreements                                     4,250              -              -               -              -
FHLB advances                                        -          5,000          9,000           8,000              -
Stockholders' equity(2)                         38,601         42,457         17,533          16,413         14,770

Interest income                                 12,464         11,335          9,755           8,861          9,254
Interest expense                                 6,390          6,320          5,706           4,643          4,890
Provision for loan losses                            -              -            298              48            140
Noninterest income                                 585            307            694           1,284          1,223
Noninterest expense                              4,261          3,718          3,096           2,822          2,598
Provision for income taxes                         855            543            413             881          1,113(3)
Net income                                       1,543          1,061            936           1,751          1,736


                                       23


<PAGE>
<CAPTION>


Selected Financial Ratios and Other Data

                                                      ------------At or for the Year Ended December 31,-----------
                                                      1997           1996         1995         1994         1993
                                                      ----           ----         ----         ----         ----

<S>                                                <C>            <C>          <C>         <C>           <C>

Performance ratios:
     Return on average assets                          0.87%         0.65%         0.65%       1.25%         1.27%
     Return on average equity                          3.84          3.92          5.49       11.15         12.52
     Average equity to average assets                 22.75         16.48         11.82       11.26         10.16
     Average interest rate spread(4)                   2.58          2.48          2.38        2.80          3.22
     Net interest margin(5)                            3.61          3.19          2.90        3.15          3.44
     Efficiency ratio(6)                              63.99         69.86         65.28       51.28         46.50
     Noninterest expense to average assets             2.41          2.26          2.15        2.02          1.90

Asset quality ratios:
     Nonperforming loans as a
       percent of gross loans receivable(7)            0.50%         0.44%         1.46%       1.17%         0.54%
     Nonperforming assets as a
       percentage of total assets(7)                   0.23          0.20          0.61        0.51          0.35
     Allowance for loan losses as a
       percent of gross loans receivable               0.71          0.73          0.91        0.47          0.42
     Allowance for loan losses as a
       percent of nonperforming loans(7)             143.68        167.22         62.49       39.97         77.88

Other data:
     Number of full service offices                    3             3             3           3             3

<FN>
(1)  The allowance for loan losses at December 31, 1997, 1996, 1995, 1994, 
     and 1993 was $500,000, $500,000, $573,000, $275,000, and $250,000, 
     respectively.

(2)  Retained earnings for years prior to 1996.

(3)  Income taxes for the year ended December 31, 1993 includes a $104,000 
     charge due to the cumulative effect of a change in accounting for 
     income taxes.

(4)  The average interest rate spread  represents the difference  between 
     the weighted average yield on  interest-earning  assets and the weighted
     average cost of interest-bearing liabilities.

(5)  The net  interest  margin  represents  net  interest  income as a percent 
     of average interest-earning assets.

(6)  The efficiency ratio represents noninterest expense as a percent of net 
     interest income before the provision for loan losses and 
     noninterest income.

(7)  Nonperforming  assets consist of nonperforming  loans and REO.  
     Nonperforming loans consist of all loans 90 days or more past due and 
     all other nonaccrual loans.
</FN>
</TABLE>

                                       24


<PAGE>


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

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report contains certain  forward-looking  statements  within the meaning of
Section 27a of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act of 1934,  as amended.  The  Corporation  intends  such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe future plans,  strategies and expectations of the Corporation,  are
generally  identifiable  by use  of the  words  "believe",  "expect",  "intend",
"anticipate",  "estimate",  "project", or similar expressions. The Corporation's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain.  Factors which could have a material adverse affect on the
operations  and  future  prospects  of  the  Corporation  and  its  wholly-owned
subsidiary include,  but are not limited to, changes in: interest rates; general
economic  conditions;  legislative/regulatory  provisions;  monetary  and fiscal
policies of the U.S. Government, including policies of the U.S. Treasury and the
Federal  Reserve  Board;  the quality or  composition  of the loan or investment
portfolios;  demand for loan products;  deposit flows;  competition;  demand for
financial services in the Corporation's market area; and accounting  principles,
policies, and guidelines.  These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements.

GENERAL

The primary  business of the Company is the  ownership  of the Bank.  The Bank's
results of operations are dependent  primarily on net interest income,  which is
the difference between the interest income earned on the Bank's interest-earning
assets,  such  as  loans  and  investments,  and  the  interest  expense  on its
interest-bearing  liabilities,  such as deposits and  borrowings.  The Bank also
generates  noninterest  income  such as  income  from  real  estate  development
activities and other fees. The Bank's  noninterest  expenses consist of employee
compensation and benefits as well as occupancy  expenses.  The Bank's results of
operations are also  significantly  affected by general economic and competitive
conditions,  particularly changes in market interest rates, government policies,
and actions of regulatory agencies.

                                       25


<PAGE>


AVERAGE STATEMENT OF FINANCIAL CONDITION

The  following  table sets forth certain  information  relating to the Company's
Average  Statement of  Financial  Condition  and  reflects the average  yield on
assets and average cost of  liabilities  for the years ended  December 31, 1997,
1996, and 1995.  The yields and costs are derived by dividing  income or expense
by the average  balance of assets or  liabilities,  respectively,  for the years
shown. Average balances are derived from average month-end balances.  Management
does not believe  that the use of average  monthly  balances  instead of average
daily balances has caused any material differences in the information presented.
Average  balances  of loans  receivable  include  loans  on  which  the Bank has
discontinued  accruing  interest.  The yields and costs  include  fees which are
considered adjustments to yields.

<TABLE>
<CAPTION>

                                             -------------------------Year Ended December 31,--------------------------------------

                                               ------------1 9 9 7---------  --------1 9 9 6-----------    --------1 9 9 5---------
                                                                   Average                      Average                     Average
                                                Average              Yield/  Average             Yield/    Average           Yield/
                                                Balance   Interest    Cost   Balance   Interest    Cost    Balance   Interest  Cost
                                                -------   --------    ----   -------   --------    ----    -------   --------  ----

<S>                                           <C>        <C>        <C>     <C>        <C>       <C>      <C>       <C>       <C>  

ASSETS
   Interest-earnings assets
     Interest-earning deposits and 
      other investments                      $   4,848     $   175    3.63%  $  9,595   $    438   4.56%  $ 6,971   $   361    5.18%
     Securities, net(1)                         75,579       5,261    6.96     62,868      4,022   6.40    55,390     3,175    5.73
     Loans receivable(2)                        67,408       5,649    8.38     62,447      5,398   8.64    58,830     5,090    8.65
     Mortgage-backed securities, net(1)         20,623       1,379    6.68     22,541      1,477   6.55    18,560     1,129    6.08
                                             ---------    --------            -------     ------         --------   -------
       Total interest-earning assets           168,458      12,464    7.40    157,451     11,335   7.20   139,751     9,755    6.98
                                                                                                                    -------
   Non-interest-earning assets                   8,010                                     6,672            4,418
                                             ---------                                    ------          -------

     Total assets                            $ 176,468                                  $164,123         $144,169
                                             =========                                   =======         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
   Interest-bearing liabilities
     Passbook accounts                       $  33,336         915    2.74   $ 34,266        949   2.77% $ 36,761     1,059    2.88%
     Money market savings accounts               3,988         134    3.36      4,121        138   3.35     3,656       120    3.28
     NOW accounts                                5,839         111    1.90      5,887        111   1.89     5,336       103    1.93
     Certificate accounts                       85,106       4,959    5.38     84,740      5,003   5.90    75,640     4,322    5.71
                                             ---------     --------           -------     ------         --------   -------
       Total                                   128,269       6,119    4.77    129,014      6,201   4.81   121,393     5,604    4.62
     FHLB advances and other borrowings          4,392         271    6.17      4,758        118   2.48     2,692       102    3.79
                                             ---------     --------           -------    -------         --------   -------
       Total interest-bearing liabilities      132,661       6,390    4.82    133,772      6,319   4.72   124,085     5,706    4.60
                                                           --------                      -------                    -------
   Non-interest-bearing liabilities              3,662                          3,298                       3,038
                                             ---------                        -------                    --------
     Total liabilities                         136,323                        137,070                     127,123
   Stockholders' equity                         40,145                         27,053                      17,046
                                             ---------                        -------                    --------

     Total liabilities and stockholders' 
      equity                                 $ 176,468                       $164,123                    $144,169
                                             =========                       ========                    ========

   Net interest income before provision 
     for estimated loan losses                           $   6,074                       $ 5,016                    $ 4,049
                                                         =========                      ========                   ========
   Net interest rate spread(3)                                        2.58%                         2.48%                      2.38%
                                                                     =====                         =====                      =====
   Net interest margin(4)                                             3.61                          3.19                       2.90
                                                                     =====                         =====                      =====
   Ratio of average interest-earning 
     assets to average interest-bearing 
     liabilities                               126.98%                        117.70%                     112.63%
                                             ========                       ========                      ======

<FN>
(1) Includes  related assets  available for sale and  unamortized  discounts and
    premiums and certificates of deposit.

(2) Amount is net of deferred loan  origination  fees,  undisbursed  loan funds,
    unamortized discounts, and allowance for loan losses and includes non-performing
    loans. 

(3) Net interest rate spread represents the difference  between the yield
    on average  interest-earning  assets and the  average  cost of  interest-bearing
    liabilities.

(4) Net  interest  margin  represents  net  interest  income  divided by average
    interest-earning assets.
</FN>
</TABLE>

                                       26


<PAGE>


RATE/VOLUME ANALYSIS

The following  table  presents the extent to which changes in interest rates and
changes  in  the  volume  of   interest-earning   assets  and   interest-bearing
liabilities have affected the Bank's interest income and interest expense during
the periods indicated. Information is provided in each category with respect to:
(i) changes  attributable to changes in volume (changes in volume  multiplied by
prior  rate);  (ii)  changes  attributable  to changes in rate  (changes in rate
multiplied by prior volume);  and (iii) the net change. The changes attributable
to the combined impact of volume and rate have been allocated proportionately to
the changes due to volume and the changes due to rate.

<TABLE>
<CAPTION>

                                                Year Ended                              Year Ended
                                             December 31, 1997                       December 31, 1996
                                                Compared to                             Compared to
                                                Year Ended                              Year Ended
                                    ---------December 31, 1996---------    ----------December 31, 1995--------
                                        Increase (Decrease) Due to              Increase (Decrease) Due to
                                        --------------------------              --------------------------
                                       Volume        Rate           Net       Volume         Rate         Net
                                       ------        ----           ---       ------         ----         ---

<S>                                 <C>            <C>           <C>         <C>            <C>         <C>

INTEREST-EARNING ASSETS
    Interest-earning deposits
      and other investments         $    (185)   $    (78)      $   (263)    $   124      $    (47)    $     77
    Securities, net(1)                    863         376          1,239         455           392          847
    Loans receivable, net                 419        (168)           251         313            (5)         308
    Mortgage-backed securities,
      net(1)                             (128)         30            (98)        257             91         348
                                    ---------    ----------    ---------    --------      ---------   ---------
       Total interest-earning
         assets                           969         160          1,129       1,149            431       1,580
                                    ---------    ----------    ---------    --------      ---------   ---------

INTEREST-BEARING LIABILITIES
    Passbook savings accounts             (26)         (8)           (34)        (70)           (40)       (110)
    Money market savings accounts          (4)          -             (4)         16              2          18
    NOW accounts                           (1)          1              -          10             (2)          8
    Certificate accounts                   22         (66)           (44)        534            147         681
    FHLB advances and other
      borrowings                          (10)        163            153          60            (44)         16
                                    ---------    ----------    ---------    --------      ---------   ---------
       Total interest-bearing
         liabilities                      (19)         90             71         550             63         613
                                    ---------    ----------    ---------    --------      ---------   ---------

Change in net interest income       $     988    $     70      $   1,058    $    599      $     368    $    967
                                    =========    ==========    =========    ========      =========   =========

<FN>
(1)  Includes assets available-for-sale.
</FN>
</TABLE>

                                       27


<PAGE>


COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1997 AND DECEMBER 31, 1996

Total assets at December 31, 1997 were $176.7 million compared to $178.2 million
at December 31, 1996, a decrease of $1.5 million.  During 1997,  loans increased
by $2.1 million to $68.3 million due to increased demand for fixed-rate mortgage
loans in the  Chicago  market.  The  increase in  deposits  and the  decrease in
securities  were used to fund the loan growth,  repay $5 million of Federal Home
Loan Bank  advances,  and complete to the  repurchase  of 391,709  shares of the
Company common stock.

Total liabilities at December 31, 1997 were $138.0 million compared to $135.7 at
December 31, 1996, an increase of $2.3 million.  The increase is attributable to
deposit  growth  of $3.0  million  and an  increase  in  securities  sold  under
repurchase  agreements of $4.2 million,  offset by the repayment of Federal Home
Loan Bank advances.

Stockholders'  equity at December 31, 1997 was $38.6 million compared to $42.4 
million at December 31,  1996, a decrease of $3.8 million,  due primarily to net
income for the year offset by the repurchase of Company common stock.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1996 AND DECEMBER 31, 1995

Total assets at December 31, 1996 were $178.2 million compared to $158.9 million
at December 31, 1995, an increase of $19.3 million. The increase in total assets
is primarily attributable to the proceeds raised in the Company's initial public
offering of common stock.  The net proceeds of the stock  offering were invested
in  securities  which is reflected in the $13.0  million  increase in securities
available-for-sale and the $5.3 million increase in securities held-to-maturity.
During  1996,  loans  increased  by $5.6  million  due to  increased  demand for
fixed-rate mortgage loans in the Chicago market. The increases to securities and
loans  were  partially  offset  by a $6.6  million  decrease  in cash  and  cash
equivalents  which was primarily  attributable to repayment of Federal Home Loan
Bank  advances and  additional  development  costs  associated  with real estate
development at Prairie Ridge.

Total liabilities at December 31, 1996 were $135.7 million compared to $141.4 at
December 31, 1995, a decrease of $5.7 million. The decrease is attributable to a
$4.0 million  decrease in Federal Home Loan Bank advances and a $1.7 decrease in
deposits.

Stockholders'  equity at December 31, 1996 was $42.4  million  compared to $17.5
million at December 31, 1995, an increase of $24.9 million, due primarily to net
proceeds of the initial public offering that was completed on August 9, 1996 and
the net income for the year.

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 
DECEMBER 31, 1996

GENERAL
Net income  increased 45.4% from $1,061,000 for the year ended December 31, 1996
to  $1,543,000  for the year ended  December 31, 1997.  Fiscal 1996 results were
negatively affected by the $736,000 one-time special assessment paid by the Bank
to  recapitalize  the Savings  Association  Insurance  Fund  ("SAIF") as further
discussed below.

                                       28


<PAGE>


INTEREST INCOME
Interest income for the year ended December 31, 1997 was $12.5 million  compared
to $11.3  million  for the year ended  December  31,  1996,  an increase of $1.1
million or 9.9%.  The  increase in interest  income was caused  primarily  by an
increase  in  the  average  yield  on  securities,   including   mortgage-backed
securities. The increase in average yield resulted from the investment in higher
yielding investment and mortgage-backed  securities.  Additionally,  the average
balance of loans outstanding increased by more than 7.9% from 1996.

INTEREST EXPENSE
Interest  expense for the year ended December 31, 1997 was $6.4 million compared
to $6.3 million for the year ended  December 31, 1996, an increase of $71,000 or
1.1%.  The  increase in  interest  expense  was  primarily  due to growth in the
average balance of certificates of deposit and higher costs of Federal Home Loan
Bank advances for the year ended December 31, 1997.

PROVISION FOR LOAN LOSSES
There was no provision for losses on loans for the years ended December 31, 1997
and 1996. The lack of provision is indicative of  management's  assessment  that
the allowance for loan losses is adequate,  given the trends in historical  loss
experience of the portfolio and current economic conditions.

NONINTEREST INCOME
Noninterest income for the year ended December 31, 1997 was $585,000 compared to
$307,000 for the year ended December 31, 1996, an increase of $278,000 or 90.5%.
The increase was primarily attributable to increased sales volume of real estate
held for development which generated a gain of $276,000 as compared to a gain of
$60,000  for the  year  ended  December  31,  1996.  Additionally,  the  Company
recognized  a  one-time  completion  fee  of  $106,000  during  1997  on a  land
development loan.  Service fee income decreased from $177,000 for the year ended
December 31, 1996 to $145,000 for the year ended December 31, 1997 primarily due
to a lesser amount of construction loans.

NONINTEREST EXPENSE
Noninterest  expense  for the year  ended  December  31,  1997 was $4.3  million
compared to $3.7 million for the year ended  December  31, 1996,  an increase of
$543,000.  The primary  components  attributable  to the increase were increased
compensation  expense associated with the employee stock ownership plan ("ESOP")
and  management  retention  plan  ("MRP") as well as other  costs  incurred as a
result of operating as a public company. The Company also realized a decrease in
federal deposit insurance costs due to a $736,000 special one-time assessment to
recapitalize the SAIF recorded in 1996. Additionally, the insurance premium rate
was reduced after this special assessment.

INCOME TAXES
Income tax expense was $855,000 for the year ended December 31, 1997 compared to
$543,000  for the year ended  December 31,  1996,  an increase of $312,000.  The
increase  in income tax  expense  was  primarily  the result of the  increase in
income before income taxes to $2.4 million for the year ended  December 31, 1997
from $1.6 million for the year ended December 31, 1997.

                                       29


<PAGE>


COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 
DECEMBER 31, 1995

GENERAL
Net income increased 13.3% from $936,000 for the year ended December 31, 1995 to
$1,061,000  for the year ended  December  31,  1996.  Fiscal 1996  results  were
negatively  affected  by the  one-time  special  assessment  paid by the Bank to
recapitalize  the  Savings  Association   Insurance  Fund  ("SAIF")  as  further
discussed  below.  Prior  to this  charge,  the  earnings  of the  Company  were
$1,547,000  due primarily to the growth in earning assets from 1995 to 1996 as a
result of the Company's conversion to a stock form of ownership during 1996.

INTEREST INCOME
Interest income for the year ended December 31, 1996 was $11.3 million  compared
to $9.8  million  for the year ended  December  31,  1995,  an  increase of $1.5
million  or 15%,  caused  primarily  by an  increase  in the  average  yield  on
securities and the investment of stock offering proceeds.

INTEREST EXPENSE
Interest  expense for the year ended December 31, 1996 was $6.3 million compared
to $5.7 million for the year ended December 31, 1995, an increase of $613,000 or
10.7%.  The increase in interest expense was primarily due to a higher rate paid
on certificates of deposit.

PROVISION FOR LOAN LOSSES
The Bank's  provision  for losses on loans for the year ended  December 31, 1996
was $0 compared to $298,000 for the year ended  December  31, 1995.  The lack of
provision  is  indicative  of  management's  assessment  of the  adequacy of the
allowance for loan losses, given the trends in historical loss experience of the
portfolio and current economic conditions.

NONINTEREST INCOME
Noninterest income for the year ended December 31, 1996 was $307,000 compared to
$695,000 for the year ended  December 31, 1995, a decrease of $388,000 or 55.8%.
The decrease was primarily  attributable to the slowdown in sales volume of real
estate held for development. During the year ended December 31, 1996, six of the
remaining nine lots were sold in the Rose Hill  subdivision at a gain of $60,000
as compared to a gain of $523,000 for the year ended  December  31,  1995.  This
decline was  mitigated by an increase in service fee income from fees on deposit
accounts  which  increased from $102,000 for the year ended December 31, 1995 to
$177,000 for the year ended December 31, 1996.

NONINTEREST EXPENSE
Noninterest  expense  for the year  ended  December  31,  1996 was $3.7  million
compared to $3.1 million for the year ended  December  31, 1995,  an increase of
$0.6 million.  The primary  factor  attributable  to the increase was a $736,000
special  one-time  assessment to  recapitalize  the SAIF.  This  assessment  was
charged to the Bank during 1996 and was based upon a 65.7 basis point  charge on
insured deposits outstanding as of March 31, 1995.

                                       30


<PAGE>


INCOME TAXES
Income tax expense was $543,000 for the year ended December 31, 1996 compared to
$413,000  for the year ended  December 31,  1995,  an increase of $130,000.  The
increase  in income tax  expense  was  primarily  the result of the  increase in
income  before  income taxes from $1.3  million for the year ended  December 31,
1995 to $1.6 million for the year ended December 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

The  Bank's  primary  sources  of funds are  deposits,  principal  and  interest
payments on loans and  securities,  proceeds from the  maturation of securities,
FHLB advances, and securities sold under repurchase agreements. While maturities
and scheduled  amortization of loans and securities are  predictable  sources of
funds,  deposit flows and mortgage prepayments are greatly influenced by general
interest  rates,  economic  conditions,  and  competition.  The Bank maintains a
liquidity   ratio   substantially   above  the  regulatory   requirement.   This
requirement,  which may be varied at the  direction  of the OTS  depending  upon
economic  conditions and deposit  flows,  is based upon a percentage of deposits
and  short-term  borrowings.  The  required  ratio is  currently  5%. The Bank's
average  regulatory  liquidity  ratios were 53.48%,  52.98%,  and 52.72% for the
years ended December 31, 1997, 1996, and 1995, respectively.

The Bank's cash flows are  comprised of three  primary  classifications  -- cash
flows from operating activities, investing activities, and financing activities.
Cash flows  provided by operating  activities  were  $1,919,000,  $895,000,  and
$863,000 for the years ended December 31, 1997,  1996,  and 1995,  respectively.
Net cash from investing activities consisted primarily of disbursements for loan
originations and the purchase of securities,  offset by principal collections on
loans,  proceeds from maturation of investments and paydowns on  mortgage-backed
securities, and the investment in and proceeds from the sale of real estate held
for development.  Net cash from financing  activities consisted primarily of the
activity  in  deposit  accounts,  FHLB  borrowings,  and  securities  sold under
repurchase  agreements in addition to the  repurchase of Company common stock in
1997. The net cash from financing activities was $(4.0) million,  $18.4 million,
and $12.9  million  for the years  ended  December  31,  1997,  1996,  and 1995,
respectively.

At  December  31,  1997,  the  Bank  exceeded  all  of  its  regulatory  capital
requirements with a tangible capital level of $23.7 million or 14.5% of adjusted
total assets,  which is above the required  level of $2.4 million or 1.5%;  core
capital of $23.7 million or 14.5% of adjusted  total assets,  which is above the
required level of $4.9 million or 3.0%; and risk-based  capital of $24.2 million
or 38.6% of  risk-weighted  assets,  which is above the  required  level of $5.0
million or 8.0%.

The Bank's most liquid assets are cash and short-term investments. The levels of
these assets are  dependent on the Bank's  operating,  financing,  lending,  and
investing  activities  during any given period.  At December 31, 1997,  cash and
short-term  investments  totaled  $7.8  million.  The Bank has other  sources of
liquidity if a need for additional funds arises,  including  securities maturing
within  one year and the  repayment  of loans.  The Bank may also  utilize  FHLB
advances or the sale of securities available-for-sale as a source of funds.

                                       31


<PAGE>


At December 31, 1997, the Bank had outstanding commitments to originate mortgage
loans  of  $891,000  compared  to  $835,000  at  December  31,  1996.  The  Bank
anticipates  that it will have  sufficient  funds  available to meet its current
loan origination commitments. Certificate accounts which are scheduled to mature
in less than one year from  December 31, 1997 totaled  $57.7  million.  The Bank
expects that a substantial portion of the maturing  certificate accounts will be
retained by the Bank at maturity.  However,  if a  substantial  portion of these
deposits are not retained, the Bank may utilize Federal Home Loan Bank advances,
or raise interest rates on deposits to attract new accounts, which may result in
higher levels of interest expense.

IMPACT OF INFLATION AND CHANGING PRICES

The Consolidated  Financial  Statements and Notes thereto  presented herein have
been prepared in accordance with generally accepted accounting principles, which
requires the measurement of financial position and operating results in terms of
historical  dollar  amounts  without  considering  the  changes in the  relative
purchasing power of money over time due to inflation. The impact of inflation is
reflected in the  increased  cost of the Bank's  operations.  Unlike  industrial
companies,  nearly all of the assets and liabilities of the Bank are monetary in
nature.  As a  result,  interest  rates  have a  greater  impact  on the  Bank's
performance  than do the effects of general levels of inflation.  Interest rates
do not necessarily move in the same direction or to the same extent as the price
of goods and services.

IMPACT OF NEW ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 130 (SFAS No. 130), Reporting
Comprehensive Income, will become effective during 1998 and requires that all
components of comprehensive income be presented in a separate statement.
Management does not anticipate that SFAS No. 130 will have a significant impact
on the Company's results of operations or capital.

Statement of Financial Accounting Standards No. 131 (SFAS No. 131),  Disclosures
about  Segments  of an  Enterprise  and  Related  Information,  will also become
effective  during 1998.  SFAS No. 131  establishes  standards for the way public
companies  report  information  about its  operating  segments and requires that
these  standards  be  adhered to for  interim  reporting  as well.  SFAS No. 131
requires  companies to provide more descriptive  disclosures about its operating
segments including the way in which the segment was determined, the products and
services  provided  by the  segment,  and the  profit or loss  generated  by the
segment.  Management  does  not  anticipate  that  SFAS  No.  131  will  have  a
significant impact on the Company's results of operations or capital.

YEAR 2000 COMPLIANCE

A critical  issue facing the  financial  institution  industry is concerns  over
computer systems' ability to process year-date data beyond the year 1999. Except
in  recently  developed  year  2000  compliant  programs,  computer  programmers
consistently  have  abbreviated  dates by eliminating  the first two digits of a
year,  with the  assumption  that these two digits would always be "19".  Unless
corrected, this situation is expected to cause widespread problems on January 1,
2000,  when  computer  systems may recognize  this date as January 1, 1900,  and
process data incorrectly or stop processing altogether.  This issue could affect
a variety of the Company's systems from its data processing system which records
loan and  deposit  

                                       32


<PAGE>


information to other ancillary systems such as alarms and locking devices.
Management has considered this issue internally and receives periodic
correspondence from its data processor regarding their plans to be year 2000
compliant. Management does not anticipate that the Company will incur material
operating expenses or be required to invest heavily in computer system
improvements to be year 2000 compliant. Nevertheless, if not properly addressed,
these issues could result in interruptions in the Company's business and have a
material adverse effect on the Company's results of operations.


ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
               RISK

The principal  objective of the Bank's interest rate risk management function is
to evaluate the interest rate risk included in certain  balance sheet  accounts;
determine  the  level of risk  appropriate  given  the  Bank's  business  focus,
operating  environment,  capital and  liquidity  requirements,  and  performance
objectives;  and manage the risk  consistent  with  Board  approved  guidelines.
Through  such  management,  the Bank  seeks to reduce the  vulnerability  of its
operations  to changes in interest  rates.  The Bank  monitors its interest rate
risk as such risk  relates to its  operating  strategies.  The Bank's  executive
committee meets regularly and reviews the Bank's interest rate risk position and
makes recommendations for adjusting such position. In addition, the Bank's Board
of Directors reviews on a quarterly basis the Bank's  asset/liability  position,
including  simulations of the effect on the Bank's  capital of various  interest
rate scenarios.

The Bank's interest rate sensitivity is monitored by management  through the use
of a model which  estimates  the change in net  portfolio  value  ("NPV") over a
range of interest  rate  scenarios.  NPV is the present  value of expected  cash
flows from assets, liabilities,  and off-balance-sheet  contracts. An NPV Ratio,
in any interest rate scenario, is defined as the NPV in that scenario divided by
the market value of assets in the same scenario.  The Sensitivity Measure is the
decline in the NPV Ratio,  in basis points,  caused by a 2% increase or decrease
in rates,  whichever  produces a larger  decline.  The  higher an  institution's
Sensitivity  Measure  is, the greater  its  exposure  to  interest  rate risk is
considered  to be. The Bank  utilizes a market  value model  prepared by the OTS
(the  "OTS  NPV  model"),  which is  prepared  quarterly,  based  on the  Bank's
quarterly  Thrift  Financial  Reports  filed  with  the OTS.  The OTS NPV  model
measures the Bank's interest rate risk by approximating the Bank's NPV, which is
the net present value of expected cash flows from assets,  liabilities,  and any
off-balance-sheet  contracts, under various market interest rate scenarios which
range from a 400 basis point  increase  to a 400 basis point  decrease in market
interest  rates.  The interest  rate risk policy of the Bank  provides  that the
maximum  permissible  change at a 400 basis point increase or decrease in market
interest  rates  is a 90%  change  in the  net  portfolio  value.  The  OTS  has
incorporated  an interest rate risk component into its regulatory  capital rule.
Under the rule, an institution  whose  sensitivity  measure  exceeds 2% would be
required to deduct an interest  rate risk  component  in  calculating  its total
capital for purpose of the risk-based capital  requirement.  As of September 30,
1997, the Bank's sensitivity  measure,  as measured by the OTS, resulting from a
200 basis point  increase in  interest  rates was (0.66)% and would  result in a
$1.9  million  reduction  in the  NPV of the  Bank.  Accordingly,  increases  in
interest  rates  would be  expected  to have a  negative  impact  on the  Bank's
operating results.  The NPV Ratio sensitivity  measure is 

                                       33


<PAGE>


below the threshold at which the Bank could be required to hold additional
risk-based capital under OTS regulations.

Certain  shortcomings are inherent in the methodology used in the above interest
rate risk  measurements.  Modeling changes in NPV requires the making of certain
assumptions  that may tend to oversimplify the manner in which actual yields and
costs respond to changes in market interest rates. First, the models assume that
the composition of the Bank's interest sensitive assets and liabilities existing
at the beginning of a period  remains  constant over the period being  measured.
Second,  the  models  assume  that a  particular  change  in  interest  rates is
reflected  uniformly  across  the yield  curve  regardless  of the  duration  to
maturity or repricing of specific assets and liabilities.  Third, the model does
not take into account the impact of the Bank's  business or  strategic  plans on
the  structure  of  interest-earning  assets and  interest-bearing  liabilities.
Accordingly,  although the NPV measurement  provides an indication of the Bank's
interest rate risk exposure at a particular  point in time, such  measurement is
not intended to and does not provide a precise forecast of the effect of changes
in market  interest rates on the Bank's net interest income and will differ from
actual  results.  The results of this modeling are  monitored by management  and
presented to the Board of Directors, quarterly.

The following table shows the NPV and projected change in the NPV of the Bank at
December 31, 1997 assuming an instantaneous and sustained change in market
interest rates of 100, 200, 300, and 400 basis points.

<TABLE>
<CAPTION>

             Interest Rate Sensitivity of Net Portfolio Value (NPV)

                                                                                       NPV as a % of
                           --------------Net Portfolio Value------------    -----------PV of Assets---------
       Change in Rates       $ Amount         $ Change       % Change          NPV Ratio         Change
       ---------------       --------         --------       --------          ---------         ------

<S>                        <C>              <C>             <C>               <C>               <C>

          + 400 bp         $    25,295     $   (5,127)         (16.8)%           15.74%         - 223 bp
          + 300 bp              26,753         (3,664)         (12.0)            16.42          - 155 bp
          + 200 bp              28,181         (2,241)          (7.3)            17.05           - 92 bp
          + 100 bp              29,477           (945)          (3.1)            17.60           - 37 bp
              0 bp              30,422              -               -            17.97              -
          - 100 bp              30,925            503            1.6             18.11           + 14 bp
          - 200 bp              31,124            702            2.3             18.10           + 13 bp
          - 300 bp              31,498          1,076            3.5             18.16           + 19 bp
          - 400 bp              32,209          1,787            5.8             18.38           + 41 bp

</TABLE>

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Information on page F-1.


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

Not applicable.

                                       34


<PAGE>


                                    PART III


ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

(a)    Directors.  This information  required in response to this item regarding
       directors of the Company will be  contained in the  Company's  definitive
       Proxy  Statement  (the  "Proxy  Statement")  for its  Annual  Meeting  of
       Shareholders to be held on April 21, 1998 under the caption  "Election of
       Directors Information with Respect to the Nominees, Continuing Directors,
       and Certain Executive Officers" and is incorporated herein by reference.

(b)    Executive Officers of the Company.  The information  required in response
       to this item regarding  executive officers of the Company is contained in
       Part I of this report and is incorporated herein by reference.


ITEM 11.       EXECUTIVE COMPENSATION

The information required in response to this item will be contained in the Proxy
Statement under the captions  "Election of Directors - Directors'  Compensation"
and "Executive Compensation" and is incorporated herein by reference.


ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT

The information required in response to this item will be contained in the Proxy
Statement under the captions  "Security  Ownership of Certain Beneficial Owners"
and  "Election  of  Directors  -  Information  with  Respect  to  the  Nominees,
Continuing Directors, and Certain Executive Officers" and is incorporated herein
by reference.


ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required in response to this item will be contained in the Proxy
Statement under the caption  "Election of Directors - Transactions  with Certain
Related Persons" and is incorporated herein by reference.

                                       35


<PAGE>


                                     PART IV


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

(a)    Documents filed as part of this report:

       1,2    Financial Statements and Schedules

              See Index to Financial Information on page F-1.

       3      Exhibits

              See Exhibit Index on page i.

(b)    Reports on Form 8-K

       No reports on Form 8-K were filed by the Company during 1997.


                                       36


<PAGE>


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto duly authorized on the 13th day of March,
1998.

                                              PARK BANCORP, INC.



                                              By: /s/David A. Remijas
                                                  -------------------
                                                     David A. Remijas
                                                      Chairman of the Board,
                                                      President, and
                                                      Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1933, 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>

             Name                                       Title                                  Date

<S>                                     <C>                                            <C>

/s/ David A. Remijas                    Chairman of the Board,                          March 13, 1998
--------------------------              President, and Chief Executive
David A. Remijas                        Officer (principal executive officer)


/s/ Steven J. Pokrak                    Treasurer and Chief Financial                   March 13, 1998
--------------------------              Officer (principal financial officer)
Steven J. Pokrak


/s/ Richard J. Remijas, Jr.             Executive Vice President, Chief                 March 13, 1998
--------------------------              Operating Officer, Corporate
Richard J. Remijas, Jr.                 Secretary, and Director

/s/ Joseph M. Judickas, Jr.             Director                                        March 13, 1998
--------------------------
Joseph M. Judickas, Jr.

/s/ Charles Paprocki                    Director                                        March 13, 1998
--------------------------
Charles Paprocki

/s/ Paul Shukis                         Director                                        March 13, 1998
--------------------------
Paul Shukis

</TABLE>

                                       37


<PAGE>


                                  EXHIBIT INDEX

                               Park Bancorp, Inc.

                         Form 10-K for Fiscal Year Ended
                                December 31, 1997


    3.1    Certificate of  Incorporation  of Park Bancorp,  Inc.  ("Park  
           Bancorp")  (incorporated  by reference to Exhibit 3.1 to Park 
           Bancorp's  Registration Statement No. 333-4380)

    3.2    Bylaws of Park Bancorp, Inc. (incorporated by reference to 
           Exhibit 3.2 to Park Bancorp's Registration Statement No. 333-4380)

    3.3    Federal Stock Charter and Bylaws of Park Federal Savings Bank  
           (incorporated  by reference to Exhibit 2.1 to Park Bancorp's  
           Registration  Statement No. 333-4380)

    4.0    Stock Certificate of Park Bancorp, Inc. (incorporated by reference 
           to Exhibit 4.0 to Park Bancorp's Registration Statement No. 333-4380)

   10.1*   Form of Park Federal  Savings Bank  Employee  Stock  Ownership  
           Plan  (incorporated  by  reference  to Exhibit 10.1 to Park  
           Bancorp's  Registration Statement No. 333-4380)

   10.2*   ESOP Loan  Commitment  Letter and ESOP Loan  Documents  
           (incorporated  by reference to Exhibit 10.2 to Park  Bancorp's  
           Registration  Statement  No. 333-4380)

   10.3*   Form of Employment  Agreements between Park Federal Savings Bank and
           Park Bancorp,  Inc. and certain executive  officers  (incorporated 
           by reference to Exhibit 10.3 to Park Bancorp's Registration 
           Statement No. 333-4380)

   10.4*   Form  Proposed  Park Federal  Savings  Bank  Employee  Severance
           Compensation  Plan  (incorporated  by reference to Exhibit 10.4 
           to Park  Bancorp's Registration Statement No. 333-4380)

   10.5*   Park Federal  Savings Bank  Supplemental  Executive  Retirement  
           Plan  (incorporated  by  reference to Exhibit 10.5 to Park  
           Bancorp's  Registration Statement No. 333-4380)

   10.6*   Park Bancorp, Inc. 1997 Stock-Based Incentive Plan (incorporated by 
           reference to Exhibit 99.1 to Park Bancorp's  Registration Statement
           No. 333-33103)

   21.0    Subsidiaries  of  Registrant  (incorporated  by reference to 
           Exhibit 21.0 to the Park  Bancorp,  Inc.  Annual Report on 
           Form 10-K for the year ended December 31, 1996)

   23.0    Consent of Independent Auditors

   27.0    Financial Data Schedule

-----------
*   Management contract or compensatory plan or arrangement required to be filed
    as an exhibit to this Form 10-K pursuant to Item 14(c) of Form 10-K.


                                       i


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                                Chicago, Illinois

                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995


                         INDEX TO FINANCIAL INFORMATION






REPORT OF INDEPENDENT AUDITORS.....................................   1


FINANCIAL STATEMENTS

     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION................   2

     CONSOLIDATED STATEMENTS OF INCOME.............................   3

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY...............   4

     CONSOLIDATED STATEMENTS OF CASH FLOWS.........................   5

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS....................   7


                                      F-1

<PAGE>

                                     [LOGO]
                                  CROWE CHIZEK


                         REPORT OF INDEPENDENT AUDITORS



Board of Directors
Park Bancorp, Inc.
Chicago, Illinois


We have audited the accompanying  consolidated statements of financial condition
of Park Bancorp,  Inc. and  Subsidiary as of December 31, 1997 and 1996, and the
related consolidated statements of income,  stockholder's equity, and cash flows
for each of the  three  years in the  period  ended  December  31,  1997.  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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Park Bancorp,  Inc.
and  Subsidiary  as of  December  31,  1997 and 1996,  and the  results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.


                                            /s/ Crowe, Chizek and Company LLP

                                                Crowe, Chizek and Company LLP

Oak Brook, Illinois
January 23, 1998

                                      F-2


<PAGE>
<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           December 31, 1997 and 1996
                 (In thousands, except share and per share data)


                                                                                          1997          1996
                                                                                          ----          ----

<S>                                                                                 <C>            <C>

ASSETS
Cash and due from banks                                                              $     1,119    $       769
Interest-bearing deposits with other financial institutions                                6,693          5,444
                                                                                     -----------    -----------
    Total cash and cash equivalents                                                        7,812          6,213

Securities available-for-sale                                                             37,101         50,109
Securities held-to-maturity (fair value:  1997 - $55,684;
  1996 - $47,553)                                                                         55,736         47,840
Loans receivable, net                                                                     68,327         66,179
Federal Home Loan Bank stock                                                                 841            756
Real estate held for development                                                           2,270          2,871
Premises and equipment, net                                                                2,489          2,150
Accrued interest receivable                                                                1,542          1,627
Foreclosed real estate                                                                        60             60
Other assets                                                                                 494            389
                                                                                     -----------    -----------

    Total assets                                                                     $   176,672    $   178,194
                                                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
    Deposits                                                                         $   131,865    $   128,852
    Securities sold under repurchase agreements                                            4,250              -
    Advances from borrowers for taxes and insurance                                        1,387          1,288
    Federal Home Loan Bank advances                                                            -          5,000
    Accrued interest payable                                                                 175            159
    Other liabilities                                                                        394            438
                                                                                     -----------    -----------
       Total liabilities                                                                 138,071        135,737

Stockholders' equity
    Preferred stock $.01 par value authorized 1,000,000 shares;
      none issued and outstanding                                                              -              -
    Common stock $.01 par value per share;
      authorized 9,000,000 shares, issued 2,701,441 shares                                    27             27
    Additional paid-in capital                                                            26,222         26,088
    Retained earnings                                                                     20,060         18,517
    Treasury stock, 283,652 shares, at cost                                               (4,693)             -
    Unearned ESOP shares                                                                  (1,807)        (1,993)
    Unearned MRP shares                                                                   (1,226)             -
    Unrealized gain (loss) on securities
      available-for-sale, net of income taxes                                                 18           (182)
                                                                                     -----------    -----------
       Total stockholders' equity                                                         38,601         42,457
                                                                                     -----------    -----------

          Total liabilities and stockholders' equity                                 $   176,672    $   178,194
                                                                                     ===========    ===========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-3


<PAGE>
<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 1997, 1996, and 1995
                 (In thousands, except share and per share data)


                                                                            1997           1996          1995
                                                                            ----           ----          ----

<S>                                                                     <C>           <C>           <C>

Interest income
    Loans receivable                                                     $    5,649    $    5,398    $    5,090
    Securities                                                                6,640         5,499         4,304
    Interest-bearing deposits with other
       financial institutions                                                   175           438           361
                                                                         ----------    ----------    ----------
                                                                             12,464        11,335         9,755

Interest expense
    Deposits                                                                  6,119         6,202         5,604
    Federal Home Loan Bank advances and
      other borrowings                                                          271           118           102
                                                                         ----------    ----------    ----------
                                                                              6,390         6,320         5,706
                                                                         ----------    ----------    ----------


NET INTEREST INCOME                                                           6,074         5,015         4,049

Provision for loan losses                                                         -             -           298
                                                                         ----------    ----------    ----------


NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                           6,074         5,015         3,751

Noninterest income
    Gain on sale of securities                                                   18             -            14
    Gain on sale of real estate held for development                            276            60           523
    Service fee income                                                          251           177           102
    Other operating income                                                       40            70            55
                                                                         ----------    ----------    ----------
                                                                                585           307           694

Noninterest expense
    Compensation and benefits                                                 2,575         1,664         1,782
    Occupancy and equipment expense                                             475           374           361
    Federal deposit insurance premiums                                          132           342           316
    Special SAIF assessment                                                       -           736             -
    Data processing services                                                    128           125           115
    Advertising                                                                 172            64           134
    Stationery, printing, and supplies                                          109            84           103
    Loss on sale of foreclosed real estate                                        6             4             -
    Other operating expense                                                     664           325           285
                                                                         ----------    ----------    ----------
                                                                              4,261         3,718         3,096
                                                                         ----------    ----------    ----------


INCOME BEFORE INCOME TAXES                                                    2,398         1,604         1,349

Income tax expense                                                              855           543           413
                                                                         ----------    ----------    ----------


NET INCOME                                                               $    1,543    $    1,061    $      936
                                                                         ==========    ==========    ==========

Basic earnings per share                                                   $    .67      $    .15           N/A
                                                                           ========      ========
Diluted earnings per share                                                 $    .67      $    .15           N/A
                                                                           ========      ========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4


<PAGE>
<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years ended December 31, 1997, 1996, and 1995
                 (In thousands, except share and per share data)



                                                                                                       Unrealized
                                                                                                       Gain (Loss)
                                                Additional                       Unearned   Unearned   on Securities     Total
                                     Common      Paid-in   Retained   Treasury     ESOP        MRP      Available-    Stockholders'
                                      Stock      Capital   Earnings     Stock     Shares     Shares      For-Sale       Equity
                                      -----      -------   --------     -----     ------     ------      --------       -------

<S>                               <C>          <C>        <C>        <C>        <C>         <C>        <C>            <C>

Balance at January 1, 1995         $      -    $      -   $ 16,520    $      -   $      -    $     -     $  (107)       $16,413

Net income                                -           -        936           -          -          -           -            936

Effect of transfer to available-
  for-sale at December 12,
  1995, net of income taxes
  of $88,000 (Note 2)                     -           -          -           -          -          -          139           139

Change in fair value
  of securities classified as
  available-for-sale, net of
  income taxes of $28,000                 -           -          -           -          -          -           45            45
                                   --------    --------   --------    --------   --------    -------      -------       -------


Balance at December 31, 1995              -           -     17,456           -          -          -          77         17,533

Issuance of common stock,
  net of conversion costs of
  $950,000                               27      26,038          -           -     (2,161)         -           -         23,904

ESOP shares released                      -          50          -           -        168          -           -            218

Net income                                -           -      1,061           -          -          -           -          1,061

Change in fair value of
  securities classified as
  available-for-sale, net of
  income taxes of $142,000                -           -          -           -          -          -        (259)          (259)
                                   --------    --------   --------    --------   --------    -------     -------        -------


Balance at December 31, 1996            27       26,088     18,517           -     (1,993)                  (182)        42,457

Purchase of 391,709 shares
  of treasury stock at cost              -            -          -      (6,395)         -          -           -         (6,395)

ESOP shares released                     -          129          -           -        186          -           -            315

Grant of shares under
  Management Recognition
  Plan (MRP)                             -            -          -       1,702          -     (1,702)          -              -

MRP shares earned                        -            5          -           -          -        476           -            481

Net income                               -            -      1,543           -          -          -           -          1,543

Change in fair value
  of securities classified as
  available-for sale, net of
  income taxes of $104,000               -            -          -           -          -          -         200            200
                                  --------     --------   --------    --------   --------    -------     -------        -------


Balance at December 31, 1997       $    27    $  26,222  $  20,060  $   (4,693) $  (1,807) $   (1,226)    $    18        $ 38,601
                                  ========     ========   ========    ========   ========   =========    ========       =======

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5


<PAGE>
<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1997, 1996, and 1995
                                 (In thousands)




                                                                1997                1996                1995
                                                                ----                ----                ----

<S>                                                        <C>                <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                              $        1,543    $         1,061    $          936
    Adjustments to reconcile net income to net
      cash from operating activities
       Net premium amortization (discount accretion)                    (3)                23                42
       Loss on sale of foreclosed real estate                            6                  4                 -
       Gain on sale of securities available-for-sale                   (18)                 -               (14)
       Depreciation                                                    104                124               102
       Deferred income tax expense (benefit)                             8                 78               (69)
       Deferred loan fees                                              (81)                42                14
       Provision for loan losses                                         -                  -               298
       Net change in accrued interest receivable                        85               (436)             (129)
       Net change in other assets                                     (105)               (35)               79
       Net change in accrued interest payable                           16                (25)              101
       Net change in other liabilities                                (156)               (99)               26
       ESOP expense                                                    315                218                 -
       Stock award earned                                              481                  -                 -
       Gain on sale of real estate held for
         development                                                  (276)               (60)             (523)
                                                            --------------    ---------------    --------------
          Net cash from operating activities                         1,919                895               863

CASH FLOWS FROM INVESTING ACTIVITIES
    Net change in loans                                             (2,196)            (5,952)           (4,111)
    Proceeds from maturities and calls of securities
     available-for-sale                                             22,000             15,850            11,002
    Proceeds from maturities and calls of securities
      held-to-maturity                                              25,150             24,635             6,002
    Purchase of securities available-for-sale                      (11,652)           (30,700)          (27,337)
    Purchase of securities held-to-maturity                        (35,963)           (34,121)                -
    Proceeds from sale of securities available-for-sale              1,001                  -             8,013
    Principal repayments on mortgage-backed
      securities held-to-maturity                                    2,917              1,719             3,687
    Principal repayments on mortgage-backed
      securities available-for-sale                                  1,984              3,872               132
    Purchase of consumer loans                                           -                  -              (182)
    Purchase of Federal Home
      Loan Bank stock                                                  (85)               (80)              (10)
    Proceeds from sales of real estate held for
      development                                                    1,144                384             2,172


                                  (Continued)

                                      F-6


<PAGE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1997, 1996, and 1995
                                 (In thousands)


                                                                    1997              1996              1995
                                                                    ----              ----              ----

<S>                                                          <C>                 <C>              <C>

CASH FLOWS FROM INVESTING ACTIVITIES (Continued)
    Investment in real estate held for development             $        (267)    $      (1,405)   $      (1,897)
    Payments to participants in real estate held for
      development                                                          -              (165)            (376)
    Proceeds from sale of foreclosed real estate                         123               265                -
    Expenditures for premises and equipment                             (443)             (186)            (280)
    Acquisition of land held for sale                                      -                 -             (318)
    Expenditures on foreclosed real estate                                 -               (10)               -
                                                               -------------     -------------    -------------
       Net cash from investing activities                              3,713           (25,894)          (3,503)

CASH FLOWS FROM FINANCING ACTIVITIES
    Net change in deposits                                             3,013            (1,651)          11,982
    Net change in securities sold under repurchase
      agreements                                                       4,250                 -                -
    Net change in advances from borrowers for
      taxes and insurance                                                 99               170             (125)
    Net proceeds from sale of common stock                                 -            23,903                -
    Purchase of treasury stock                                        (6,395)                -                -
    Federal Home Loan Bank advances                                        -                 -           12,000
    Repayment of Federal Home Loan Bank advances                      (5,000)           (4,000)         (11,000)
                                                               -------------     -------------    -------------
       Net cash from financing activities                             (4,033)           18,422           12,857
                                                               -------------     -------------    -------------

Increase (decrease) in cash and cash equivalents                       1,599            (6,577)          10,217

Cash and cash equivalents at beginning of year                         6,213            12,790            2,573
                                                               -------------     -------------    -------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                       $       7,812     $       6,213    $      12,790
                                                               =============     =============    =============

Supplemental disclosures of cash flow information
    Cash paid during the year for
       Interest                                                $       6,374     $       6,344    $       5,605
       Income taxes                                                    1,025               396              427

Supplemental disclosures of noncash investing activities
    Real estate acquired through foreclosure                             129               269                -
    Transfer of debt securities on December 12, 1995
      to available-for-sale from held-to-maturity                          -                 -           13,904

</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-7


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION:  The accompanying consolidated financial statements
include the accounts of Park  Bancorp,  Inc.  (the  Company),  its  wholly-owned
subsidiary  Park  Federal  Savings  Bank (the Bank) and the Bank's  wholly-owned
subsidiaries,  GPS Corporation, which conducts limited insurance activities, and
GPS Development Corp., which conducts real estate  development  activities.  All
significant   intercompany   transactions   and  balances  are   eliminated   in
consolidation.

BUSINESS:  The only  business of the Company is the  ownership of the Bank.  The
Bank is engaged in the business of retail  banking,  with  operations  conducted
through  its main  office and two  branches  located in  Chicago  and  Westmont,
Illinois.  The Bank's revenues  primarily arise from interest income from retail
lending  activities and investments and revenue derived from real estate through
the development and sales of residential lots to home builders.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:  The preparation of
financial statements in conformity with generally accepted accounting principles
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
income and expenses  during the reporting  period.  Actual  results could differ
from those  estimates.  The  collectibility  of loans,  fair value of  financial
instruments, and status of contingencies are particularly subject to change.

SECURITIES:  Securities  are classified as  held-to-maturity  when the Company's
management has the positive intent and the Company has the ability to hold those
securities  to  maturity.  Accordingly,  they are stated at cost,  adjusted  for
amortization  of premiums and accretion of discounts.  Securities are classified
as  available-for-sale  when  management may decide to sell those  securities in
response to changes in market interest rates, liquidity needs, changes in yields
on  alternative  investments,  and for other  reasons.  They are carried at fair
value. Unrealized gains and losses on securities  available-for-sale are charged
or credited to a valuation  allowance  and  included as a separate  component of
equity, net of income taxes.  Realized gains and losses on disposition are based
on the net proceeds and the adjusted  carrying  amount of the  securities  sold,
using the specific identification method.

LOANS  RECEIVABLE:  Loans receivable are stated at unpaid principal  balances, 
less the allowance for loan losses, deferred loan origination fees, and 
discounts.

ALLOWANCE  FOR LOAN  LOSSES:  Because  some loans may not be repaid in full,  an
allowance for loan losses is maintained. Increases to the allowance are recorded
by a provision for loan losses  charged to expense.  Estimating  the risk of the
loss and the amount of loss on any loan is necessarily subjective.  Accordingly,
the allowance is maintained by management at a level

                                  (Continued)

                                      F-8


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

considered  adequate to cover  possible  losses that are  currently  anticipated
based on past loss experience,  general economic  conditions,  information about
specific borrower  situations  including their financial position and collateral
values,  and other factors and estimates  which are subject to change over time.
While  management  may  periodically  allocate  portions  of the  allowance  for
specific problem loan situations,  including impaired loans discussed below, the
whole allowance is available for any charge-offs  that occur.  Loans are charged
off in whole or in part when  management's  estimate  of the  undiscounted  cash
flows from the loan are less than the recorded  investment in the loan, although
collection efforts continue and future recoveries may occur.

Loans are  considered  impaired if full  principal or interest  payments are not
anticipated.  Impaired  loans are carried at the present  value of expected cash
flows discounted at the loan's  effective  interest rate or at the fair value of
the collateral if the loan is collateral  dependent.  A portion of the allowance
for loan losses is  allocated to an impaired  loan if the present  value of cash
flows or collateral value indicate the need for an allowance.

Smaller  balance  homogeneous  loans are defined as  residential  first mortgage
loans secured by one-to-four-family residences,  residential construction loans,
second mortgage  loans,  and consumer loans and are evaluated  collectively  for
impairment.   Commercial  real  estate  loans  are  evaluated  individually  for
impairment.  Normal loan evaluation  procedures are used to identify loans which
must be evaluated for impairment.  In general,  loans  classified as doubtful or
loss  are  considered   impaired  while  loans  classified  as  substandard  are
individually  evaluated  for  impairment.  A loan is placed in  nonaccrual  when
payments  are  more  than  90 days  past  due  unless  the  loan  is  adequately
collateralized  and in the process of  collection.  Although  impaired  loan and
nonaccrual loan balances are measured differently,  impaired loan disclosures do
not differ significantly from nonaccrual and renegotiated loan disclosures.

INTEREST  INCOME:  Interest on loans is accrued over the term of the loans based
upon the principal  outstanding.  Management reviews loans delinquent 90 days or
more to determine if the interest accrual should be  discontinued.  The carrying
values of impaired  loans are  periodically  adjusted to reflect cash  payments,
revised  estimates of future cash flows,  and  increases in the present value of
expected  cash flows due to the  passage  of time.  Cash  payments  representing
interest  income are  reported  as such.  Other cash  payments  are  reported as
reductions  in carrying  value,  while  increases or decreases due to changes in
estimates  of future  payments  and due to the  passage of time are  reported as
adjustments to the provision for loan losses.

                                  (Continued)

                                      F-9


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LOAN  ORIGINATION  FEES:  Loan  origination  fees,  net of certain  direct  loan
origination  costs, are deferred and recognized over the contractual life of the
loan as a yield adjustment.

REAL  ESTATE  HELD  FOR  DEVELOPMENT:   The  Company,  through  the  Bank's  GPS
Development  Corp.  subsidiary,  engages in the development of residential  real
estate  lots in  partnership  with  local  developers.  Since the Bank  provides
substantially all of the financing for these projects,  they have been reflected
as  wholly-owned   investments  in  real  estate  held  for  development.   Land
inventories and real estate  projects under  development are valued at the lower
of acquisition cost plus development costs, or net realizable value. The cost of
each unit sold includes a proportionate share of the total projected development
expense cost.  Holding costs associated with undeveloped land,  completed units,
and suspended construction  activities are expensed.  General and administrative
costs  related  to the  real  estate  development  projects  are  expensed  when
incurred.

INCOME RECOGNITION ON REAL ESTATE:  Gains on real estate sales,  including those
financed by the  Company,  are recorded in the period that sales  contracts  are
executed.  Loans  made by the  Company to  builders  purchasing  developed  lots
require a 25% down  payment  and mature in one year or less.  Gains on sales are
reported net of all related costs, except for certain  insignificant general and
administrative expenses borne by the Company.

PREMISES  AND  EQUIPMENT:  Premises  and  equipment  are  stated  at  cost  less
accumulated  depreciation.  Depreciation  is  computed  using the  straight-line
method over the estimated  useful lives of the assets,  which range from 5 to 40
years.

FORECLOSED  REAL ESTATE:  Real estate acquired  through  foreclosure and similar
proceedings  is carried at cost (fair  value at the date of  foreclosure)  or at
fair  value  less  estimated  costs to sell.  Losses on  disposition,  including
expenses incurred in connection with the disposition, are charged to operations.

INCOME TAXES:  The provision for income taxes is based on an asset and liability
approach that requires  recognition of deferred tax assets and  liabilities  for
the expected future  consequences of temporary  differences between the carrying
amounts and the tax bases of assets and liabilities.

                                  (Continued)

                                      F-10


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

EMPLOYEE STOCK  OWNERSHIP  PLAN: The cost of shares issued to the Employee Stock
Ownership Plan (ESOP) but not yet allocated to  participants is presented in the
consolidated balance sheet as a reduction of stockholders' equity.  Compensation
expense  is  recorded  based  on the  market  price  of the  shares  as they are
committed to be released for allocation to participant accounts.  The difference
between  the market  price and the cost of shares  committed  to be  released is
recorded as an adjustment to additional paid-in capital.

Shares are considered  outstanding  for earnings per share  calculations as they
are committed to be released; unallocated shares are not considered outstanding.

STATEMENT  OF CASH  FLOWS:  For the  purpose  of this  statement,  cash and cash
equivalents are defined to include the Company's cash on hand,  demand balances,
and interest-bearing deposits with other financial institutions, and investments
in certificates of deposit with maturities of less than three months.

EARNINGS PER SHARE:  Basic and diluted  earnings per share are computed  under a
new accounting standard which became effective in the quarter ended December 31,
1997. All prior amounts have been restated to be comparable.  Basic earnings per
share is based on net  income  divided  by  weighted  average  number  of shares
outstanding  during the period.  Diluted  earnings  per share shows the dilutive
effect of  additional  common shares  issuable  under stock options and unearned
Management  Recognition  Plan  (MRP)  shares.  In 1996,  earnings  per  share is
computed  using  net  earnings  from  August  9,  1996,  the date  that the Bank
converted to stock ownership.

FAIR VALUES OF FINANCIAL  INSTRUMENTS:  Fair values of financial instruments are
estimated using relevant market  information and other assumptions as more fully
disclosed elsewhere.  Fair value estimates involve  uncertainties and matters of
significant  judgment regarding interest rates,  credit risk,  prepayments,  and
other factors,  especially in the absence of broad markets for particular items.
Changes in assumptions or in market  conditions could  significantly  affect the
estimates.  The fair  value  estimates  of  existing  on- and  off-balance-sheet
financial  instruments does not include the value of anticipated future business
or the values of assets and liabilities not considered financial instruments.


                                  (Continued)

                                      F-11


<PAGE>
<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 2 - SECURITIES

Securities are summarized as follows:

                                                      ---------------------December 31, 1997-------------------
                                                                         Gross            Gross
                                                        Amortized     Unrealized       Unrealized       Fair
SECURITIES AVAILABLE-FOR-SALE                             Cost           Gains           Losses         Value
-----------------------------                             ----           -----           ------         -----

<S>                                                  <C>            <C>             <C>            <C>

U.S. government agency notes                          $    29,183     $        36    $       (52)   $    29,167
Municipal securities                                          288               -             (1)           287
                                                      -----------     -----------    -----------    -----------
                                                           29,471              36            (53)        29,454
Equity securities                                             400               8              -            408
Mortgage-backed securities:
    FNMA                                                    4,141              30             (5)         4,166
    FHLMC                                                   3,061              12              -          3,073
                                                      -----------     -----------    -----------    -----------
                                                            7,202              42             (5)         7,239
                                                      -----------     -----------    -----------    -----------

                                                      $    37,073     $        86    $       (58)   $    37,101
                                                      ===========     ===========    ===========    ===========

SECURITIES HELD-TO-MATURITY
---------------------------

U.S. government agency notes                          $    44,975     $       146    $       (33)   $    45,088
Mortgage-backed securities:
    FNMA                                                    5,651               -            (85)         5,566
    FHLMC                                                   5,110               -            (80)         5,030
                                                      -----------     -----------    -----------    -----------
                                                           10,761               -           (165)        10,596
                                                      -----------     -----------    -----------    -----------

                                                      $    55,736     $       146    $      (198)   $    55,684
                                                      ===========     ===========    ===========    ===========

</TABLE>

                                  (Continued)

                                      F-12


<PAGE>
<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 2 - SECURITIES (Continued)

                                                      ---------------------DECEMBER 31, 1996-------------------
                                                                         Gross            Gross
                                                        Amortized     Unrealized       Unrealized       Fair
SECURITIES AVAILABLE-FOR-SALE                             Cost           Gains           Losses         Value
-----------------------------                             ----           -----           ------         -----

<S>                                                   <C>             <C>             <C>           <C>

U.S. Treasury bills and notes                         $     1,500     $        15    $         -    $     1,515
U.S. government agency notes                               39,679               2           (310)        39,371
                                                      -----------     -----------    -----------    -----------
                                                           41,179              17           (310)        40,886
Mortgage-backed securities:
    FNMA                                                    5,056              24             (2)         5,078
    FHLMC                                                   4,150               7            (12)         4,145
                                                      -----------     -----------    -----------    -----------
                                                            9,206              31            (14)         9,223
                                                      -----------     -----------    -----------    -----------

                                                      $    50,385     $        48    $      (324)   $    50,109
                                                      ===========     ===========    ===========    ===========

SECURITIES HELD-TO-MATURITY
---------------------------

U.S. government agency notes                          $    34,134     $        77    $      (194)   $    34,017
Mortgage-backed securities:
    FNMA                                                    6,290               -            (84)         6,206
    FHLMC                                                   7,416               2            (88)         7,330
                                                      -----------     -----------    -----------    -----------
                                                           13,706               2           (172)        13,536
                                                      -----------     -----------    -----------    -----------

                                                      $    47,840     $        79    $      (366)   $    47,553
                                                      ===========     ===========    ===========    ===========

Sales of securities are summarized as follows:

<CAPTION>

                                                                                 For the Year Ended
                                                                       -------------December 31,-------------
                                                                          1997          1996           1995
                                                                          ----          ----           ----

<S>                                                                    <C>           <C>          <C>

     Proceeds from sales                                               $    1,001    $        -    $    8,013
     Gross realized gains                                                      18             -            14

</TABLE>

                                  (Continued)

                                      F-13


<PAGE>
<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)


NOTE 2 - SECURITIES (Continued

Contractual  maturities of debt securities at December 31, 1997 were as follows.
Securities not due at a single  maturity  date,  primarily  mortgage-backed  and
equity securities, are shown separately.
                                                                                 Amortized        Fair
         Securities Available-For-Sale                                             Cost           Value
         -----------------------------                                             ----           -----

<S>                                                                            <C>            <C>

         Due in one year or less                                                $    2,000     $     1,991
         Due after one year through five years                                      17,186          17,166
         Due after five years through ten years                                      6,000           6,020
         Due after ten years                                                         4,285           4,277
                                                                                ----------     -----------
                                                                                    29,471          29,454
         Equity securities                                                             400             408
         Mortgage-backed securities                                                  7,202           7,239
                                                                                ----------     -----------

                                                                                $   37,073     $    37,101
                                                                                ==========     ===========

         SECURITIES HELD-TO-MATURITY
         ---------------------------

         Due in one year or less                                                $    6,000     $     5,987
         Due after one year through five years                                       3,999           4,024
         Due after five years through ten years                                     19,987          20,090
         Due after ten years                                                        14,989          14,987
                                                                                ----------     -----------
                                                                                    44,975          45,088
         Mortgage-backed securities                                                 10,761          10,596
                                                                                ----------     -----------

                                                                                $   55,736     $    55,684
                                                                                ==========     ===========

Securities  with a book value of  $4,750,000  at December  31, 1997 were  
pledged to secure  securities  sold under repurchase agreements.

</TABLE>

                                  (Continued)

                                      F-14


<PAGE>

<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 3 - LOANS RECEIVABLE

Loans receivable are summarized as follows at:

                                                                                   --------December 31,--------
                                                                                       1997             1996
                                                                                       ----             ----

<S>                                                                               <C>             <C>

     First mortgage loans
         Principal balances
              Secured by one-to-four-family residences                             $     55,634    $     53,757
              Secured by other properties                                                 7,860           8,168
              Commercial, construction, and land                                          5,215           5,000
                                                                                   ------------    ------------
                                                                                         68,709          66,925

     Undistributed portion of construction loans                                         (1,042)         (1,043)
     Net deferred loan origination fees                                                    (337)           (418)
                                                                                   ------------    ------------
         Total first mortgage loans                                                      67,330          65,464

     Consumer loans                                                                       1,501           1,223
     Unearned discounts                                                                      (4)             (8)
                                                                                   ------------    ------------
         Total consumer loans                                                             1,497           1,215

     Allowance for loan losses                                                             (500)           (500)
                                                                                   ------------    ------------

                                                                                   $     68,327    $     66,179
                                                                                   ============    ============

</TABLE>

At December 31, 1997 and 1996, impaired loans totaled $99,000 and $190,000.  The
average balance of impaired loans was approximately  $145,000 for the year ended
December 31, 1997 and  approximately  $346,000  for the year ended  December 31,
1996.  No portion of the  allowance  for loan losses was  allocated  to impaired
loans at December 31, 1997 or December 31, 1996.  Interest income  recognized on
impaired  loans was  approximately  $10,000 for the year ended December 31, 1997
and $13,000 for the year ended December 31, 1996, which was received in cash for
both years.

The Company has granted  loans to certain bank  officers,  directors,  and their
related interests. Related party loans are made on substantially the same terms,
including  interest rates and  collateral,  as those  prevailing at the time for
comparable  transactions  with  unrelated  persons and do not involve  more than
normal  risk of  collectibility.  All loans  are  current  in their  contractual
payments for both principal and interest.

                                  (Continued)

                                      F-15


<PAGE>
<TABLE>
<CAPTION>

                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 3 - LOANS RECEIVABLE (Continued)

Activity  in the  loan  accounts  of  officers,  directors,  and  their  related
interests follows:

                                                                                        For the Year Ended
                                                                                           December 31,
                                                                                           ------------
                                                                                       1997            1996
                                                                                       ----            ----

<S>                                                                                <C>            <C>

     Balance at beginning of year                                                   $       623    $     1,273
     Loans disbursed                                                                         23             35
     Principal repayments                                                                   (64)          (685)
                                                                                    -----------    -----------

         Balance at end of year                                                     $       582    $       623
                                                                                    ===========    ===========

Activity in the allowance for loan losses is as follows:

<CAPTION>

                                                                                For the Year Ended
                                                                     --------------December 31,----------------
                                                                         1997          1996             1995
                                                                         ----          ----             ----

<S>                                                                 <C>            <C>            <C>

     Balance at beginning of year                                    $       500    $       573    $       275
     Provision for loan losses                                                 -              -            298
     Charge-offs                                                               -            (73)             -
     Recoveries                                                                -              -              -
                                                                     -----------    -----------    -----------

         Balance at end of year                                      $       500    $       500    $       573
                                                                     ===========    ===========    ===========

</TABLE>
<TABLE>
<CAPTION>

NOTE 4 - REAL ESTATE HELD FOR DEVELOPMENT

The Company, through the Bank's subsidiary,  GPS Development Corp., participates
with local real estate  developers  in  developing  residential  lots located in
Naperville, Illinois.

The following summarizes the Bank's real estate development activities:

                                                                                For the Year Ended
                                                                     --------------December 31,----------------
                                                                         1997          1996             1995
                                                                         ----          ----             ----

<S>                                                                   <C>            <C>              <C>

     Proceeds from sale of real estate held
       for development                                               $     1,144    $       384    $     2,172

     Gain on sale of real estate held for development                        276             60            523

</TABLE>

                                  (Continued)

                                      F-16


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 4 - REAL ESTATE HELD FOR DEVELOPMENT (Continued)

The  Company's  primary  investment  in real  estate held for  development  is a
single-family  housing subdivision located in Naperville known as Prairie Ridge.
This  development  consists of 88 single family lots, of which 14 have been sold
through December 31, 1997


NOTE 5 - PREMISES AND EQUIPMENT

<TABLE>
<CAPTION>

Premises and equipment consist of the following at:

                                                                                -------December 31,-------
                                                                                   1997           1996
                                                                                   ----           ----

<S>                                                                            <C>             <C>

         Cost
              Land$                                                            $       850      $      850
              Buildings and improvements                                             1,839           1,777
              Furniture and fixtures                                                   930             549
                                                                                ----------     -----------
                  Total cost                                                         3,619           3,176
         Less accumulated depreciation                                              (1,130)         (1,026)
                                                                                ----------     -----------

                                                                                $    2,489     $     2,150
                                                                                ==========     ===========
</TABLE>


NOTE 6 - DEPOSITS

Certificate  of deposit  accounts with  balances  $100,000 or more totaled  
$11,634,000  at  December 31,  1997 and $8,413,000 at December 31, 1996.

At December 31, 1997,  scheduled  maturities of  certificates  of deposit are as
follows:

        1998                                  $   57,743
        1999                                      22,518
        2000                                       5,285
        2001                                       1,255
        2002 and thereafter                        2,084
                                              ----------

                                              $   88,885
                                              ==========

NOTE 7 - ADVANCES FROM FEDERAL HOME LOAN BANK

There  were no  advances  from the  Federal  Home  Loan Bank of  Chicago  (FHLB)
outstanding at December 31, 1997. At December 31, 1996, the Company had advances
from the FHLB of $5,000,000. FHLB advances consist of an open line of credit and
bear an interest  rate which  adjusts  daily.  The interest rate was 6.95% as of
December 31, 1996.

                                  (Continued)

                                      F-17


<PAGE>

                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 7 - ADVANCES FROM FEDERAL HOME LOAN BANK (Continued)

The Company  maintains a collateral  pledge agreement  covering secured advances
whereby the  Company has agreed to at all times keep on hand,  free of all other
pledges,  liens, and  encumbrances,  fully  disbursed,  whole first mortgages on
improved residential  property not more than 90 days delinquent,  aggregating no
less than 167% of the outstanding secured advances from the FHLB.


NOTE 8 - EMPLOYEE BENEFIT PLANS

The  Company   terminated  its  Defined   Benefit  Pension  Plan  in  1996.  All
participants  became fully vested as of May 31, 1996 and no credit was given for
service after that date. All participant balances were paid in 1997.

Prior to 1996, the Bank maintained a Profit Sharing Plan covering  substantially
all  employees.  Contributions  to the  Profit  Sharing  Plan  were  made at the
discretion of the Board of Directors and charged to expense  annually.  In 1996,
the Bank  added a 401(k)  feature  to the Plan to allow for  participant  salary
deferrals into the Plan along with a matching contribution provided by the Bank.
The  matching  contributions  were  $36,000 and $18,000 for 1997 and 1996.  Plan
contributions for 1995 were $141,000.

During  1996,  the  Bank  established  a  non-qualified  Supplemental  Executive
Retirement  Plan  (SERP) to provide  certain  officers  and  highly  compensated
employees with additional  retirement benefits.  The SERP is designed to restore
benefits to  participants  in the qualified plan whose  retirement  benefits had
been reduced as the result of changes in the Internal Revenue Code.  Benefits to
be provided under the SERP will be funded with proportional  contributions  from
the  Company  and  the  Bank.   During  1997  and  1996,   there  were  no  such
contributions.

As part of the conversion  transaction,  the Bank  established an Employee Stock
Ownership Plan (ESOP) for the benefit of substantially  all employees.  The ESOP
borrowed  $2,160,990  from the Company  and used those funds to acquire  216,099
shares of the  Company's  stock at $10 per share,  the initial  public  offering
price.

Shares issued to the ESOP are allocated to ESOP participants  based on principal
repayments made by the ESOP on the loan from the Company. The loan is secured by
shares  purchased  with the loan  proceeds  and will be  repaid by the ESOP with
funds from the Bank's  discretionary  contributions  to the ESOP and earnings on
ESOP  assets.  Principal  payments are  scheduled  to occur over a  fifteen-year
period.  However, in the event the Bank's  contributions exceed the minimum debt
service  requirements,  additional principal payments will be made. Dividends on
allocated  ESOP  shares  are  recorded  as a  reduction  of  retained  earnings;
dividends on unallocated ESOP shares are used to release shares.

                                  (Continued)

                                      F-18


<PAGE>

                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 8 - EMPLOYEE BENEFIT PLANS (Continued)

During  1997 and 1996,  18,582 and 16,757  shares of stock with an average  fair
value of $17 and $13 per share,  respectively,  were  committed  to be released,
resulting in ESOP compensation expense of $315,000 and $218,000.
Shares held by the ESOP at December 31, 1997 and 1996 are as follows:

                                                  1997           1996
                                                  ----           ----

         Allocated shares                          35,339          16,757
         Unallocated shares                       180,760         199,342
                                               ----------     -----------

              Total ESOP shares                   216,099         216,099
                                               ==========     ===========

         Fair value of unallocated shares      $    3,367     $     2,591
                                               ==========     ===========

Also in connection with the conversion to stock ownership, the Company adopted a
Management Recognition Plan (MRP) during 1997. The Bank contributed $1.7 million
allowing the MRP to acquire 108,057 shares of common stock of the Company,  at a
cost of $15.75  per share.  Under the MRP,  92,925  shares of common  stock were
awarded  to  certain  employees  and  directors  at the  time of  adoption.  The
remaining  15,132 shares are held for future awards.  The stock awards vest over
five years. The amortized cost of the shares which vested in 1997 was $476,000.

The Company  also  adopted a stock  option plan in 1997 under the terms of which
270,141  shares of the Company's  common stock were  reserved for issuance.  The
options become  exercisable on a cumulative basis in equal  installments  over a
five-year  period from the date of grant.  The options expire ten years from the
date of grant.  During 1997,  options for 232,324 shares of Company common stock
were granted at an exercise price of $15.75 per share.  None of the options were
forfeited or exercised  during 1997. The options have a weighted average life of
9.2 years and a fair value of $6.38 per share.

Statement  of  Financial   Accounting  Standards  No.  123  requires  pro  forma
disclosures for companies that do not adopt its fair value accounting method for
stock-based  employee  compensation.   Accordingly,   the  following  pro  forma
information  presents  1997 net income and earnings per share had the fair value
method been used to measure  compensation cost for stock option plans. There was
no compensation expense recorded for stock options in 1997.

                  Pro forma net income               $     1,361
                  Basic earnings per share           $       .59
                  Diluted earnings per share         $       .59

                                  (Continued)

                                      F-19


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 8 - EMPLOYEE BENEFIT PLANS (Continued)

The fair value of options  granted in 1997 was estimated  using a  Black-Scholes
option  pricing  model using the  following  assumptions:  divided  yield of 0%;
expected  volatility factor of the expected market price of the Company's common
stock of 11%; and risk-free interest rate of 5.50%.


NOTE 9 - EARNINGS PER SHARE

The following table presents a reconciliation  of the components used to compute
basic and diluted  earnings  per share for the year ended  December 31, 1997 and
the period from August 9, 1996 to December 31, 1996.

<TABLE>
<CAPTION>

                                                                               1997              1996
                                                                               ----              ----

<S>                                                                      <C>                <C>

         BASIC EARNINGS PER SHARE
              Net income as reported                                     $        1,543     $        1,061
              Earnings prior to conversion to
                a stock form of ownership                                             -               (697)
                                                                         --------------     --------------
              Net income available to
                common shareholders                                               1,543                364
              Weighted average common
                shares outstanding                                            2,296,427          2,493,680
                                                                         --------------     --------------

                  Basic earnings per share                               $          .67     $          .15
                                                                         ==============     ==============

         DILUTED EARNINGS PER SHARE
              Net income available to
                common shareholders                                      $        1,543     $          364

              Weighted average common
                shares outstanding                                            2,296,427          2,493,686
              Dilutive effect of MRP                                              3,476                  -
              Dilutive effect of stock options                                   15,197                  -
                                                                         --------------     --------------
                                                                              2,315,100          2,493,680
                                                                         --------------     --------------

                  Dilutive earnings per share                            $          .67     $          .15
                                                                         ==============     ==============

</TABLE>

                                  (Continued)

                                      F-20


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 10 - REGULATORY CAPITAL

On March  21,  1996,  the  Board of  Directors  of the  Bank  adopted  a Plan of
Conversion to convert from a federal  chartered mutual savings bank to a federal
chartered stock savings bank with the concurrent formation of a holding company.
On August 9, 1996, the Company sold 2,701,441  shares of common stock at $10 per
share and received proceeds of $23,903,420,  net of conversion expenses and ESOP
shares.  Approximately  50% of the gross  proceeds  were used by the  Company to
acquire all of the capital stock of the Bank.  The  conversion was accounted for
as an internal reorganization with historical account balances carried forward.

At the time of conversion,  the Bank established a liquidation  account totaling
$17,646,000.  The liquidation  account is maintained for the benefit of eligible
depositors  who  continue  to  maintain  their  accounts  at the Bank  after the
conversion.  The liquidation account will be reduced annually to the extent that
eligible depositors have reduced their qualifying deposits. Subsequent increases
will not  restore an  eligible  account  holder's  interest  in the  liquidation
account. In the event of a complete liquidation, each eligible depositor will be
entitled to receive a  distribution  from the  liquidation  account in an amount
proportionate  to the current  adjusted  qualifying  balances for accounts  then
held. The liquidation account balance is not available for payment of dividends.

The Bank is subject to regulatory capital  requirements  administered by federal
regulatory  agencies.  Capital adequacy  guidelines and prompt corrective action
regulations involve quantitative  measures of assets,  liabilities,  and certain
off-balance-sheet   items  calculated  under  regulatory  accounting  practices.
Capital amounts and classifications are also subject to qualitative judgments by
regulators  about  components,  risk  weightings,  and  other  factors,  and the
regulators can lower  classifications in certain cases.  Failure to meet various
capital  requirements  can initiate  regulatory  action that could have a direct
material effect on the financial statements.

The prompt corrective action regulations provide five classifications, including
well  capitalized,  adequately  capitalized,   undercapitalized,   significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to  represent  overall  financial  condition.  If  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and plans for capital restoration are required.

                                  (Continued)

                                      F-21


<PAGE>
<TABLE>
<CAPTION>

NOTE 10 - REGULATORY CAPITAL (Continued)

At year end, the Bank's actual capital levels and minimum required levels were:

                                                                                                        Minimum Required
                                                                                                           to Be Well
                                                                             Minimum Required              Capitalized
                                                                               for Capital          Under Prompt Corrective
                                                         Actual              Adequacy Purposes         Action Regulations
                                                        -------              -----------------         ------------------
1997                                               Amount        Ratio        Amount        Ratio       Amount       Ratio
----                                               ------        -----        ------        -----       ------       -----

<S>                                            <C>            <C>            <C>          <C>          <C>          <C>

Total capital (to risk-weighted assets)          $   24,221      38.6%     $    5,022       8.0%      $    6,278     10.0%
Tier 1 (core) capital (to risk-weighted
  assets)                                        $   23,721      37.8%     $    2,511       4.0%      $    2,511      4.0%
Tier 1 (core) capital (to adjusted total
  assets)                                        $   23,721      14.5%     $    4,892       3.0%      $    6,523      4.0%
Tangible capital (to adjusted total
  assets)                                        $   23,721      14.5%     $    2,446       1.5%             N/A        N/A
Tier 1 (leverage) capital (to average
  total assets)                                  $   25,991      15.6%     $    6,658       4.0%      $    8,323      5.0%

1996
----

Total capital (to risk-weighted assets)          $   27,634      58.2%     $    3,797       8.0%      $    4,797     10.0%
Tier 1 (core) capital (to risk-weighted
  assets)                                        $   27,134      57.2%     $    1,899       4.0%      $    1,899      4.0%
Tier 1 (core) capital (to adjusted total
  assets)                                        $   27,134      16.5%     $    4,947       3.0%      $    6,596      4.0%
Tangible capital (to adjusted total
  assets)                                        $   27,134      16.5%     $    2,473       1.5%             N/A        N/A
Tier 1 (leverage) capital (to average
  total assets)                                  $   29,823      18.3%     $    6,530       4.0%      $    8,163      5.0%

</TABLE>

The Bank at December 31, 1997 was categorized as well capitalized.

Federal  regulations  require the  Qualified  Thrift  Lender  (QTL) test,  which
mandates  that  approximately  65% of assets be  maintained  in  housing-related
finance and other specified areas. If the QTL test is not met, limits are placed
on growth,  branching,  new investments,  and Federal Home Loan Bank advances or
the  Bank  must  convert  to a  commercial  bank  charter.  The Bank  meets  the
requirements of the QTL test at December 31, 1997.

                                  (Continued)

                                      F-22


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 11 - INCOME TAXES

Income tax expense consists of the following:

<TABLE>
<CAPTION>


                                                      For the Year Ended
                                           --------------December 31,---------------
                                              1997           1996            1995
                                              ----           ----            ----

<S>                                      <C>             <C>             <C>

     Currently payable tax
         Federal                           $       847    $       465    $       552
         State                                       -              -            (70)
     Deferred tax expense                            8             78            (69)
                                           -----------    -----------    -----------

         Income tax expense                $       855    $       543    $       413
                                           ===========    ===========    ===========

</TABLE>

The federal income tax expense  differs from the amounts  determined by applying
the statutory  federal income tax rate to income before income taxes as a result
of the following items:

<TABLE>
<CAPTION>

                                    ----------------------------------December 31,----------------------------------
                                    -----------1 9 9 7-------  ----------1 9 9 6-------   ----------1 9 9 5---------
                                                  Percentage                 Percentage                 Percentage
                                                   of Income                  of Income                  of Income
                                                    Before                     Before                     Before
                                                    Income                     Income                     Income
                                       Amount        Taxes        Amount        Taxes        Amount        Taxes
                                      -------        -----        ------        -----        ------        -----

<S>                                 <C>            <C>         <C>            <C>         <C>            <C>

Income tax computed at
  the statutory rate                 $       815     34.0%     $       545        34.0%   $       459      34.0%
State income tax benefit,
  net of federal tax                           -        -                -           -            (45)     (3.4)
ESOP expense                                  44      1.8               17         1.1              -         -
Other items, net                              (4)     (.1)             (19)       (1.2)            (1)        -
                                     -----------   ------      -----------   ---------    -----------    ------

                                     $       855     35.7%     $       543        33.9%   $       413      30.6%
                                     ===========   ======      ===========   =========    ===========    ======

</TABLE>

Prior to 1996, the Bank had qualified under  provisions of the Internal  Revenue
Code which  allowed it to deduct from taxable  income a provision  for bad debts
which differs from the provision charged to income in the financial  statements.
Retained  earnings at December 31, 1997  include  approximately  $3,298,000  for
which  no  deferred  federal  income  tax  liability  has  been  recorded.   Tax
legislation passed in August 1996 now requires all thrift institutions to deduct
a provision for bad debts for tax purposes based on the actual loss experience.

                                  (Continued)

                                      F-23


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 11 - INCOME TAXES (Continued)

Deferred tax assets (liabilities) are comprised of the following at:

<TABLE>
<CAPTION>

                                                                             ---------December 31,---------
                                                                                  1997            1996
                                                                                  ----            ----

<S>                                                                          <C>              <C>

     Deferred loan fees                                                      $        115     $        162
     ESOP and MRP expense                                                              27                -
     Unrealized loss on securities available for sale                                   -               94
     Other                                                                              -               22
                                                                             ------------     ------------
                                                                                      142              278

     Bad debt deduction                                                              (243)            (276)
     Federal Home Loan Bank stock dividend                                            (32)             (37)
     Depreciation                                                                    (106)            (117)
     Unrealized gain on securities available for sale                                 (10)               -
     Other                                                                            (15)               -
                                                                             ------------     ------------
                                                                                     (406)            (430)
                                                                             ------------     ------------

         Net deferred tax liability                                          $       (264)    $       (152)
                                                                             ============     ============

</TABLE>


NOTE 12 - COMMITMENTS, FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET
  RISK, AND CONCENTRATIONS OF CREDIT RISK

The Company  grants  mortgages and  installment  loans to, and obtains  deposits
from,  customers  primarily  in  Cook,  DuPage,  and  Will  Counties,  Illinois.
Substantially  all loans are secured by specific items of collateral,  primarily
residential  real  estate  and  consumer  assets.   The  Company  also  develops
residential  housing  lots in DuPage  and Will  counties  for sale to local home
builders.

The Company is a party to financial instruments with  off-balance-sheet  risk in
the normal  course of business  to meet the  financing  needs of its  customers.
These financial instruments consist of standby letters of credit and commitments
to make loans and fund loans in process.  The Company's  exposure to credit loss
in the event of nonperformance by the other party to these financial instruments
is  represented  by the  contractual  amount of these  instruments.  The Company
follows the same credit policy to make such commitments as is followed for those
loans recorded on the statement of financial condition.

                                  (Continued)

                                      F-24


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 12 - COMMITMENTS, FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET
  RISK, AND CONCENTRATIONS OF CREDIT RISK (Continued)

These financial instruments are summarized as follows at:

<TABLE>
<CAPTION>

                                                                  Contract Amount
                                                       ------------December 31,---------
                                                             1997             1996
                                                             ----             ----

<S>                                                     <C>            <C>

     Financial instruments whose contract
       amounts represent credit risk
         Commitments to make loans (all fixed rate)       $   891         $   835
         Standby letters of credit                            793           1,665
         Loans in process                                   1,042           1,043

</TABLE>

The fixed rate loan  commitments  at  December  31, 1997 have terms of 75 to 180
days and rates in the range of 7.125% to 10.50%.  Fixed rate loan commitments at
December  31,  1996 have terms of 75 to 180 days and rates in the range of 7.00%
to 8.90%.

Since certain commitments to make loans and fund loans in process expire without
being  used,  the  amounts  above  do  not  necessarily  represent  future  cash
commitments. No losses are anticipated as a result of these transactions.

Interest-bearing  deposit accounts in other financial  institutions  potentially
subject the Company to  concentrations of credit risk. At December 31, 1997, the
Company had  deposit  accounts  at the  Federal  Home Loan Bank of Chicago  with
balances totaling  approximately  $6,693,000.  At December 31, 1996, the balance
was approximately $5,444,000.


NOTE 13 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The approximate carrying amount and estimated fair value of financial 
instruments is as follows:

<TABLE>
<CAPTION>

                                                     ---------DECEMBER 31, 1997-----  ------DECEMBER 31, 1996-----
                                                         Approximate                     Approximate
                                                          Carrying       Estimated        Carrying     Estimated
                                                           Amount       Fair Value         Amount     Fair Value
                                                           ------       ----------         ------     ----------

<S>                                                   <C>             <C>            <C>            <C>

       ASSETS
          Cash and cash equivalents                    $     7,812     $     7,812    $     6,213    $     6,213
          Securities available-for-sale                     37,101          37,101         50,109         50,109
          Securities held-to-maturity                       55,736          55,684         47,840         47,553
          Loans receivable, net                             68,327          70,307         66,179         67,168
          Federal Home Loan Bank stock                         841             841            756            756
          Accrued interest receivable                        1,542           1,542          1,627          1,627

</TABLE>

                                  (Continued)

                                      F-25


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 13 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

<TABLE>
<CAPTION>


                                                     ---------December 31, 1997-----  ------December 31, 1996-----
                                                         Approximate                     Approximate
                                                          Carrying       Estimated        Carrying      Estimated
                                                           Amount       Fair Value         Amount      Fair Value
                                                          -------       ----------         ------      ----------

<S>                                                     <C>            <C>            <C>             <C>

       LIABILITIES
          Demand and NOW                               $    (6,823)    $    (6,823)   $    (6,760)   $    (6,760)
          Money market                                      (4,002)         (4,002)        (4,041)        (4,041)
          Passbook savings                                 (32,155)        (32,155)       (33,875)       (33,875)
          Certificates of deposit                          (93,135)        (93,540)       (84,176)       (84,505)
          Advances from borrowers for taxes
            and insurance                                   (1,387)         (1,387)        (1,288)        (1,288)
          Federal Home Loan Bank advances                        -               -         (5,000)        (5,000)
          Accrued interest payable                            (175)           (175)          (159)          (159)

</TABLE>

For purposes of the above, the following assumptions were used:

CASH  AND  CASH  EQUIVALENTS:  The  estimated  fair  values  for  cash  and cash
equivalents  are based on their carrying  value due to the short-term  nature of
these assets.

SECURITIES:  The fair values of securities  are based on the quoted market value
for the individual  security or its  equivalent.  The fair value of Federal Home
Loan Bank stock is based on its redemption value.

LOANS: The estimated fair value for loans has been determined by calculating the
present  value of future cash flows based on the current rate the Company  would
charge for similar loans with similar maturities,  applied for an estimated time
period until the loan is assumed to be repriced or repaid.

DEPOSITS:  The  estimated  fair value for time  deposits has been  determined by
calculating  the present  value of future cash flows based on estimates of rates
the  Company  would pay on such  deposits,  applied  for the time  period  until
maturity.  The  estimated  fair  values of demand  and NOW,  money  market,  and
passbook  savings  deposits are assumed to approximate  their carrying values as
management  establishes rates on these deposits at a level that approximates the
local market area.

                                  (Continued)

                                      F-26


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 13 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

FEDERAL HOME LOAN BANK ADVANCES:  The advances are at current market rates.  
Accordingly,  fair value is assumed to equal carrying value.

ACCRUED  INTEREST AND ADVANCES FROM BORROWERS FOR TAXES AND INSURANCE:  The fair
values of accrued  interest  receivable  and payable and advances from borrowers
for taxes and insurance are assumed to equal their carrying value.

OFF-BALANCE-SHEET  INSTRUMENTS:  Off-balance-sheet  items  consist  principally
of unfunded loan  commitments  and standby letters of credit.  The fair value 
of these items is not material.

Other  assets  and   liabilities   of  the  Company  not  defined  as  financial
instruments,  such as  property  and  equipment,  are not  included in the above
disclosures.  Also not  included  are  nonfinancial  instruments  typically  not
recognized in financial statements such as the value of core deposits,  customer
goodwill, and similar items.

While  the  above  estimates  are  based on  management's  judgment  of the most
appropriate factors, there is no assurance that if the Company disposed of these
items on December 31, 1997 or December 31, 1996, the fair values would have been
achieved,  because the market value may differ  depending on the  circumstances.
The estimated  fair values at December 31, 1997 and December 31, 1996 should not
necessarily be considered to apply at subsequent dates.

                                  (Continued)

                                      F-27


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 14 - PARENT COMPANY FINANCIAL STATEMENTS

Presented  below are the condensed  balance  sheets,  statements of income,  and
statements of cash flows for Park Bancorp, Inc. The Company was formed on August
9, 1996. Accordingly, the statements of income and cash flows reflect year ended
December 31, 1997 and the period August 9, 1996 through December 31, 1996.

<TABLE>
<CAPTION>


                             CONDENSED BALANCE SHEET
                           December 31, 1997 and 1996

                                                                           1997            1996
                                                                           ----            ----

<S>                                                                    <C>            <C>

ASSETS
Cash and cash equivalents                                               $       743    $     4,566
Securities available-for-sale                                                 8,713          2,997
Securities held-to-maturity                                                   1,000          3,149
ESOP loan                                                                     1,839          1,981
Investment in bank subsidiary                                                25,991         29,823
Accrued interest receivable and other assets                                    389             48
                                                                        -----------    -----------

     Total assets                                                       $    38,675    $    42,564
                                                                        ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other liabilities                                  $        74    $       107
Stockholders' equity
     Common stock                                                                27             27
     Additional paid-in capital                                              26,222         26,088
     Retained earnings                                                       20,060         18,517
     Treasury stock                                                          (4,693)             -
     Unearned ESOP shares                                                    (1,807)        (1,993)
     Unearned MRP shares                                                     (1,226)             -
     Unrealized gain (loss) on securities available-for-sale                     18           (182)
                                                                        -----------    -----------

         Total liabilities and stockholders' equity                     $    38,675    $    42,564
                                                                        ===========    ===========

</TABLE>

                                  (Continued)

                                      F-28


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 14 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>

                          CONDENSED STATEMENT OF INCOME
              For the year ended December 31, 1997 and the period August 9, 1996
to December 31, 1996


                                                                                      1997             1996
                                                                                      ----             ----

<S>                                                                              <C>             <C>

Operating income
     Dividends from subsidiary                                                    $      6,000    $          -
     Gain on sale of securities                                                             18               -
     Interest income
         Securities                                                                        687              65
         ESOP loan                                                                         143              79
         Interest-bearing deposits with other financial institutions                        79             170
                                                                                  ------------    ------------
              Total operating income                                                     6,927             314

Operating expenses
     Interest on other borrowings                                                           89               -
     Other expenses                                                                        321               -
                                                                                  ------------    ------------
         Total operating expenses                                                          410               -
                                                                                  ------------    ------------


INCOME BEFORE INCOME TAXES AND EQUITY IN
  UNDISTRIBUTED EARNINGS OF BANK SUBSIDIARY                                              6,517             314

Income taxes                                                                               164             107
                                                                                  ------------   -------------


INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS
  OF BANK SUBSIDIARY                                                                     6,353             207

Equity in undistributed (overdistributed) earnings
  of bank subsidiary                                                                    (4,810)            157
                                                                                  ------------    ------------


NET INCOME                                                                        $      1,543    $        364
                                                                                  ============    ============

</TABLE>

                                  (Continued)

                                      F-29


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

NOTE 14 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>

                        CONDENSED STATEMENT OF CASH FLOWS
              For the year ended December 31, 1997 and the period August 9, 1996
to December 31, 1996

                                                                                        1997           1996
                                                                                        ----           ----

<S>                                                                               <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                                     $     1,543     $      364
     Adjustments to reconcile net income to net cash
       provided by operating activities
         Net discount accretion                                                              (7)             -
         Gain on sale of securities available-for-sale                                      (18)             -
         Equity in (undistributed) overdistributed earnings
               of bank subsidiary                                                         4,810           (157)
         Change in
              Other assets                                                                 (341)           (47)
              Other liabilities                                                             (43)           107
                                                                                    -----------    -----------
                  Net cash from operating activities                                      5,944            267

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of bank subsidiary stock                                                        -        (13,638)
     Purchase of securities available-for-sale                                          (11,652)        (2,997)
     Purchase of securities held-to-maturity                                                  -         (3,149)
     Proceeds from sale of securities available-for-sale                                  1,001              -
     Proceeds from maturities and calls of securities
       available-for-sale                                                                 4,988              -
     Proceeds from maturities and calls of securities
       held-to-maturity                                                                   2,149              -
     Payment received on ESOP loan                                                          142            180
                                                                                    -----------    -----------
         Net cash from investing activities                                              (3,372)       (19,604)

CASH FLOWS FROM FINANCING ACTIVITIES
     Purchase of treasury stock                                                          (6,395)             -
     Net proceeds from sale of common stock                                                   -         23,903
                                                                                    -----------    -----------
         Net cash from financing activities                                              (6,395)        23,903
                                                                                    -----------    -----------

Net change in cash and cash equivalents                                                  (3,823)         4,566

Cash and cash equivalents at beginning of period                                          4,566              -
                                                                                    -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                          $       743    $     4,566
                                                                                    ===========    ===========

</TABLE>

                                  (Continued)

                                      F-30


<PAGE>


                        PARK BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996, and 1995
          (Table amounts in thousands, except share and per share data)

<TABLE>
<CAPTION>

NOTE 15 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

1997
----
                                                     ----------------------Three Months Ended------------------
                                                       March 31        June 30     September 30      December 31
                                                       --------        -------     ------------      -----------

<S>                                                  <C>           <C>             <C>              <C>

Interest income                                      $     3,150     $     3,130    $     3,118    $     3,066
Interest expense                                           1,569           1,602          1,603          1,616
                                                     -----------     -----------    -----------    -----------


NET INTEREST INCOME                                        1,581           1,528          1,515          1,450

Provision for loan losses                                      -               -              -              -
Other income                                                  88             216            189             92
Other expense                                                925           1,050          1,029          1,257
                                                     -----------     -----------   ------------      ---------


INCOME BEFORE INCOME TAXES                                   744             694            675            285

Income tax expense                                           253             234            226            142
                                                     -----------     -----------    -----------    -----------


NET INCOME                                           $       491     $       460    $       449    $       143
                                                     ===========     ===========    ===========    ===========

Basic earnings per share                             $       .20     $       .20    $       .20    $       .07
Diluted earnings per share                           $       .20     $       .20    $       .20    $       .07

1996
----

<CAPTION>

                                                     ----------------------Three Months Ended------------------
                                                       March 31        June 30     September 30      December 31
                                                       --------        -------     ------------      -----------

<S>                                                  <C>            <C>            <C>              <C>

Interest income                                      $     2,643     $     2,612    $     2,970    $     3,110
Interest expense                                           1,553           1,561          1,579          1,626
                                                     -----------     -----------    -----------    -----------


NET INTEREST INCOME                                        1,090           1,051          1,391          1,484

Provision for loan losses                                      -               -              -              -
Other income                                                  77              80             79             71
Other expense                                                783             760          1,462            714
                                                      ----------       ---------      ---------    -----------


INCOME BEFORE INCOME TAXES                                   384             371              8            841

Income tax expense (benefit)                                 130             130             (4)           287
                                                     -----------     -----------    -----------    -----------


NET INCOME                                           $       254     $       241    $        12    $       554
                                                     ===========     ===========    ===========    ===========

Basic earnings per share 1                                   N/A             N/A    $      (.07)   $       .22
Diluted earnings per share 1                                 N/A             N/A    $      (.07)   $       .22

<FN>
1    Earnings per share for the three months ended  September  30, 1996 is
     computed on a net loss of $190,000  from August 9, 1996, the date that 
     the Bank converted to stock ownership.
</FN>
</TABLE>