SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
    FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

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

                     For the fiscal year ended June 30, 1999

          [ ] Transition Report Pursuant to Section 13 or 15 (d) of the
                         Securities Exchange Act of 1934

                          Commission File No.: 0-21491

                            BIG FOOT FINANCIAL CORP.
             (Exact name of registrant as specified in its charter)

                                    ILLINOIS
         (State or other jurisdiction of incorporation or organization)

                                   36-4108480
                      (I.R.S. Employer Identification No.)

                            1190 RFD, LONG GROVE, IL
                    (Address of principal executive offices)
                                   60047-7304
                                   (Zip code)

                                 (847) 634-2100
               (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:
                               TITLE OF EACH CLASS
                               -------------------
                     COMMON STOCK, $.01 PAR VALUE PER SHARE

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 files pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting and non-voting common equity of the
Registrant by non-affiliates was approximately $23.0 million as of September 21,
1999.

As of September 21, 1999, 2,231,449 shares of the Registrant's common stock were
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Registrant's 1999 Annual Report to Stockholders are incorporated
by reference in Part II.

Portions of the Registrant's Proxy Statement for its 1999 Annual Meeting of
Stockholders are incorporated by reference in Part III.

<PAGE>

                            BIG FOOT FINANCIAL CORP.
                               REPORT ON FORM 10-K
                            FOR THE FISCAL YEAR ENDED
                                  JUNE 30, 1999

                                TABLE OF CONTENTS

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ITEM                                 PART I                                 PAGE
--------------------------------------------------------------------------------
 1         BUSINESS                                                            3
 2         PROPERTIES                                                         33
 3         LEGAL PROCEEDINGS                                                  34

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                                     PART II
--------------------------------------------------------------------------------
 4         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                34
 5         MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
           MATTERS                                                            34
 6         SELECTED FINANCIAL DATA                                            35
 7         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS                                              36
 7A        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK         36
 8         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                        36
 9         CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE                                               36

--------------------------------------------------------------------------------
                                    PART III
--------------------------------------------------------------------------------
 10        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                 36
 11        EXECUTIVE COMPENSATION                                             36
 12        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT      37
 13        CERTAIN RELATIONSHIPS AND RELATED TRANSCTIONS                      37

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                                      PART IV
--------------------------------------------------------------------------------

 14        EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K    37



--------------------------------------------------------------------------------
FORWARD LOOKING STATEMENTS
This Annual  Report on Form 10-K contains  certain  forward  looking  statements
consisting  of estimates  with respect to the  financial  condition,  results of
operations and business of the Company that are subject to various factors which
could cause actual  results to differ  materially  from these  estimates.  These
factors  include:  changes  in  general,  economic  and market  conditions;  the
development of an adverse interest rate  environment that adversely  affects the
interest rate spread or other income  anticipated from the Company's  operations
and investments;  depositor and borrower preferences;  and the factors described
under  "Management's  Discussion and Analysis of Financial Condition and Results
of Operations - Year 2000."
--------------------------------------------------------------------------------


<PAGE>


                                     PART I

ITEM 1.  BUSINESS

         GENERAL. Big Foot Financial Corp. (the "Company"), an Illinois
corporation, is the holding company for Fairfield Savings Bank, F.S.B. (the
"Bank"), a federally chartered stock savings bank. On December 19, 1996, the
Bank completed its conversion (the "Conversion") from a federally chartered
mutual savings bank to a federally chartered stock savings bank, and the Company
acquired all of the capital stock of the Bank. The Company issued and sold
2,512,750 shares of its common stock, $.01 par value per share (the "Common
Stock"), at a price of $10.00 per share in a subscription offering (the
"Offering") to eligible members of the Bank and to the Company's Employee Stock
Ownership Plan ("ESOP"). The Company's sole business activity consists of the
business of the Bank. The Company also invests in long and short-term investment
grade marketable securities and other liquid investments.

         At June 30, 1999, the Company had total assets of $215.5 million, of
which $138.5 million was comprised of loans receivable and $54.0 million was
comprised of mortgage-backed securities. At such date, total savings deposits
were $123.9 million, borrowings were $52.0 million and stockholders' equity was
$34.7 million. The Company's Common Stock is quoted on the National Market
System of the Nasdaq Stock Market under the symbol "BFFC". Unless otherwise
disclosed, the information presented in this Report on Form 10-K represents the
activity of the Bank for the period prior to December 19, 1996 and the activity
of Big Foot Financial Corp. consolidated thereafter. Unless the context
otherwise requires, all references herein to the Bank or the Company include the
Company and the Bank on a consolidated basis.

         In connection with the Conversion, the Bank changed its fiscal year-end
to June 30. The Company's and the Bank's fiscal year 1997 consisted of the
11-month period beginning August 1, 1996 and ending June 30, 1997. The Company
believes that it is appropriate to compare the results for the 11-month period
ended June 30, 1997 with the years ending June 30, 1999 and 1998.

         The Bank was originally founded in 1901 as an Illinois state chartered
mutual savings and loan association. On July 1, 1991, the Bank converted to a
federally chartered mutual savings bank. The Bank is subject to extensive
regulation, supervision and examination by the Office of Thrift Supervision (the
"OTS"), its primary regulator, and the Federal Deposit Insurance Corporation
(the "FDIC"), which insures its deposits. The Bank's savings deposits are
insured up to the maximum allowable amount by the Savings Association Insurance
Fund (the "SAIF") of the FDIC.

         The Bank's principal business consists of gathering savings deposits
from the general public within its market area and investing those savings
deposits primarily in one- to four-family residential mortgage loans,
mortgage-backed securities and obligations of the U.S. Government. To a lesser
extent, the Bank originates multifamily residential loans, commercial real
estate loans, land, construction and development loans, consumer loans
(including loans secured by savings deposits) and commercial lines of credit.
The Bank's revenues are derived principally from interest on mortgage loans and
mortgage-backed securities. The Bank's primary sources of funds are savings
deposits,


                                       3

<PAGE>


proceeds from principal and interest payments on loans, mortgage-backed and
investment securities and Federal Home Loan Bank ("FHLB") advances.

         MARKET AREA. The Bank is a community-oriented financial institution
which provides a variety of financial services to meet the needs of the
communities which it serves. The Bank serves three distinct geographic markets:
the Chicago branch at 1601 North Milwaukee Avenue serves the near northwest side
of the City of Chicago, the Norridge branch at 8301 West Lawrence serves
Chicago's near northwestern suburbs and the Long Grove branch at Old McHenry
Road and Route 83 serves northern Cook and southern Lake counties. The Bank's
customer base may be categorized by branch location. In the Chicago branch, the
customer base is largely comprised of blue collar workers and young white collar
technicians and professionals. The Chicago market is experiencing new
construction and a refurbishing of its existing aged housing stock and is
becoming an active mortgage market as well as a savings market. The Norridge
branch serves a customer base split between blue and white collar workers where
the market is mature. The Norridge market has modest prospects for growth;
however, it provides the Bank with a stable source of deposits. The Long Grove
office is situated in an affluent, high growth, white collar market. This is a
dynamic market which provides the Bank with significant loan demand and
potential for growth opportunities in savings and lending activities.
Substantially all loans originated by the Bank are secured by real estate
located in Cook, DuPage and Lake counties in Illinois.

         COMPETITION. The Bank faces intense and increasing competition both in
making loans and in attracting savings deposits. The Bank's market area has a
high density of financial institutions, many of which have greater financial
resources, name recognition and market presence than the Bank, and all of which
are competitors of the Bank to varying degrees. Particularly intense competition
exists for savings deposits and the origination of all of the loan products
emphasized by the Bank.

         The Bank's competition for loans comes principally from commercial
banks, other savings banks, savings and loan associations, mortgage banking
companies, finance companies and credit unions. The Bank's most direct
competition for savings deposits historically has come from other savings banks,
savings and loan associations, commercial banks and credit unions. In addition,
the Bank faces increasing competition for savings deposits from non-bank
institutions such as brokerage firms, insurance companies, money market mutual
funds, other mutual funds (such as corporate and government securities funds)
and annuities. Trends toward the consolidation of the banking industry and the
lifting of interstate banking and branching restrictions may make it more
difficult for smaller institutions, such as the Bank, to compete effectively
with large national and regional banking institutions.

         While the Bank is subject to competition from other financial
institutions which may have much greater financial and marketing resources, the
Bank believes it benefits by its community bank orientation as well as its
relatively high core deposit base. Management believes that the variety, depth
and stability of the communities in which the Bank is located support the
service and lending activities conducted by the Bank. The relative economic
stability of the Bank's lending area is reflected in the small number of
mortgage delinquencies experienced by the Bank.


                                       4

<PAGE>

         IMPACT OF THE ECONOMY ON OPERATIONS. Declines in the local economy,
national economy or real estate market could adversely affect the financial
condition and results of operations of the Bank, including decreased demand for
loans or increased competition for good loans, increased non-performing loans
and loan losses and resulting additional provisions for loan losses and for
losses on real estate owned.

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 June 30, 1999, the Bank had gross loans receivable outstanding of
$139.1 million, of which $136.9 million, or 98.5% of gross loans, were one- to
four-family residential mortgage loans. The remainder consisted of $0.6 million
of multifamily mortgage loans, or 0.4% of gross loans; $0.6 million of
commercial real estate mortgage loans, or 0.4% of gross loans; $58,000 of land,
construction and development loans, or 0.1% of gross loans; $0.6 million of home
equity loans, or 0.4% of gross loans; and $316,000 of other loans, or 0.2% of
gross loans.

         The 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, monetary policies of the federal
government, including the Board of Governors of the Federal Reserve System (the
"FRB"), and legislative tax policies.

         All of the Bank's lending is subject to its written, nondiscriminatory
underwriting standards and to loan origination procedures prescribed by the
Bank's Board of Directors the majority of which conform to the Federal National
Mortgage Association ("FNMA") standards. Property valuations by a member of the
Bank's appraisal staff or independent appraisers approved by the Board of
Directors are required. Detailed loan applications are obtained to determine the
borrower's ability to repay, and the more significant items on these
applications are verified through the use of credit reports, financial
statements and confirmations. Generally, the Bank will lend against the
appraised value of property up to a maximum loan to value ratio of 95%. Private
mortgage insurance is required on all loans with loan to value ratios greater
than 80%. All loans are approved by the full Board of Directors. Mortgage loans
originated by the Bank generally include due on sale clauses which provide the
Bank with the contractual right to deem the loan immediately due and payable in
the event the borrower transfers ownership of the property without the Bank's
consent. Due on sale clauses are an important means of adjusting the rates of
the Bank's fixed-rate mortgage loan portfolio, and the Bank has generally
exercised its rights under these clauses. It is the Bank's policy to require
title insurance policies certifying or insuring that the Bank has a valid first
lien on the mortgaged real estate. Borrowers must also obtain hazard insurance
policies prior to closing and, where necessary, flood insurance policies. Most
borrowers are required to maintain a noninterest-bearing escrow account or a
pledged passbook savings account with the Bank to cover charges for real estate
taxes, hazard insurance premiums and assessments.


                                       5

<PAGE>

         Under applicable federal law, the aggregate amount of loans that the
Bank is permitted to make to any one borrower is generally limited to 15% of
unimpaired capital and surplus (25% if the security for such loan has a "readily
ascertainable" value or 30% for certain residential development loans). At June
30, 1999, based on the above, the Bank's regulatory loans to one borrower limit
was approximately $4.0 million. On the same date, the Bank had no borrowers with
outstanding balances in excess of this amount. At June 30, 1999, the two largest
dollar amounts outstanding to one borrower or group of related borrowers were
approximately $414,000 and $395,000. Both of these loans are secured by one- to
four-family properties located in the Bank's market area and, at June 30, 1999,
were performing in accordance with their terms.

         The following table sets forth the composition of the Bank's mortgage
and other loan portfolios in dollar amounts and in percentages at the dates
indicated.


<TABLE>
<CAPTION>
                                                       AT JUNE 30                                      AT JULY 31,
                              ------------------------------------------------------------  ---------------------------------------
                                        1999              1998                 1997                1996            1995
                              --------------------  ------------------   -----------------  -----------------   -------------------
                                          PERCENT             PERCENT             PERCENT            PERCENT             PERCENT
                                 AMOUNT   OF TOTAL   AMOUNT   OF TOTAL    AMOUNT  OF TOTAL  AMOUNT   OF TOTAL   AMOUNT   OF TOTAL
                              ----------  --------  --------  --------   -------  --------  -------  --------   -------  ----------
                                                                     (Dollars in thousands)
<S>                            <C>         <C>     <C>          <C>      <C>        <C>    <C>         <C>     <C>         <C>
Mortgage loans:
 One-to four-family            $136,924    98.5%   $113,441     97.8%    $91,133    96.7%  $76,325     95.6%   $68,080     94.9%
 Multifamily (1)                    610     0.4         741      0.6         942     1.0       979      1.2      1,035      1.4
 Commercial real estate             593     0.4         833      0.7         384     0.4       411      0.5        441      0.6
 Land, construction/development      58     0.1         118      0.1         403     0.4       404      0.5        166      0.2
 Home equity                        597     0.4         822      0.7       1,258     1.3     1,421      1.8      1,691      2.4
                               --------   -----    --------    -----     -------   -----   -------    -----    -------    -----
  Total mortgage loans         $138,782    99.8%   $115,955     99.9%    $94,120    99.8%  $79,540     99.6%   $71,413     99.5%
                               --------   -----    --------    -----     -------   -----   -------    -----    -------    -----
Other loans
 Home improvement                     -       -           -        -           -       -         -        -         15        -
 Commercial credit lines              -       -           -        -           -       -       150      0.2        131      0.2
 Loans on savings deposits          316     0.2         144      0.1         181     0.2       192      0.2        212      0.3
                               --------   -----    --------    -----     -------   -----   -------    -----    -------    -----
  Total other loans                 316     0.2         144      0.1         181     0.2       342      0.4        358      0.5
                               --------   -----    --------    -----     -------   -----   -------    -----    -------    -----
   Loans receivable, gross     $139,098   100.0%   $116,099    100.0%    $94,301   100.0%  $79,882    100.0%   $71,771    100.0%
                               --------   =====    --------    =====     -------   =====   -------    =====    -------    =====
 Less:
  Loans in process             $      -            $      -              $     -           $     -             $   111
  Deferred loan fees                281                 327                  377               438                 510
  Allowance for loan losses         300                 300                  300               300                 166
                               --------            --------              -------           -------             -------
   Loans receivable, net       $138,517            $115,472              $93,624           $79,144             $70,984
                               ========            ========              =======           =======             =======
</TABLE>


(1) Multifamily includes participation in Community Investment Corporation
("CIC") of $333,000 at June 30, 1999, $389,000 at June 30, 1998, $413,000 at
June 30, 1997, $381,000 at July 31, 1996 and $321,000 at July 31, 1995. CIC is a
not-for-profit tax-exempt corporation whose purpose is to focus the resources
and expertise of the financial community to revitalize certain neighborhoods in
Chicago.


         MORTGAGE LOANS. At June 30, 1999, over 98.0% of the Bank's $138.8
million mortgage loan portfolio consisted of mortgage loans secured by one- to
four-family residential real estate. While the Bank offers adjustable-rate
mortgage products, the Bank's customer base has historically favored fixed-rate
mortgage loans, which are generally priced off the FNMA delivery rate with
adjustments relating to local competition and the availability of funds. At June
30, 1999, approximately 96.5% of the Bank's mortgage portfolio was comprised of
fixed-rate loans. The balance of the mortgage loan portfolio is comprised of
adjustable rate loans, including approximately $4.2 million of one-to
four-family residential mortgages, the majority of which are tied to the
National Cost of Funds Index and adjust annually to rates from 2.5% to 2.75%
over the Index. These loans carry annual caps and life-of-the-loan ceilings to
protect borrowers against sudden rate volatility. Generally, adjustable rate
mortgage loans pose credit risks somewhat greater than the credit risk inherent
in fixed-rate loans



                                       6
<PAGE>

primarily because, as interest rates rise, the underlying payments of the
borrowers rise, increasing the potential for default. It is the Bank's policy to
underwrite its adjustable rate mortgage loans based on the fully indexed
origination rate. The Bank currently has no mortgage loans that are subject to
negative amortization. Management intends to continue to emphasize fixed rate
loans secured by single family owner-occupied units with 15 year terms. The Bank
also makes home equity loans. At June 30, 1999, the Bank had an aggregate
balance of $597,000 in home equity loans.

         LAND, CONSTRUCTION AND DEVELOPMENT LOANS. The Bank offers a residential
construction loan program for custom home buyers and builders, who typically
have a longstanding business relationship with the Bank. The Bank has
established additional guidelines and progress pay-out procedures for these
loans in recognition of the higher degree of risk involved in making such loans.
See "Delinquencies and Non-Performing Assets."

         MULTIFAMILY RESIDENTIAL AND COMMERCIAL REAL ESTATE. Multifamily
residential and commercial real estate and land loans are generally considered
to involve a higher degree of credit risk than one- to four-family residential
mortgage loans. This greater risk is attributable to several factors, including
the higher concentration of principal in a limited number of loans and
borrowers, the effects of general economic conditions on income-producing
properties and the increased difficulty of evaluating and monitoring these types
of loans. Furthermore, the repayment of loans secured by multifamily residential
and commercial real estate is typically dependent upon sufficient cash flow from
the related real estate project to cover operating expenses and debt service. If
the cash flow from the project is reduced (for example, if leases are not
obtained or renewed), the borrower's ability to repay the loan may be impaired.
Circumstances outside the borrower's control may adversely affect income from
the multifamily or commercial property as well as its market value.

         OTHER LOANS. The Bank also makes short term fixed-rate and
adjustable-rate other loans, such as loans secured by savings accounts and
commercial lines of credit. These loans generally have an average life of less
than two years. The shorter terms to maturity and the short term repricing
periods are helpful in managing the Bank's interest rate risk.

         ORIGINATION OF LOANS. Loans are originated by the Bank's staff of
salaried loan officers. Residential loan originations can be attributed to
depositors, retail customers, telephone inquiries, newspaper ads, loan officers,
and referrals from other borrowers, real estate brokers and builders. Loan
applications are taken and processed at each of the Bank's offices.
Historically, the bulk of all loans originated by the Bank have been retained in
the Bank's portfolio.

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


                                       7

<PAGE>


<TABLE>
<CAPTION>
                                                                                  FOR THE
                                                                                ELEVEN MONTHS
                                                   FOR THE YEAR ENDED JUNE 30,  ENDED JUNE 30,
                                                 -----------------------------  ---------------
                                                   1999              1998           1997
                                                 ----------      -------------  ------------
                                                                (In thousands)
<S>                                              <C>              <C>             <C>
LOAN (GROSS):
   At beginning of period                        $  116,099       $   94,301      $  79,882
                                                 ----------       ----------      ---------
MORTGAGE LOANS ORIGINATED:
   One-to four-family                                43,587           38,612         23,088
   Multifamily                                           98               34              -
   Commercial real estate                                 -              550              -
                                                 ----------       ----------      ---------
     Total mortgage loans originated                 43,685           39,196         23,088
OTHER LOANS ORIGINATED:
   Other loans                                          449              249            192
                                                 ----------       ----------      ---------
      Total loans originated                         44,134           39,445         23,280
                                                 ----------       ----------      ---------
   Additional draws - open-end home equity loans        279              428            346
   Principal repayments                             (21,414)         (17,838)        (9,207)
   Loans sold                                             -             (237)             -
                                                 ----------       ----------      ---------
      LOAN BALANCES AT END OF PERIOD             $  139,098       $  116,099      $  94,301
                                                 ==========       ==========      =========
</TABLE>


         INCOME FROM LENDING ACTIVITIES. The Bank realizes interest income and
servicing fee income from its lending activities. For the most part, interest
rates charged by the Bank on loans are determined by local competition, although
they also reflect general interest rates, demand for loans and availability of
funds.

         The Bank charges service fees, late payment and other miscellaneous
service fees. During the years ended June 30, 1999 and 1998 and the eleven
months ended June 30, 1997, the Bank earned an aggregate of such fees totaling
$20,000, $24,000 and $23,000, respectively.

         LOAN MATURITY. The following table shows the contractual maturity of
the Bank's loan portfolio at June 30, 1999. Loans are shown as due based on
their contractual terms to maturity rather than when interest rates are next
subject to change. The table does not include prepayments or scheduled principal
amortization.

<TABLE>
<CAPTION>
                                                   MORTGAGE LOANS                                     TOTAL LOANS
                          --------------------------------------------------------                 --------------------
                                                                LAND
                           ONE-TO                           CONSTRUCTION                                      WEIGHTED
DUE DURING PERIODS         FOUR-      MULTI-   COMMERCIAL        AND         HOME       OTHER                 AVERAGE
ENDING JUNE 30,            FAMILY     FAMILY   REAL ESTATE   DEVELOPMENT    EQUITY      LOANS      AMOUNT       RATE
                          --------   --------  -----------  -------------   ------     -------    --------    --------
                                                            (Dollars in thousands)
<S>                       <C>        <C>        <C>            <C>          <C>         <C>       <C>           <C>
2000                      $      4   $   7      $   -          $   -        $   -       $  55     $     66      8.68%
2001                           246      17         39             58           31          51          442      8.29
2002                           391      36          -              -          219         210          856      7.84
2003 and 2004                1,309      53         77              -          223           -        1,662      7.89
2005 to 2010                12,569       -         41              -          124           -       12,734      7.11
2011 to 2015                32,260     306         22              -            -           -       32,588      6.74
2016 to 2020                 4,159     176        414              -            -           -        4,749      7.61
2021 and following          85,986      15          -              -            -           -       86,001      6.95
                          --------   -----      -----          -----        -----       -----     --------      -----
Total loans due, gross    $136,924   $ 610      $ 593          $  58        $ 597       $ 316     $139,098      6.95%
                          ========   =====      =====          =====        =====       =====     ========      =====
</TABLE>


                                       8

<PAGE>

         The following table sets forth at June 30, 1999, the dollar amount of
loans due after June 30, 2000, and whether such loans have fixed interest rates
or adjustable interest rates.

                                                 DUE AFTER JUNE 30, 2000
                                      -----------------------------------------
                                          FIXED        ADJUSTABLE       TOTAL
                                      ------------   --------------   ---------
                                                      (In thousands)
Mortgage loans:
  One- to four-family                  $ 132,769        $ 4,151      $ 136,920
  Multifamily                                603              -            603
  Commercial real estate                     492            101            593
  Land, construction and development           -             58             58
  Home equity                                  -            597            597
                                       ---------        -------      ---------
Total mortgage loans                   $ 133,864        $ 4,907      $ 138,771
Other loans                                  261              -            261
                                       ---------        -------      ---------
  Total loans                          $ 134,125        $ 4,907      $ 139,032
                                       =========        =======      =========


DELINQUENCIES AND NON-PERFORMING ASSETS

         DELINQUENCY PROCEDURES. When a borrower fails to make a required
payment on a loan, the Bank attempts to cause the deficiency to be cured by
contacting the borrower. Contacts are made after a payment is more than 15 days
past due, and a late charge is assessed at that time. In most cases,
deficiencies are cured promptly. If the deficiency exceeds 90 days and is not
cured through the Bank's normal collection procedures, the Bank may institute
measures to remedy the default, including commencing a foreclosure action or
accepting from the mortgagor a voluntary deed of the secured property in lieu of
foreclosure. If a foreclosure action is instituted and the loan is not
reinstated, paid in full or refinanced, the property is sold at a judicial sale.
If the Bank acquires the property at judicial sale or accepts a voluntary deed
of the secured property in lieu of foreclosure, the acquired property is then
listed in the Bank's Real Estate Owned ("REO") account until it is sold. At June
30, 1999, the Bank had no REO. The Bank is permitted to finance sales from its
REO account by "loans to facilitate," which involve a lower down payment or a
longer repayment term or other more favorable features than generally would be
granted under the Bank's underwriting guidelines. Currently, the Bank has no
such "loans to facilitate."

         The following table sets forth information with respect to the Bank's
non-performing assets (which includes loans that are delinquent for 90 days or
more and REO) at the dates indicated. At June 30, 1999, there were no loans
other than those included in the table below with regard to which management had
information about possible credit problems of the borrower that caused
management to seriously doubt the ability of the borrower to comply with present
loan repayment terms.


                                       9

<PAGE>


<TABLE>
<CAPTION>
                                                        AT JUNE 30,                 AT JULY 31,
                                             -----------------------------      -------------------
NON-PERFORMING LOANS:                          1999       1998      1997         1996        1995
-------------------------------------------  --------    -------   -------      -------     -------
                                                         (Dollars in thousands)
<S>                                          <C>         <C>        <C>         <C>         <C>
Mortgage loans:
    One- to four-family                      $  186      $  342     $ 199       $  69       $  193
    Multifamily                                   7           -         -           -            -
    Commercial real estate                        -           -         -           -            -
    Land, construction and development            -           -         -           -            -
    Home equity                                   -           -         -          49            -
    Other loans                                   -           -         -           -            -
                                             ------      ------     -----       -----       ------
      Total non-performing loans                193         342       199         118          193
                                             ------      ------     -----       -----       ------
Real estate owned                                 -           -         -           -          168
                                             ------      ------     -----       -----       ------
      Total non-performing assets            $  193      $  342     $ 199       $ 118       $  361
                                             ======      ======     =====       =====       ======

Total non-performing loans to total loans     0.14 %       0.29 %    0.21 %      0.15 %      0.27 %
Total non-performing assets to total assets   0.09         0.16      0.09        0.06        0.18
</TABLE>


         A loan is placed on non-accrual status when it becomes 90 days or more
delinquent and when the collection of principal and/or interest becomes
doubtful. At June 30, 1999, the Bank had one single family residential loan with
an outstanding principal balance of $70,000 that was non-accruing. At June 30,
1998 the Bank had no non-accrual loans. The Bank had one single family
residential loan with an outstanding balance of $199,000 at June 30, 1997 that
was non-accruing. For the years ended June 30, 1999 and 1998 and for the eleven
months ended June 30, 1997 the amount of interest income that would have been
recorded on non-accrual loans was $4,000, $0 and $10,000, respectively. Interest
earned on loans 90 days or more delinquent and still accruing interest amounted
to $11,000, $25,000, and $36,000 for the fiscal years ended June 30, 1999 and
1998 and for the eleven months ended June 30, 1997, respectively.

         The Bank's non-performing assets at June 30, 1999, consisted of two
one- to four-family residential loan with an aggregate outstanding principal
balance of $186,000 and one multi-family residential loan with an aggregate
outstanding principal balance of $7,000. The Bank's non-performing assets at
June 30, 1998 consisted of three, one-to four-family residential loans, with an
aggregate outstanding principal balance of $342,000. The Bank's non-performing
assets at June 30, 1997, consisted of one, one-to four-family residential loan,
with an aggregate outstanding principal balance of $199,000. The properties
underlying the non-performing loans are located in the Chicago metropolitan
area.

         CLASSIFIED ASSETS. OTS regulations require that each saving association
classify its assets on a regular basis and establish prudent valuation
allowances based on such classifications. In addition, in connection with
examinations of savings associations, OTS examiners have authority to identify
problem assets and, if appropriate, require them to be classified. OTS
regulations provide for three adverse classifications for problem assets:
Substandard, Doubtful and Loss. Substandard assets have one or more defined
weaknesses and are characterized by the distinct possibility that the savings
association will sustain some loss if the deficiencies are not corrected.
Doubtful assets have the weaknesses of Substandard assets, with the additional
characteristics that the weaknesses make

                                       11

<PAGE>

collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable, and there is a high probability of loss. An
asset classified Loss is considered uncollectible and of such little value that
its continuance as an asset of the institution is not warranted. The regulations
have also created a Special Mention category, consisting of assets which do not
currently expose a savings association to a sufficient degree of risk to warrant
classifications, but do possess credit deficiencies or potential weaknesses
deserving management's close attention. Assets classified as Substandard or
Doubtful require the savings association to establish prudent valuation
allowances. If an asset or portion thereof is classified as Loss, the
association must either establish specific allowances for loan losses in the
amount of 100% of the portion of the asset classified Loss or charge off such
amount. If an association does not agree with an examiner's classification of an
asset, it may appeal this determination to the District Director of the OTS. On
the basis of management's review of its loans at June 30, 1999, the Bank had one
loan which met the criteria for classification as "Substandard" and no potential
problem loans which met the criteria for classification as "Special Mention" or
"Doubtful".

         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 Bank's loan portfolio and the general economy. The
allowance for loan losses is maintained at an amount management considers
adequate to cover loan losses which are deemed probable and estimable. The
allowance is based upon a number of factors, including asset classifications,
economic trends, industry experience and trends, industry and geographic
concentrations, estimated collateral values, management's assessment of the
credit risk inherent in the portfolio, historical loan loss experience and the
Bank's underwriting policies. The allowance for loan losses is maintained at an
amount considered adequate to provide for potential losses. Although management
believes it uses the best information available to make determinations with
respect to the allowance for loan losses, future adjustments may be necessary if
economic conditions and the Bank's actual experience differ substantially from
the conditions and experience used in the assumptions upon which the initial
determinations are based. The OTS, in conjunction with the other federal banking
agencies, has adopted an interagency policy statement on the allowance for loan
and lease losses. The policy statement provides guidance for financial
institutions on both the responsibilities of management for the assessment and
establishment of adequate allowances and guidance for banking agency examiners
in determining the adequacy of general valuation guidelines. Generally, the
policy statement recommends that institutions have effective systems and
controls to identify, monitor and address asset quality problems; that
management analyzes all significant factors that affect the collectibility of
the portfolio in a reasonable manner; and that management establishes acceptable
allowance evaluation processes that meet the objectives set forth in the policy
statement.

         While the Bank believes that it has established an adequate allowance
for loan losses, there can be no assurance that regulators, in reviewing the
Bank's loan portfolio as part of a future regulatory examination, will not
request the Bank to materially increase its allowance for loan losses, thereby
negatively affecting the Bank's financial condition and earnings at that time.
Moreover, no assurance can be made that future additions to the allowance will
not be necessary based on changes in economic and real estate market conditions,
further information obtained regarding known problem loans, identification of
additional problem loans and other factors, both within and outside of
management's control. The directors of the Bank and the Company have reviewed
the provision for loan losses and


                                       12

<PAGE>

the allowance for loan losses and the assumptions utilized by management as to
their reasonableness and adequacy. Specific valuation reserves are provided for
individual loans which are contractually past due (including loans classified
Substandard or Doubtful) when ultimate collection is considered questionable by
management after reviewing the current status of such loans and considering the
net realizable value of the security for the loan.

         The following table analyzes activity in the Bank's allowance for loan
losses during the periods indicated.

<TABLE>
<CAPTION>
                                                                        AT OR FOR
                                                                        THE ELEVEN
                                                                          MONTHS
                                                    AT OR FOR THE          ENDED       AT OR FOR THE
                                                 YEAR ENDED JUNE 30,     JUNE 30,   YEAR ENDED JULY 31,
ALLOWANCE FOR LOAN LOSSES                         1999        1998          1997      1996       1995
-------------------------                      ----------  ----------   ---------  ---------   --------
                                                               (Dollars in thousands)
<S>                                            <C>           <C>         <C>         <C>        <C>
Balance at beginning of year                   $   300       $  300      $  300      $ 166      $  166
Provision for loan losses                            -            -           -        138           -
Charge-offs:
  Mortgage loans:
     One- to- four-family                            -            -           -          -           -
     Multifamily                                     -            -           -         (4)          -
     Commercial real estate                          -            -           -          -           -
     Land, construction and development              -            -           -          -           -
     Home equity                                     -            -           -          -           -
  Other loans                                        -            -           -          -           -
                                               -------       ------      ------      -----      ------
        Total charge-offs                            -            -           -         (4)          -
                                               -------       ------      ------      -----      ------
Recoveries                                           -            -           -          -           -
                                               -------       ------      ------      -----      ------
Balance at end of year                         $   300       $  300      $  300      $ 300      $  166
                                               =======       ======      ======      =====      ======
Allowance for loan losses to total loans
   at the end of the period (1)                   0.22%        0.26%       0.32%      0.38%       0.23%
Allowance for loan losses to total
  non-performing loans at end of period         155.44        87.72      150.75     254.24       86.01
Allowance for loan losses to total
  non-performing assets at end of period        155.44        87.72      150.75     254.24       45.98
Net charge-offs to average loans outstanding         -            -           -       0.01           -
--------------------------
(1) Total loans represent loans, net plus the allowance for loan losses.
</TABLE>

         The following tables set forth the breakdown of the allowance for loan
losses by loan category at the dates indicated. The allocation of the allowance
to each category is not necessarily indicative of future losses and does not
restrict the use of the allowance to absorb losses in any category.



                                       12

<PAGE>

<TABLE>
<CAPTION>

                                                                        AT JUNE 30,
                                   ----------------------------------------------------------------------------------
                                                     1999                                  1998
                                   -----------------------------------------  ---------------------------------------
                                                               PERCENT OF                               PERCENT OF
                                                              LOANS IN EACH                            LOANS IN EACH
                                    ALLOWANCE   PERCENT OF    CATEGORY TO     ALLOWANCE   PERCENT OF    CATEGORY TO
                                     AMOUNT     ALLOWNACE     GROSS LOANS      AMOUNT     ALLOWANCE    GROSS LOANS
                                   ----------   ----------    -------------   ----------  ----------   --------------
                                                                  (Dollars in thousands)
<S>                                  <C>          <C>             <C>         <C>          <C>            <C>
Mortgage loans:
 One- to four-family                 $ 237        79.1%           98.5%       $ 125        41.7%          97.8%
 Multifamily                             3         1.0             0.4            4         1.3            0.6
 Commercial real estate                  6         2.0             0.4            8         2.7            0.7
 Land, construction and development      1         0.3             0.1            1         0.3            0.1
 Home equity                             1         0.3             0.4            2         0.7            0.7
Other loans                              -           -             0.2            -           -            0.1
Unallocated                             52        17.3               -          160        53.3              -
                                     -----       -----           -----        -----       -----          -----
 Total                               $ 300       100.0%          100.0%       $ 300       100.0%         100.0%
                                     =====       =====           =====        =====       =====          =====
</TABLE>



<TABLE>
<CAPTION>
                                               AT JUNE 30,                             AT JULY 31,
                              ----------------------------------------  ----------------------------------------
                                                 1997                                      1996
                              ----------------------------------------  ----------------------------------------
                                                         PERCENT OF                               PERCENT OF
                                                         LOANS IN EACH                            LOANS IN EACH
                              ALLOWANCE    PERCENT OF    CATEGORY TO    ALLOWANCE    PERCENT OF   CATEGORY TO
                              AMOUNT       ALLOWANCE     GROSS LOANS    AMOUNT       ALLOWANCE    GROSS LOANS
                              ----------  -----------   --------------  ----------  -----------  ---------------
                                                            (Dollars in thousands)
<S>                            <C>             <C>          <C>          <C>            <C>            <C>
Mortgage loans:
   One- to four-family         $ 105           35.0%        96.7%        $  85          28.3%          95.6 %
   Multifamily                     5            1.7          1.0             5           1.7            1.2
   Commercial real estate          4            1.3          0.4             4           1.3            0.5
   Land, construction and
     Development                   2            0.7          0.4             2           0.7            0.5
   Home equity                     3            1.0          1.3             4           1.3            1.8
Other loans                        -              -          0.2             -             -            0.4
Unallocated                      181           60.3            -           200          66.7              -
   Total                       $ 300          100.0%       100.0%        $ 300         100.0%         100.0 %
                               =====          =====        =====         =====         =====          =====
</TABLE>



                                              AT JULY 31,
                              -----------------------------------------
                                                 1995
                              -----------------------------------------
                                                          PERCENT OF
                                                          LOANS IN EACH
                               ALLOWANCE    PERCENT OF    CATEGORY TO
                                AMOUNT       ALLOWANCE    GROSS LOANS
                              ------------  -----------  --------------
                                       (Dollars in thousands)
Mortgage loans:
   One- to four-family           $  79          47.6 %         94.9%
   Multifamily                       6           3.6            1.4
   Commercial real estate            4.          2.4            0.6
   Land, construction and
     Development                     2           1.2            0.2
   Home equity                       5           3.0            2.4
Other loans                          -             -            0.5
Unallocated                         70          42.2              -
   Total                         $ 166         100.0 %        100.0%
                                 =====         =====          =====


INVESTMENT ACTIVITIES

         GENERAL. The investment policy of the Bank, which is approved by the
Board of Directors, is based upon its asset/liability management goals and is
designed primarily to provide and maintain adequate liquidity, maintain a
balance of high quality, diversified investments, minimize risks to the Bank and
complement the Bank's lending activities. The investment policy is implemented
by the Chief Financial Officer and the President. The policy designates the
Chief Financial Officer as the investment manager authorized to oversee the
daily operations of the investment portfolio. Historically, the Bank has
maintained liquid assets at levels above the minimum requirements imposed by the
OTS regulations and these levels are believed adequate to meet the requirements
of normal operations, including potential deposit outflows. At June 30, 1999,
the Bank's liquidity ratio for regulatory purposes was 50.1%. See "Liquidity and
Capital Resources" in Management's Discussion and Analysis of Financial
Condition and Results of Operations, in the 1999 Annual Report to Stockholders.

         As required by Statement of Financial Accounting Standards ("SFAS")
115, securities are classified into three categories: trading, held-to-maturity
and available-for-sale. Securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading



                                       13

<PAGE>

securities and are reported at fair value with unrealized gains and losses
included in trading account activities in the statement of earnings. At June 30,
1999, the Bank had no securities which were classified as trading. Securities
that the Bank has the positive intent and ability to hold to maturity are
classified as held-to-maturity and reported at amortized cost. All other
securities not classified as held-to-maturity are classified as
available-for-sale. Available-for-sale securities are reported at fair value
with unrealized gains and losses included, on an after tax basis, as a separate
component of accumulated other comprehensive income in stockholders' equity. At
June 30, 1999, $28.8 million of mortgage-backed securities and other investments
were classified as available-for-sale. At June 30, 1999, mortgage-backed
securities held-to-maturity totaled $28.6 million and had a fair value of $28.1
million.

         MORTGAGE-BACKED SECURITIES. The Bank invests in mortgage-backed
securities and uses such investments to complement its mortgage lending
activities and supplement such activities at times of low mortgage loan demand.

         At June 30, 1999, all securities in the Bank's mortgage-backed
securities portfolio were directly insured or guaranteed by FNMA or the Federal
Home Loan Mortgage Corporation ("FHLMC"), thereby providing the certificate
holder a guarantee of timely payments of interest and scheduled principal
payments, whether or not they are collected. The Bank's mortgage-backed
securities portfolio had a weighted average yield of 6.68% at June 30, 1999.

         Mortgage-backed securities generally yield less than the loans that
underlie such securities because of the cost of payment guarantees or credit
enhancements that reduce credit risk. In addition, mortgage-backed securities
are more liquid than individual mortgage loans and may be used to collateralize
borrowings of the Bank. In general, mortgage-backed securities issued or
guaranteed by the Government National Mortgage Association ("GNMA"), FNMA and
FHLMC and certain AAA rated mortgage-backed pass through securities are weighted
at no more than 20% for risk based regulatory capital purposes, compared to the
50% risk weighting assigned to most non-securitized residential mortgage loans.

         While mortgage-backed securities carry a reduced credit risk as
compared to whole loans, such securities remain subject to the risk that a
fluctuating interest rate environment, along with other factors such as the
geographic distribution of the underlying mortgage loans, may alter the
prepayment rate of such mortgage loans and so affect both the prepayment speed,
and value, of such securities.

         INVESTMENT SECURITIES. Federal savings associations have the authority
to invest in various types of liquid assets, including United States Treasury
obligations, securities of various federal agencies, certain certificates of
deposit of insured banks and savings institutions, certain bankers' acceptances,
repurchase agreements and federal funds. Subject to various restrictions,
federal savings associations may also invest their assets in commercial paper,
investment grade corporate debt securities and mutual funds whose assets conform
to the investments that a federal savings association is otherwise authorized to
make directly. The Bank, from time to time, has used investment securities to
supplement loan volume and to provide short- and intermediate-term assets for
asset/liability management purposes. From time to time, the Bank has invested in
high quality investment securities with various terms to maturity. At June 30,
1999, the Company had $3.3 million invested in preferred


                                       14

<PAGE>

stocks and mutual funds. These equity investments are held in the Company's
available-for-sale portfolio, and are carried at fair value, as shown in the
table below. Certain of these equity investments currently have unrealized
holding losses. The short term value fluctuations are monitored by management
for other than temporary impairment. Also management views these investments
with a longer time horizon for return on the Company's investment.

         The following table sets forth activity in the Company's
mortgage-backed securities and investment portfolio for the periods indicated.

<TABLE>
<CAPTION>
                                                                               FOR THE ELEVEN
                                                                                MONTHS ENDED
                                                FOR THE YEAR ENDED JUNE 30,       JUNE 30,
                                                  1999             1998             1997
                                             -----------     ---------------   ---------------
                                                            (In thousands)
<S>                                          <C>              <C>              <C>
Held-to-maturity:
 Amortized cost at beginning of period       $   46,729       $  47,376        $  44,133
 Purchases/sales, net                                 -          10,192           10,207
 Principal repayments                           (17,863)        (10,602)          (6,753)
 Premium and discount amortization, net            (299)           (237)            (211)
                                             ----------       ---------        ---------
 Amortized cost at end of period             $   28,567       $  46,729        $  47,376
                                             ----------       ---------        ---------

Available-for-sale
 Amortized cost at beginning of period       $   35,550       $  61,376        $  59,898
 Purchases/sales, net                            11,188          (7,440)          10,172
 Principal repayments                           (17,165)        (18,331)          (8,680)
 Premium and discount amortization, net             (78)            (55)             (14)
                                             ----------       ---------        ---------
 Amortized cost at end of period             $   29,495       $  35,550        $  61,376
                                             ----------       ---------        ---------
   Total mortgage-backed securities and
    investment portfolio                     $   58,062       $  82,279        $ 108,752
                                             ==========       =========        =========
</TABLE>


         The following table sets forth certain information regarding the
amortized cost and fair value of the Company's mortgage-backed securities and
investments at the dates indicated.



                                       15

<PAGE>



<TABLE>
<CAPTION>
                                                                  AT JUNE 30,
                                   -------------------------------------------------------------------------
                                             1999                    1998                      1997
                                   ----------------------   ----------------------  ------------------------
                                     AMORTIZED              AMORTIZED                AMORTIZED
                                       COST     FAIR VALUE    COST      FAIR VALUE      COST     FAIR VALUE
                                   -----------  ----------  ----------  ----------   ----------  -----------
                                                                (In thousands)
<S>                                  <C>         <C>        <C>         <C>          <C>         <C>
HELD-TO-MATURITY:
 FNMA                                $ 28,567    $ 28,055   $ 44,284    $ 44,087     $ 44,136    $ 43,283
 FHLMC                                      -           -      2,445       2,473        3,240       3,252
                                     --------    --------   --------    --------     ---------   --------
  Total held-to-maturity             $ 28,567    $ 28,055   $ 46,729    $ 46,560     $  47,376   $ 46,535
                                     --------    --------   --------    --------     ---------   --------
AVAILABLE-FOR-SALE:
 FNMA  $                             $ 23,344    $ 22,974   $ 22,576    $ 22,693     $ 41,173    $ 41,152
 FHLMC                                  2,480       2,473     10,369      10,342       19,187      19,067
 Mutual funds and preferred stock       3,671       3,320      2,605       2,569        1,016       1,087
                                     --------    --------   --------    --------     ---------   --------
  Total available-for-sale           $ 29,495    $ 28,767   $ 35,550    $ 35,604     $ 61,376    $ 61,306
                                     --------    --------   --------    --------     ---------   --------
 Total mortgage-backed securities
  and investment portfolio           $ 58,062    $ 56,822   $ 82,279    $ 82,164     $ 108,752   $107,841
                                     ========    ========   ========    ========     =========   ========
</TABLE>


         The table below sets forth certain information regarding the amortized
cost, fair value, weighted average yields and stated maturity of the Company's
mortgage-backed securities and investment portfolio at June 30, 1999. No effect
has been given to prepayments or amortization of loans. There were no
mortgage-backed securities (exclusive of obligations of the U.S. Government and
any federal agencies) issued by any one entity with a total carrying value in
excess of 10% of stockholders' equity at June 30, 1999.

                          (See table on following page)



                                       16

<PAGE>



                                                    AT JUNE 30, 1999
                                         --------------------------------------
                                                                     WEIGHTED
                                          AMORTIZED        FAIR       AVERAGE
                                             COST          VALUE      COUPON
                                         ----------      --------    ----------
                                                    (Dollars in thousands)
HELD-TO-MATURITY:
No stated maturity date                   $      -       $      -         - %
Due within 1 year                            2,890          2,827      6.43
Due after 1 year but within 5 years         15,046         14,654      6.39
Due after 5 years but within 10 years          136            134      7.00
Due after 10 years                          10,495         10,440      7.14
                                          --------       --------     -----
  Total held-to-maturity                  $ 28,567       $ 28,055      6.68 %
                                          --------       --------     -----

AVAILABLE-FOR-SALE:
No stated maturity date                   $  2,171       $  1,845      7.95 %
Due within 1 year                               51             51      7.00
Due after 1 year but within 5 years          8,465          8,302      6.80
Due after 5 years but within 10 years        8,127          8,039      6.52
Due after 10 years                          10,681         10,530      6.85
                                          --------       --------     -----
  Total available-for-sale                $ 29,495       $ 28,767      6.83 %
                                          --------       --------     -----

TOTAL:
No stated maturity date                   $  2,171       $  1,845      7.95 %
Due within 1 year                            2,941          2,878      6.44
Due after 1 year but within 5 years         23,511         22,956      6.54
Due after 5 years but within 10 years        8,263          8,173      6.53
Due after 10 years                          21,176         20,970      7.00
                                          --------       --------     -----
  Total mortgage-backed securities
  and investment portfolio                $ 58,062       $ 56,822      6.75 %
                                          ========       ========     =====


         REAL ESTATE INVESTMENT. The investment in real estate held for sale and
development originally consisted of 158 single family detached home sites and a
15-acre commercial parcel in a Planned Unit Development named the Trails of
Olympia Fields. At June 30, 1999, the Bank had nearly liquidated this investment
through sales and only one five-acre commercial parcel with a book value of
$262,000 remained unsold. This parcel was sold in July 1999 at an auction
without reservation. The sale price, net of all selling cost was approximately
$154,000, resulting in a loss of approximately $108,000. A loss accrual was
recorded by the Company in the quarter ended June 30, 1999 for this amount.
Through the sale of this property, the Company expects to benefit in future
years from a reduction of operating expenses related to the property of
approximately $40,000 annually and from the ability to invest the proceeds of
the sale in income-earning assets.

         The Bank is currently the plaintiff in litigation brought against the
Village of Olympia Fields, its trustees, The Home Owners Association of the
Trails of Olympia Fields and individual members of its Home Owners Association
for actions by these defendants that impeded the orderly development of the
Trails of Olympia Fields.



                                       17

<PAGE>

SOURCES OF FUNDS

         GENERAL. Savings deposits are the primary source of the Bank's funds
for use in lending and for other general business purposes. In addition to
savings deposits, the Bank derives funds from loan and security repayments and
prepayments, from advances from the FHLB of Chicago, from other borrowings, net
revenues from operations and to a lesser extent from loan sales. Loan and
mortgage-backed securities amortizations are a relatively stable source of
funds, while savings inflows and outflows and loan and mortgage-backed
securities prepayments are significantly influenced by general interest rates
and money market conditions. Borrowings, primarily from the FHLB of Chicago, may
be used on a short term basis to compensate for reductions in normal sources of
funds at less than projected levels. They may also be used on a longer term
basis to support expanded activities.

         SAVINGS DEPOSITS. The Bank offers several types of savings programs to
attract short term and long term savings deposits, including passbook, various
NOW accounts, money market deposit accounts and a variety of fixed-rate, money
market certificates. Deposit account terms vary according to the minimum balance
required, the time periods the funds must remain on deposit and the interest
rate, among other factors. The Bank's savings deposits are obtained
predominantly from the areas near its office locations. The Bank relies
primarily on customer service and long-standing relationships with customers to
attract and retain these savings deposits; however, market interest rates and
rates offered by competing financial institutions significantly affect the
Bank's ability to attract and retain savings deposits. Certificate accounts in
excess of $100,000 are not actively solicited by the Bank nor does the Bank use
brokers to obtain savings deposits. At June 30, 1999, the Bank had approximately
$123.9 million outstanding in savings deposits.

         The ability to pay competitive rates on insured savings deposits has
allowed the Bank to be more aggressive in obtaining funds and has given it more
flexibility to minimize net deposit outflows. However, competitive interest
rates have also resulted in a more volatile cost of funds.

         The following table sets forth the distribution of the Bank's deposit
accounts at the dates indicated and the weighted average interest rates on each
category of savings deposits presented. Management does not believe that the use
of year end balances instead of average monthly balances would result in any
material difference in the information presented.

<TABLE>
<CAPTION>
                                                                              AT JUNE 30,
                                    ----------------------------------------------------------------------------------------------
                                                  1999                            1998                            1997
                                    -----------------------------  -----------------------------  --------------------------------
                                              PERCENT    WEIGHTED             PERCENT   WEIGHTED              PERCENT    WEIGHTED
                                              OF TOTAL   AVERAGE              OF TOTAL  AVERAGE               OF TOTAL   AVERAGE
                                     AMOUNT   DEPOSITS     RATE     AMOUNT    DEPOSITS    RATE     AMOUNT     DEPOSITS    RATE
                                    -------   --------   --------  --------   --------  --------  --------    --------   ---------
                                                                          (Dollars in thousands)
<S>                                 <C>          <C>                <C>         <C>                 <C>         <C>
Noninterest-bearing NOW accounts    $ 5,949      4.8%        -%     $5,847      4.7 %       -%      $4,582      3.7 %        -%
Interest-bearing NOW accounts        10,020      8.1      2.01       7,668      6.2      2.01        7,178      5.9       2.02
Money market demand accounts         10,865      8.8      2.82      11,797      9.5      3.31       12,281     10.0       3.12
Passbook accounts                    39,358     31.7      2.50      38,838     31.4      2.50       39,607     32.2       2.50
Certificates of deposit              57,725     46.6      4.86      59,685     48.2      5.37       59,333     48.2       5.34
                                    -------    -----     -----    --------     -----     ----     --------    -----      -----
  Total                             $123,917   100.0%     3.47%   $123,835    100.0 %    3.81%    $122,981    100.0%      3.81%
                                    ========   =====     =====    ========    =====      ====     ========    =====      =====
</TABLE>




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


                                       18

<PAGE>

<TABLE>
<CAPTION>
                                                   FOR THE YEAR ENDED JUNE 30,  FOR THE ELEVEN
                                                   ---------------------------   MONTHS ENDED
                                                      1999          1998        JUNE 30, 1997
                                                   ----------    ----------     -------------
                                                               (In thousands)
<S>                                                <C>           <C>            <C>
Deposits                                           $ 300,897     $ 263,421      $ 266,195
Withdrawals                                         (305,172)     (267,098)      (284,167)
                                                   ---------     ---------      ---------
Deposits in excess of (less than) withdrawals         (4,275)       (3,677)       (17,972)
Interest credited                                      4,357         4,531          3,776
                                                   ---------     ---------      ---------
  Total increase (decrease) in savings deposits    $      82     $     854      $ (14,196)
                                                   =========     =========      =========
</TABLE>


         At June 30, 1999, the Bank had $7.0 million in certificate accounts
with a balance of $100,000 or greater maturing as follows:

                                                           WEIGHTED
                                            AMOUNT       AVERAGE RATE
                                            ------       ------------
                                              (Dollars in thousands)
    MATURITY PERIOD
    ---------------
    Within three months                    $  2,462          4.47 %
    After three but within six months         1,186          4.85
    After six but within 12 months            2,665          5.01
    After 12 months                             666          4.98
                                           --------        ------
      Total                                $  6,979          4.79 %
                                           ========        ======


         The following table sets forth the amount of certificates of deposit
outstanding at the dates indicated and the remaining period to maturity of the
certificates of deposit outstanding at June 30, 1999.

<TABLE>
<CAPTION>
                        PERIOD TO MATURITY AT JUNE 30, 1999
                        -----------------------------------
                                     ONE TO      MORE THAN                TOTAL AT JUNE 30,
                        LESS THAN     THREE        THREE TO               -----------------
INTEREST RATE RANGE     ONE YEAR      YEARS      FIVE YEARS        1999        1998          1997
-------------------     ---------    --------    ----------      ---------   ---------    ---------
                                                (In thousands)
<S>                     <C>          <C>          <C>            <C>         <C>          <C>
4.00% and below         $    145     $      -     $      -       $    145    $    265     $    257
4.01% to 5.00%            26,103        4,826        1,069         31,998       9,868        2,014
5.01% to 6.00%            19,037        6,380          152         25,569      48,559       54,622
6.01% to 7.00%                13            -            -             13         993        2,440
                        --------     --------     --------       --------    --------     --------
  Total                 $ 45,298     $ 11,206     $  1,221       $ 57,725    $ 59,685     $ 59,333
                        ========     ========     ========       ========    ========     ========
</TABLE>


         BORROWINGS. Although savings deposits are the primary source of funds
for the Bank's lending and investment activities and for its general business
purposes, the Bank has in the past relied upon advances from the FHLB of Chicago
and, to a lesser extent, reverse repurchase agreements, to supplement its supply
of funds and to meet deposit withdrawal requirements. The Bank may obtain


                                       19

<PAGE>

advances from the FHLB of Chicago on the security of the capital stock of the
FHLB of Chicago it owns and certain of its home mortgage loans and/or
mortgage-backed and investment securities provided certain standards related to
creditworthiness have been met. Such advances are made pursuant to several
different credit programs. Each credit program has its own interest rate and
range of maturities, and the FHLB of Chicago prescribes acceptable uses to which
the advances pursuant to each program may be used as well as limitations on the
size of such advances. Depending on the program, such limitations are based
either on a fixed percentage of assets or the Bank's creditworthiness. The FHLB
is required to review its credit limitations and standards at least once every
six months. FHLB advances have from time to time been used to meet the Bank's
liquidity needs. At June 30, 1999, the Bank had $52.0 million in FHLB of Chicago
borrowings. Certain advances are callable by the FHLB as follows: $9,000,000 in
advances due in 2002 are callable quarterly beginning August 1998; $13,000,000
in advances due in 2008 are callable quarterly beginning June, 2001; $12,000,000
in advances due in 2008 have a one time call date of June 19, 2003. The Company
also has the capability to borrow additional funds upon complying with the FHLB
of Chicago's collateral requirements.

         The Bank at times sells securities under agreements to repurchase,
which transactions are treated as financings, and the obligation to repurchase
the securities sold is reflected as a liability in the statements of financial
condition. The dollar amount of securities underlying the agreements remains in
the asset account and are held in safekeeping. There were no securities sold
under agreements to repurchase outstanding at or during the fiscal years 1999,
1998, and 1997.

         The following table sets forth certain information regarding borrowings
at the dates and for the periods indicated:

<TABLE>
<CAPTION>
                                                                            AT OR FOR          AT OR FOR
                                                                          THE YEAR ENDED       THE ELEVEN
                                                                             JUNE 30,         MONTHS ENDED
                                                                        -----------------       JUNE 30,
                                                                         1999        1998         1997
                                                                        --------   ---------  -----------
                                                                             (Dollars in thousands)
<S>                                                                     <C>        <C>         <C>
FHLB of Chicago advances:
   Maximum amount outstanding at any month-end during the period        $ 52,000   $ 53,000    $ 49,600
   Average daily balance outstanding                                      52,070     48,530      43,849
   Balance outstanding at end of period                                   52,000     53,000      49,600
   Weighted average daily interest rate during the period                   5.67%      6.61%       6.22%
   Weighted average interest rate at end of period                          5.59       5.59%       6.41%
</TABLE>


SUBSIDIARY ACTIVITIES

         As a federally chartered savings bank, the Bank is permitted to invest
an amount equal to 2% of its assets in service corporation subsidiaries with an
additional investment of 1% of assets where such investment serves primarily
community, inner city and community development. In addition to investments in
service corporations, federal institutions are permitted to invest an unlimited
amount in operating subsidiaries engaged solely in activities which a federal
savings bank may engage in directly. The Bank currently does not have any
subsidiary operations.


                                       20

<PAGE>


PERSONNEL

         At June 30, 1999, the Bank employed 50 full time and 15 part time
employees. At June 30, 1999, 45% of the Bank's full time employees had been with
the Bank for more than ten years. The employees are not represented by a
collective bargaining unit, and the Bank considers its relationship with its
employees to be good. The Bank seeks to compensate its personnel at a level
competitive with its savings institution peers in order to retain highly
qualified employees.


                           FEDERAL AND STATE TAXATION

FEDERAL TAXATION

         GENERAL. The following is a discussion of material federal income tax
matters and does not purport to be a comprehensive description of the federal
income tax rules applicable to the Bank or the Company. The Bank has not been
audited by the IRS during the last five years. For federal income tax purposes,
the Company and the Bank file consolidated income tax returns. The Company and
the Bank report their income on a fiscal 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 tax
reserve for bad debts, discussed below.

                  TAX BAD DEBT RESERVES. The Bank, as a "small bank" (one with
assets having an adjusted tax basis of $500 million or less) is permitted to
maintain a reserve for bad debts with respect to its loans, which, in general,
are loans secured by certain interests in real property, and to make, within
specified formula limits, annual additions to the reserve which are deductible
for purposes of computing the Bank's taxable income. Pursuant to the 1996 Tax
Act, the Bank is now required to recapture (take into income) over a multi-year
period a portion of the balance of its bad debt reserve as of July 31, 1996
equal to $500,000, which will require the Bank to report an additional tax
liability of $194,000. As of June 30, 1998, this liability had already been
provided for and will not have an adverse impact on the Bank's financial
condition or results of operations.

         DISTRIBUTIONS. To the extent that the Bank makes "non-dividend
distributions" to the Company, such distributions will be considered to have
been made from the Bank's "base year reserve," i.e., its reserves as of July 31,
1988 and then from the Bank's supplemental reserve for losses on loans, to the
extent thereof, and an amount based on the amount distributed (but not in excess
of the amount of such reserves) will be included in the Bank's income. The
balance of the Bank's tax bad debt reserve as of July 31, 1988 was $3,685,478.
The balance of the Bank's supplemental reserve for losses was $2,463,159.
Non-dividend distributions include distributions in excess of the Bank's current
and accumulated earnings and profits, as calculated for federal income tax
purposes, distributions in redemption of stock, and distributions in partial or
complete liquidation. Dividends paid out of the Bank's current or accumulated
earnings and profits will not be so included in the Bank's income.

         The amount of additional taxable income created from a non-dividend
distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the


                                       21

<PAGE>

distribution. Thus, if the Bank makes a non-dividend distribution to the
Company, approximately one and one-half times the amount of such distribution
(but not in excess of the amount of such reserves) would be includable in income
for federal income tax purposes, assuming a 34% federal corporate income tax
rate.

         CORPORATE ALTERNATIVE MINIMUM TAX. The Code imposes a tax ("AMT") on
alternative minimum taxable income ("AMTI") at a rate of 20%. Only 90% of AMTI
can be offset by net operating loss carryovers. AMTI is also adjusted by
determining the tax treatment of certain items in a manner that negates the
deferral of income resulting from the regular tax treatment of those items.
Thus, the Bank's 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 adjustment and prior to reduction for net operating losses). The
Bank does not expect to be subject to the AMT.

         ELIMINATION OF DIVIDENDS; DIVIDENDS RECEIVED DEDUCTION. The Company may
exclude from its income 100% of dividends received from the Bank as a member of
the same affiliated group of corporations. A 70% dividends received deduction
generally applies with respect to dividends received from domestic corporations
that are not members of such affiliated group, except that an 80% dividends
received deduction applies if the Company and the Bank own more than 20% of the
stock of a corporation paying a dividend.

STATE AND LOCAL TAXATION

         The Bank may file a combined Illinois income tax return with the
Company. For Illinois income tax purposes, the Bank is taxed at an effective
rate equal to 7.3% 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
obligations). The exclusion of income on United States Treasury obligations has
the effect of reducing the Illinois Taxable Income of the Bank. As of June 30,
1999, the Bank has approximately $5.7 million of Illinois' net loss deduction
carry forward that can be utilized to reduce Illinois taxable income.

         As an Illinois holding company, the Company will pay an annual
franchise tax to the State of Illinois.

         The Company files a combined Illinois income tax return with the Bank.
The Company will be taxed at an effective rate equal to 7.3% of Illinois taxable
income as defined above.

                                   REGULATION

GENERAL

         The Bank is subject to extensive regulation, examination, and
supervision by the OTS, as its chartering agency, and the FDIC, as its deposit
insurer. The Bank's deposit accounts are insured up to applicable limits by the
SAIF administered by the FDIC, and the Bank is a member of the FHLB of Chicago.
The Bank must file reports with the OTS and the FDIC concerning its activities
and


                                       22

<PAGE>

financial condition, and it must obtain regulatory approvals prior to
entering into certain transactions, such as mergers with, or acquisitions of,
other depository institutions. The OTS and the FDIC conduct periodic
examinations to assess the Bank's compliance with various regulatory
requirements. This regulation and supervision establishes a comprehensive
framework of activities in which a savings association can engage and is
intended primarily for the protection of the insurance fund and depositors. The
Company, as a savings association 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 (the "SEC") under the
federal securities laws.

         The OTS and the FDIC have significant discretion in connection with
their supervisory and enforcement activities and examination policies, including
policies with respect to the classification of assets and the establishment of
adequate loan loss reserves for regulatory purposes. Any change in such
policies, whether by the OTS, the FDIC or the Congress, could have a material
adverse impact on the Company, the Bank and the operations of both.

         The following discussion is intended to be a summary of the material
statutes and regulations applicable to savings associations and their holding
companies, and it does not purport to be a comprehensive description of all such
statutes and regulations.

REGULATION OF FEDERAL SAVINGS ASSOCIATIONS.

         BUSINESS ACTIVITIES. The Bank derives its lending and investment powers
from the Home Owners' Loan Act, as amended (the "HOLA"), and the regulations of
the OTS thereunder. Under these laws and regulations, the Bank may invest in
mortgage loans secured by residential and commercial real estate, commercial and
consumer loans, certain types of debt securities, and certain other assets. The
Bank may also establish service corporations that may engage in activities not
otherwise permissible for the Bank, including certain real estate equity
investments and securities and insurance brokerage. These investment powers are
subject to various limitations, including (a) a prohibition against the
acquisition of any corporate debt security that is not rated in one of the four
highest rating categories; (b) a limit of 400% of an association's capital on
the aggregate amount of loans secured by non-residential real estate property;
(c) a limit of 20% of an association's assets on the aggregate amount of
commercial loans; (d) a limit of 35% of an association's assets on the aggregate
amount of consumer loans and acquisitions of certain debt securities; (e) a
limit of 5% of assets on nonconforming loans (loans in excess of the specific
limitations of the HOLA); and (f) a limit of the greater of 5% of assets or an
association's capital on certain construction loans made for the purpose of
financing what is or is expected to become residential property.

         LOANS TO ONE BORROWER. Under the HOLA, savings associations are
generally subject to the same limits on loans to one borrower as are imposed on
national banks. Generally, under these limits, a savings association may not
make a loan or extend credit to a single or related group of borrowers in excess
of 15% of the association's unimpaired capital and surplus. Additional amounts
may be lent, not in excess of 10% of unimpaired capital and surplus, if such
loans or extensions of credit are fully secured by readily marketable
collateral. Such collateral is defined to include certain debt and equity
securities and bullion but generally does not include real estate. At June 30,
1999, the Bank's regulatory limit on loans to one borrower was $4.0 million. At
June 30, 1999, the Bank's largest


                                       23

<PAGE>

aggregate amount of loans to one borrower was $414,000, and the second largest
borrower had an aggregate balance of $395,000. The Bank is in compliance with
all applicable limitations on loans to one borrower.

         QTL TEST. The HOLA requires a savings association to meet a qualified
thrift lender, or "QTL" test. Under the QTL test, a savings association is
required to maintain at least 65% of its "portfolio assets" in certain
"qualified thrift investments" in at least nine months of the most recent
12-month period. "Portfolio assets" means, in general, an association's total
assets less the sum of (a) specified liquid assets up to 20% of total assets,
(b) certain intangibles, including goodwill and credit card and purchased
mortgage servicing rights, and (c) the value of property used to conduct the
association's business. "Qualified thrift investments" includes various types of
loans made for residential and housing purposes, investments related to such
purposes, including certain mortgage-backed and related securities, consumer
loans, small business loans, education loans, and credit card loans. At June 30,
1999, the Bank maintained 99% of its portfolio assets in qualified thrift
investments. The Bank had also met the QTL test in each of the prior 12 months
and was, therefore, a qualified thrift lender. A savings association may also
satisfy the QTL test by qualifying as a "domestic building and loan association"
as defined in the Internal Revenue Code of 1986.

         A savings association that fails the QTL test must either operate under
certain restrictions on its activities or convert to a bank charter. The initial
restrictions include prohibitions against (a) engaging in any new activity not
permissible for a national bank, (b) paying dividends not permissible under
national bank regulations, (c) obtaining new advances from any Federal Home Loan
Bank and (d) establishing any new branch office in a location not permissible
for a national bank in the association's home state. In addition, within one
year of the date that a savings association ceases to meet the QTL test, any
company controlling the association would have to register under, and become
subject to the requirements of, the Bank Holding Company Act of 1956, as amended
(the "BHC Act"). If the savings association does not requalify under the QTL
test within the three-year period after it failed the QTL test, it would be
required to terminate any activity and to dispose of any investment not
permissible for a national bank and would have to repay as promptly as possible
any outstanding advances from a Federal Home Loan Bank. A savings association
that has failed the QTL test may requalify under the QTL test and be free of
such limitations, but it may do so only once.

         CAPITAL REQUIREMENTS. The OTS regulations require savings associations
to meet three minimum capital standards: a tangible capital ratio requirement of
1.5% of total assets as adjusted under the OTS regulations, a leverage ratio
requirement of 3% of core capital to such adjusted total assets and a risk-based
capital ratio requirement of 8% of total risk-based capital to total
risk-weighted assets. In determining compliance with the risk-based capital
requirement, a savings association must compute its risk-weighted assets by
multiplying its assets and certain off balance sheet items by risk weights,
which range from 0% for cash and obligations issued by the United States
Government or its agencies to 100% for consumer and commercial loans, as
assigned by the OTS capital regulation based on the risks OTS believes are
inherent in the type of asset. Tangible capital is defined, generally, as common
stockholders' equity (including retained earnings), certain noncumulative
perpetual preferred stock and related earnings and minority interests in equity
accounts of fully consolidated subsidiaries, less intangibles (other than
certain purchased mortgage servicing rights) and investments in and loans to
subsidiaries engaged in activities not permissible for a national bank. Core
capital is defined


                                       24

<PAGE>

similarly to tangible capital, but core capital also includes certain qualifying
supervisory goodwill and certain purchased credit card relationships.
Supplementary capital currently includes cumulative and other perpetual
preferred stock, mandatory convertible securities, subordinated debt and
intermediate preferred stock and the allowance for loan and lease losses. The
allowance for loan and lease losses includable in supplementary capital is
limited to a maximum of 1.25% of risk-weighted assets, and the amount of
supplementary capital that may be included as total capital cannot exceed the
amount of core capital.

         The OTS has promulgated a regulation that requires a savings
association with "above normal" interest rate risk, when determining compliance
with its risk-based capital requirements, to hold additional capital to account
for its "above normal" interest rate risk. A savings association's interest rate
risk is measured by the decline in the net portfolio value of its assets (i.e.,
the difference between incoming and outgoing discounted cash flows from assets,
liabilities and off balance sheet contracts) resulting from a hypothetical 2%
increase or decrease in market rates of interest, divided by the estimated
economic value of the association's assets, as calculated in accordance with
guidelines set forth by the OTS. At the times when the 3 month Treasury bond
equivalent yield falls below 4%, an association may compute its interest rate
risk on the basis of a decrease equal to one-half of that Treasury rate rather
than on the basis of 2%. A savings association whose measured interest rate risk
exposure exceeds 2% would be considered to have "above normal" risk. The
interest rate risk component is an amount equal to one-half of the difference
between the association's measured interest rate risk and 2%, multiplied by the
estimated economic value of the association's assets. That dollar amount is
deducted from an association's total capital in calculating compliance with its
risk based capital requirement. Any required deduction for interest rate risk
becomes effective on the last day of the third quarter following the reporting
date of the association's financial data on which the interest rate risk was
computed. An institution with assets of less than $300 million and risk-based
capital ratios in excess of 12% is not subject to the interest rate risk
component, unless the OTS determines otherwise. The OTS has indefinitely
deferred the implementation of the interest rate risk component in the
computation of an institution's risk-based capital requirements. The OTS
continues to monitor the interest rate risk of individual institutions and
retains the right to impose additional capital requirements on individual
institutions.

         At June 30, 1999, the Bank met each of its capital requirements.

         The table below presents the Bank's regulatory capital as compared to
the OTS regulatory capital requirements at June 30, 1999.

<TABLE>
<CAPTION>
                                                      BANK CAPITAL
                                    BANK               REQUIREMENTS          BANK EXCESS
                            -------------------     -----------------   --------------------
                             AMOUNT     PERCENT     AMOUNT    PERCENT   AMOUNT     PERCENT
                             ------     -------     ------    -------   ------     -------
                                                  (Dollars in thousands)
<S>                         <C>          <C>       <C>         <C>      <C>         <C>
Tangible capital.........   $ 26,798     12.78%    $ 3,145     1.50%    $ 23,653    11.28%
Core capital.............     26,798     12.78       6,290     3.00       20,508     9.78
Risk-based capital.......     27,098     30.49       7,110     8.00       19,988    22.49
</TABLE>




                                       25

<PAGE>


         A reconciliation between the Bank's regulatory capital and GAAP capital
at June 30, 1999 is presented below.

                                               TANGIBLE      CORE    RISK-BASED
                                                CAPITAL     CAPITAL    CAPITAL
                                                -------     -------    -------
                                                        (In thousands)
GAAP capital...............................    $ 26,577    $ 26,577    $ 26,577
Unrealized loss on mortgage-back securities
  available-for-sale, net of tax...........         221         221         221
Allowance for loan losses..................           -           -         300
                                               --------     -------     -------
Regulatory capital.........................    $ 26,798    $ 26,798    $ 27,098
                                               ========    ========    ========


         LIMITATION ON CAPITAL DISTRIBUTIONS. Effective April 1, 1999, the OTS
amended its capital distribution regulations to reduce regulatory burdens on
savings associations. Under the amendments adopted by the OTS, certain savings
associations will be permitted to pay capital distributions during a calendar
year that do not exceed the association's net income for that year plus its
retained net income for the prior two years, without notice to, or the approval
of, the OTS. However, a savings association subsidiary of a savings and loan
holding company, such as the Bank, will continue to have to file a notice unless
the specific capital distribution requires an application. In addition, the OTS
can prohibit a proposed capital distribution, otherwise permissible under the
regulation, if the OTS has determined that the association is in need of more
than normal supervision or if it determines that a proposed distribution by an
association would constitute an unsafe or unsound practice. Furthermore, under
the OTS prompt corrective action regulations, the Bank would be prohibited from
making any capital distribution if, after the distribution, the Bank failed to
meet its minimum capital requirements, as described below. See "--Prompt
Corrective Regulatory Action".

         LIQUIDITY. The Bank is required to maintain an average daily balance of
liquid assets (cash, certain time deposits, bankers' acceptances, specified
United States Government, state or federal agency obligations, shares of certain
mutual funds and certain corporate debt securities and commercial paper) equal
to a monthly average of not less than a specified percentage of its net
withdrawable deposit accounts plus short-term borrowings. This liquidity
requirement may be changed from time to time by the OTS to any amount within the
range of 4% to 10% depending upon economic conditions and the savings flows of
member institutions, and is currently 4%. OTS regulations also require each
savings association to maintain an average daily balance of short-term liquid
assets at a specified percentage of the total of its net withdrawable deposit
accounts and borrowings payable in one year or less. Monetary penalties may be
imposed for failure to meet these liquidity requirements. The Bank's average
liquidity ratio for the month ended June 30, 1999, was 49.8%, which exceeded the
applicable requirements. The Bank has never been subject to monetary penalties
for failure to meet its liquidity requirements.

         ASSESSMENTS. Savings associations are required by OTS regulation to pay
assessments to the OTS to fund the operations of the OTS. The general
assessment, paid on a semiannual basis, is computed upon the savings
association's total assets, including consolidated subsidiaries, as reported in
the association's latest quarterly Thrift Financial Report. The OTS has adopted
amendments to its


                                       26

<PAGE>

regulations, effective January 1, 1999, that are intended to assess savings
associations on a more equitable basis. The new regulations will base the
assessment for an individual savings association on three components: the size
of the association, on which the basic assessment would be based; the
association's supervisory condition, which would result in an additional
assessment based on a percentage of the basic assessment for any savings
institution with a composite rating of 3, 4 or 5 in its most recent safety and
soundness examination; and the complexity of the association's operations, which
would result in an additional assessment based on a percentage of the basic
assessment for any savings association that managed over $1.0 billion in trust
assets, serviced for others loans aggregating more than $1.0 billion, or had
certain off-balance sheet assets aggregating more than $1.0 billion. In order to
avoid a disproportionate impact on the smaller savings institutions, which are
those whose total assets never exceeded $100.0 million, the new regulations
provide that the portion of the assessment based on asset size will be the
lesser of the assessment under the amended regulations or the regulations before
the amendment. Management believes that any change in its rate of OTS
assessments under the amended regulations will not be material.

         BRANCHING. Subject to certain limitations, the HOLA and the OTS
regulations permit federally chartered savings associations to establish
branches in any state of the United States. The authority to establish such
branches is available (a) in states that expressly authorize branches of savings
associations located in another state or (b) to an association that either
satisfies the "QTL" test for a qualified thrift lender or qualifies as a
"domestic building and loan association" under the Internal Revenue Code of
1986, which imposes qualification requirements similar to those for a "qualified
thrift lender" under the HOLA. See "QTL Test". The authority for a federal
savings association to establish an interstate branch network would facilitate a
geographic diversification of the association's activities. This authority under
the HOLA and the OTS regulations preempts any state law purporting to regulate
branching by federal savings associations.

         COMMUNITY REINVESTMENT. Under the Community Reinvestment Act (the
"CRA"), as implemented by OTS regulations, a savings association has a
continuing and affirmative obligation consistent with its safe and sound
operation to help meet the credit needs of its entire community, including low
and moderate income neighborhoods. The CRA does not establish specific lending
requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the CRA.
The CRA requires the OTS, in connection with its examination of a savings
association, to assess the association's record of meeting the credit needs of
its community and to take such record into account in its evaluation of certain
applications by such association. The CRA also requires all institutions to make
public disclosure of their CRA ratings. The Bank received a "Satisfactory" CRA
rating in its most recent examination.

         The CRA regulations establish an assessment system that bases an
associations rating on its actual performance in meeting community needs. In
particular, the assessment system focuses on three tests: (a) a lending test, to
evaluate the institution's record of making loans in its assessment areas; (b)
an investment test, to evaluate the institution's record of investing in
community development projects, affordable housing, and programs benefiting low
or moderate income individuals and businesses; and (c) a service test, to
evaluate the institution's delivery of services through its branches, ATMs and
other offices.



                                       27

<PAGE>

         TRANSACTIONS WITH RELATED PARTIES. The Bank's authority to engage in
transactions with its "affiliates" is limited by the OTS regulations and by
Sections 23A and 23B of the Federal Reserve Act (the "FRA"). In general, an
affiliate of the Bank is any company that controls the Bank or any other company
that is controlled by a company that controls the Bank, excluding the Bank's
subsidiaries other than those that are insured depository institutions. The OTS
regulations prohibit a savings association (a) from lending to any of its
affiliates that is engaged in activities that are not permissible for bank
holding companies under Section 4(c) of the BHC Act and (b) from purchasing the
securities of any affiliate other than a subsidiary. Section 23A limits the
aggregate amount of transactions with any individual affiliate to 10% of the
capital and surplus of the savings association and also limits the aggregate
amount of transactions with all affiliates to 20% of the savings association's
capital and surplus. Extensions of credit to affiliates are required to be
secured by collateral in an amount and of a type described in Section 23A, and
the purchase of low quality assets from affiliates is generally prohibited.
Section 23B provides that certain transactions with affiliates, including loans
and asset purchases, must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the
association as those prevailing at the time for comparable transactions with
nonaffiliated companies. In the absence of comparable transactions, such
transactions may only occur under terms and circumstances, including credit
standards, that in good faith would be offered to or would apply to
nonaffiliated companies.

         The Bank's authority to extend credit to its directors, executive
officers, and 10% shareholders, as well as to entities controlled by such
persons, is currently governed by the requirements of Sections 22(g) and 22(h)
of the FRA and Regulation O of the FRB thereunder. Among other things, these
provisions require that extensions of credit to insiders (a) be made on terms
that are substantially the same as, and follow credit underwriting procedures
that are not less stringent than, those prevailing for comparable transactions
with unaffiliated persons and that do not involve more than the normal risk of
repayment or present other unfavorable features and (b) not exceed certain
limitations on the amount of credit extended to such persons, individually and
in the aggregate, which limits are based, in part, on the amount of the
association's capital. In addition, extensions of credit in excess of certain
limits must be approved by the association's board of directors.

         ENFORCEMENT. Under the Federal Deposit Insurance Act (the "FDI Act"),
the OTS has primary enforcement responsibility over savings associations and has
the authority to bring enforcement action against all "institution affiliated
parties," including any controlling stockholder or any stockholder, attorney,
appraiser or accountant who knowingly or recklessly participates in any
violation of applicable law or regulation or breach of fiduciary duty or certain
other wrongful actions that causes or is likely to cause more than a minimal
loss or other significant adverse effect on an insured savings association.
Civil penalties cover a wide range of violations and actions and range from
$5,000 for each day during which violations of law, regulations, orders, and
certain written agreements and conditions continue, up to $1 million per day for
such violations if the person obtained a substantial pecuniary gain as a result
of such violation or knowingly or recklessly caused a substantial loss to the
institution. Criminal penalties for certain financial institution crimes include
fines of up to $1 million and imprisonment for up to 30 years. In addition,
regulators have substantial discretion to take enforcement action against an
institution that fails to comply with its regulatory requirements, particularly
with respect to its capital requirements. Possible enforcement actions range
from the


                                       28

<PAGE>

imposition of a capital plan and capital directive to receivership,
conservatorship, or the termination of deposit insurance. Under the FDI Act, the
FDIC has the authority to recommend to the Director of OTS that enforcement
action be taken with respect to a particular savings association. If action is
not taken by the Director of the OTS, the FDIC has authority to take such action
under certain circumstances.

         STANDARDS FOR SAFETY AND SOUNDNESS. Pursuant to the FDI Act, as amended
by FDICIA and the Riegle Community Development and Regulatory Improvement Act of
1994 (the "Community Development Act"), the OTS and the federal bank regulatory
agencies have adopted, a set of guidelines prescribing safety and soundness
standards pursuant to FDICIA, as amended. The guidelines establish general
standards relating to internal controls and information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, asset quality, earnings standards, and compensation, fees and benefits.
In general, the guidelines require, among other things, appropriate systems and
practices to identify and manage the risks and exposures specified in the
guidelines. The guidelines prohibit excessive compensation as an unsafe and
unsound practice and describe compensation as excessive when the amounts paid
are unreasonable or disproportionate to the services performed by an executive
officer, employee, director or principal stockholder. In addition, the OTS
adopted regulations that authorize, but do not require, the OTS to order an
institution that has been given notice by the OTS that it is not satisfying any
of such safety and soundness standards to submit a compliance plan. If, after
being so notified, an institution fails to submit an acceptable compliance plan
or fails in any material respect to implement an accepted compliance plan, the
OTS must issue an order directing action to correct the deficiency and may issue
an order directing other actions of the types to which an undercapitalized
association is subject under the "prompt corrective action" provisions of
FDICIA. If an institution fails to comply with such an order, the OTS may seek
to enforce such order in judicial proceedings and to impose civil money
penalties.

         REAL ESTATE LENDING STANDARDS. The OTS and the other federal banking
agencies adopted regulations to prescribe standards for extensions of credit
that (a) are secured by real estate or (b) are made for the purpose of financing
the construction of improvements on real estate. The OTS regulations require
each savings association to establish and maintain written internal real estate
lending standards that are consistent with safe and sound banking practices and
appropriate to the size of the association and the nature and scope of its real
estate lending activities. The standards also must be consistent with
accompanying OTS guidelines, which include loan-to-value ratios for the
different types of real estate loans. Associations are also permitted to make a
limited amount of loans that do not conform to the proposed loan-to-value
limitations so long as such exceptions are reviewed and justified appropriately.
The guidelines also list a number of lending situations in which exceptions to
the loan-to-value standards are justified.

         PROMPT CORRECTIVE REGULATORY ACTION. Under the OTS prompt corrective
action regulations, the OTS is required to take certain, and is authorized to
take other, supervisory actions against undercapitalized savings associations.
For this purpose, a savings association would be placed in one of five
categories based on the association's capital. Generally, a savings association
is treated as "well capitalized" if its ratio of total capital to risk-weighted
assets is at least 10.0%, its ratio of core capital to risk weighted assets is
at least 6.0%, its ratio of core capital to total assets is at least 5.0%,



                                       29

<PAGE>

and it is not subject to any order or directive by the OTS to meet a specific
capital level. A savings association will be treated as "adequately capitalized"
if its ratio of total capital to risk-weighted assets is at least 8.0%, its
ratio of core capital to risk weighted assets is at least 4.0%, and its ratio of
core capital to total assets is at least 4.0% (3.0% if the association receives
the highest rating on the CAMELS financial institutions rating system). A
savings association that has a total risk based capital of less than 8.0% or a
leverage ratio or a Tier 1 capital ratio that is less than 4.0% (3.0% leverage
ratio if the association receives the highest rating on the CAMELS financial
institutions rating system) is considered to be "undercapitalized." A savings
association that has a total risk based capital of less than 6.0% or a Tier 1
risk based capital ratio or a leverage ratio of less than 3.0% is considered to
be "significantly undercapitalized." A savings association that has a tangible
capital to assets ratio equal to or less than 2% is deemed to be "critically
undercapitalized." The elements of an association's capital for purposes of the
prompt corrective action regulations are defined generally as they are under the
regulations for minimum capital requirements. At June 30, 1999, the Bank met the
criteria for being considered "well-capitalized".

         When appropriate, the OTS can require corrective action by a savings
association holding company under the "prompt corrective action" provisions of
FDICIA.

         INSURANCE OF DEPOSIT ACCOUNTS. The Bank is a member of the SAIF, and
the Bank pays its deposit insurance assessments to the SAIF. The FDIC also
maintains another insurance fund, the BIF, which primarily insures the deposits
of banks and state chartered savings banks.

         Pursuant to FDICIA, the FDIC established a risk based assessment system
for determining the deposit insurance assessments to be paid by insured
depositary institutions. Under the assessment system, the FDIC assigns an
institution to one of three capital categories based on the institution's
financial information as of the reporting period ending seven months before the
assessment period. The three capital categories consist of (a) well capitalized,
(b) adequately capitalized or (c) undercapitalized. The FDIC also assigns an
institution to one of three supervisory subcategories within each capital group.
The supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institution's primary federal
regulator and information that the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. An institution's assessment rate depends on the capital category and
supervisory category to which it is assigned. Under the regulation, there are
nine assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
Assessment rates currently range from 0.0% of deposits for an institution in the
highest category (i.e., well-capitalized and financially sound, with no more
than a few minor weaknesses) to 0.27% of deposits for an institution in the
lowest category (i.e., undercapitalized and substantial supervisory concern).
The FDIC is authorized to raise the assessment rates as necessary to maintain
the required reserve ratio of 1.25%. As a result of the Deposit Insurance Funds
Act of 1996 (the "1996 Act"), both the BIF and the SAIF currently satisfy the
reserve ratio requirement. The 1996 Act authorized the FDIC to impose a special
one-time assessment on all institutions with SAIF-assessable deposits in the
amount necessary to recapitalize the SAIF-assessable deposits as of March 31,
1995. For the Bank, the special assessment was $936,000. The impact on
operations, net of related tax effects, reduced reported earnings by $617,000
for the eleven months ended June 30, 1997.



                                       30

<PAGE>

         The 1996 Act also provides that the FDIC cannot assess regular
insurance assessments for an insurance fund unless required to maintain or to
achieve the designated reserve ratio of 1.25%, except on those of its member
institutions that are not classified as "well capitalized" or that have been
found to have "moderately severe" or "unsatisfactory" financial, operational or
compliance weaknesses. The Bank has not been so classified by the FDIC or the
OTS.

         In addition, the 1996 Act expanded the assessment base for the payments
on the bonds (the "FICO bonds") issued in the late 1980s by the Financing
Corporation to recapitalize the now defunct Federal Savings and Loan Insurance
Corporation to include the deposits of both BIF- and SAIF-insured institutions
beginning January 1, 1997. Until December 31, 1999, or such earlier date on
which the last savings association ceases to exist, the rate of assessment for
BIF-assessable deposits will be one-fifth of the rate imposed on SAIF-assessable
deposits. The annual rate of assessments for the payments on the FICO bonds for
the first, second, third and fourth quarters of fiscal 1999 were 0.0622%,
0.0610%, 0.0582% and 0.0610%, respectively.

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

         FEDERAL HOME LOAN BANK SYSTEM. The Bank is a member of the FHLB of
Chicago, which is one of the regional Federal Home Loan Banks composing the
Federal Home Loan Bank System. Each Federal Home Loan Bank provides a central
credit facility primarily for its member institutions. The Bank, as a member of
the FHLB of Chicago, is required to acquire and hold shares of capital stock in
the FHLB of Chicago in an amount equal to 1% of the aggregate principal amount
of its unpaid residential mortgage loans, home-purchase contracts and similar
obligations, but not less than $500. The Bank was in compliance with this
requirement with an investment in the capital stock of the FHLB of Chicago at
June 30, 1999, of $2.6 million. Any advances from a Federal Home Loan Bank must
be secured by specified types of collateral, and all long term advances may be
obtained only for the purpose of providing funds for residential housing
finance.

         The Federal Home Loan Banks are required to provide funds for the
resolution of insolvent thrifts and to contribute funds for affordable housing
programs. These requirements could reduce the amount of earnings that the
Federal Home Loan Banks can pay as dividends to their members and could also
result in the Federal Home Loan Banks imposing a higher rate of interest on
advances to their members. The Bank earned dividends on the FHLB of Chicago
capital stock in amounts equal to $190,000, $171,000, and $138,000 respectively
during the fiscal year ended June 30, 1999, 1998 and the eleven months ended
June 30, 1997. If dividends were reduced, or interest on future Federal Home
Loan Bank advances increased, the Bank's net interest income would likely also
be reduced.

         FEDERAL RESERVE SYSTEM. The Bank is subject to provisions of the FRA
and the FRB's regulations pursuant to which depositary institutions may be
required to maintain non-interest-earning reserves against their deposit
accounts and certain other liabilities. Currently, reserves must be


                                       31

<PAGE>

maintained against transaction accounts (primarily NOW and regular checking
accounts). The FRB regulations generally require that reserves be maintained in
the amount of 3% of the aggregate of transaction accounts up to $46.5 million.
The amount of aggregate transaction accounts in excess of $46.5 million are
currently subject to a reserve ratio of 10%, which ratio the FRB may adjust
between 8% and 12%. The FRB regulations currently exempt $4.9 million of
otherwise reservable balances from the reserve requirements, which exemption is
adjusted by the FRB at the end of each year. The Bank is in compliance with the
foregoing reserve requirements. Because required reserves must be maintained in
the form of either vault cash, a non-interest bearing account at a Federal
Reserve Bank, or a passthrough account as defined by the FRB, the effect of this
reserve requirement is to reduce the Bank's interest-earning assets. The
balances maintained to meet the reserve requirements imposed by the FRB may be
used to satisfy liquidity requirements imposed by the OTS. Federal Home Loan
Bank System members are also authorized to borrow from the Federal Reserve
"discount window," but FRB regulations require such institutions to exhaust all
Federal Home Loan Bank sources before borrowing from a Federal Reserve Bank.

REGULATION OF SAVINGS ASSOCIATION HOLDING COMPANIES

         The Company, is a non-diversified unitary savings bank holding company
within the meaning of the HOLA, as amended. As such, the Company is subject to
OTS regulations, examinations, supervision and reporting requirements. In
addition, the OTS has enforcement authority over the Company and its non-savings
association subsidiaries, if any. Among other things, this authority permits the
OTS to restrict or prohibit activities that are determined to be a serious risk
to the financial safety, soundness, or stability of a subsidiary savings
institution.

         The HOLA prohibits a savings association holding company, directly or
indirectly, or through one or more subsidiaries, from acquiring another savings
association or holding company thereof, without prior written approval of the
OTS; acquiring or retaining, with certain exceptions, more than 5% of a
non-subsidiary savings association, a non-subsidiary holding company, or a
non-subsidiary company engaged in activities other than those permitted by the
HOLA; or acquiring or retaining control of a depository institution that is not
insured by the FDIC. In evaluating an application by a holding company to
acquire a savings association, the OTS must consider the financial and
managerial resources and future prospects of the company and savings association
involved, the effect of the acquisition on the risk to the insurance funds, the
convenience and needs of the community and competitive factors.

         As a unitary savings bank holding company, the Company generally is not
restricted under existing laws as to the types of business activities in which
it may engage, provided that the Bank continues to satisfy the QTL test. Upon
any non-supervisory acquisition by the Company of another savings association or
savings bank that meets the QTL test and is deemed to be a savings association
by the OTS and that will be held as a separate subsidiary, the Company would
become a multiple savings association holding company and would be subject to
limitations on the types of business activities in which it could engage. The
HOLA limits the activities of a multiple savings association holding company and
its noninsured association subsidiaries primarily to activities permissible for
bank holding companies under Section 4(c)(8) of the BHC Act, subject to the
prior approval of the OTS, and to other activities authorized by OTS regulation.


                                       32


<PAGE>

         The OTS is prohibited from approving any acquisition that would result
in a multiple savings association holding company controlling savings
associations in more than one state, subject to two exceptions: an acquisition
of a savings association in another state (a) in a supervisory transaction or
(b) pursuant to authority under the laws of the state of the association to be
acquired that specifically permit such acquisitions. The conditions imposed upon
interstate acquisitions by those states that have enacted authorizing
legislation vary. Some states impose conditions of reciprocity, which have the
effect of requiring that the laws of both the state in which the acquiring
holding company is located (as determined by the location of its subsidiary
savings association) and the state in which the association to be acquired is
located, have each enacted legislation allowing its savings associations to be
acquired by out-of-state holding companies on the condition that the laws of the
other state authorize such transactions on terms no more restrictive than those
imposed on the acquiror by the state of the target association. Some of these
states also impose regional limitations, which restrict such acquisitions to
states within a defined geographic region. Other states allow full nationwide
banking without any condition of reciprocity. Some states do not authorize
interstate acquisitions of savings associations.

FEDERAL SECURITIES LAW

         The Company's Common Stock is registered with the SEC under Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Company is subject to information, proxy solicitation, insider trading
restrictions and other requirements under the Exchange Act.

ITEM  2. PROPERTIES

         The Bank conducts its business through its corporate office and two
branch locations, as set forth in the following table.

                                                                       NET BOOK
                                               DATE         LEASE      VALUE AT
                                LEASED OR    LEASED OR   EXPIRATION     JUNE 30,
                                  OWNED       ACQUIRED       DATE        1999
                                ---------    ---------   ----------    ---------
                                                  (In thousands)
Main Office:
  Old McHenry Road
  Long Grove, Illinois 60047      Owned         1980         -----      $3,561

Branches:
  1601 North Milwaukee Avenue
  Chicago, Illinois  60647        Owned         1941         -----         341

  8301 West Lawrence
  Norridge Illinois  60656        (1)           1976         4/2006(2)      19
_______________________________
(1) Land leased, building owned by the Bank.
(2) The Bank has two five-year renewal options.


                                       33

<PAGE>

ITEM  3. LEGAL PROCEEDINGS

         In the ordinary course of its operations, the Bank is a party to
routine litigation involving claims incidental to the savings bank business.
Management believes that no current litigation poses a substantial likelihood of
potential loss or exposure, which would have a material adverse effect on the
financial position of the Bank.

                                     PART II

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

         None.

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

         The information required by this Item is incorporated herein by
reference to the inside back cover of the Company's 1999 Annual Report to
Shareholders under the caption "Stockholder Information" which section is
included in Exhibit 13.1 to this Report.



                                       34


<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA


FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                              At or for the
                                                         At or for the year   eleven months     At or for the year
                                                            Ended June 30,    Ended June 30,      Ended July 31,
                                                       ---------------------  --------------  ----------------------
                                                        1999          1998         1997         1996(1)      1995(1)
                                                       --------     --------  --------------  ----------  -----------
<S>                                                    <C>          <C>         <C>           <C>          <C>
SELECTED FINANCIAL CONDITION DATA:
 Total assets                                          $215,493     $220,604    $ 214,896     $194,624     $ 200,251
 Loans receivable (net)                                 138,517      115,472       93,624       79,144        70,984
 Allowance for loan losses                                  300          300          300          300           166
 Mortgage-backed securities                              54,014       79,764      107,595      102,411       111,283
 Savings deposits                                       123,917      123,835      122,981      137,177       148,350
 Borrowed funds                                          52,000       53,000       49,600       39,900        32,300
 Stockholders' equity                                    34,722       38,094       36,977       13,579        14,423

SELECTED OPERATING DATA:
 Net interest income before provision for loan losses     6,370        6,442        5,346        4,704         5,341
 Net income                                                 818        1,180          220          226           982
 Net income excluding special SAIF assessment, net
     of tax                                                 818        1,180          837          226           982

SELECTED FINANCIAL RATIOS:
 Bank Capital ratios:
     Tangible                                             12.78%       12.30%      12.13%          7.35%        7.05%
     Core                                                 12.78        12.30        12.13          7.35         7.05
     Risk-based                                           30.49        31.76        34.03         21.59        21.28
 Return on average assets                                  0.38         0.55         0.11          0.11         0.51
 Return on average assets excluding special SAIF
     assessment, net of tax                                0.38         0.55         0.41          0.11         0.51
 Return on average stockholders' equity                    2.26         3.12         0.82          1.58         6.98
 Return on average stockholders' equity excluding
     special SAIF assessment, net of tax                   2.26         3.12         3.13          1.58         6.98
 Consolidated equity to assets at end of period           16.11        17.27        17.21          6.98         7.20
 Noninterest expense to average assets                     2.47         2.47         2.59          2.36         2.45
 Noninterest expense to average assets excluding
     special SAIF assessment                               2.47         2.47         2.13          2.36         2.45
 Non-performing assets as a percent of total assets        0.09         0.16         0.09          0.06         0.18
  Allowance for loan losses as a percent of total loans    0.22         0.26         0.32          0.38         0.23
  Allowance for loan losses as a percent of
      non-performing loans                               155.44        87.72       150.75        254.24        86.01

PER SHARE DATA:
 Basic earnings per share                              $   0.37 $      0.50   $      0.27          N/A            N/A
 Diluted earnings per share                                0.37        0.49          0.27          N/A            N/A
 Book value per share                                     15.29       15.16         14.72          N/A            N/A

STOCK QUOTE:
 High(2)                                               $ 18.500     $ 23.938     $ 16.125          N/A            N/A
 Low(2)                                                  12.125       16.000       12.313          N/A            N/A
 At June 30                                              15.000       18.000       16.125          N/A            N/A
</TABLE>
______________________________________________________
(1) Fairfield Savings Bank, F.S.B. only.
(2) Quotes for 1997 include the period from December 19, 1996 to June 30, 1997.


                                       35

<PAGE>



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

         The information required by this Item is incorporated herein by
reference to pages 5 through 24 of the Company's 1999 Annual Report to
Stockholders under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations", which section is included in
Exhibit 13.1 to this Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The information required by this Item is incorporated herein by
reference to pages 7 through 9 of the Company's 1999 Annual Report to
Stockholders under the caption "Quantitative and Qualitative Disclosures About
Market Risk," which section is included in Exhibit 13.1 to this Report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required by this Item is incorporated herein by
reference to pages 25 through 58 of the Company's 1999 Annual Report to
Stockholders under the captions "Independent Auditor's Report," "Consolidated
Financial Statements" and "Notes to Consolidated Financial Statements," which
sections are included in Exhibit 13.1 to this Report.

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

         None

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following information included on pages 7, 8 and 19 of the
Company's Proxy Statement for the 1999 Annual Meeting of Stockholders (the
"Proxy Statement") is incorporated herein by reference: "Election of Director,"
"Nominee for Election as Director," "Continuing Directors," "Executive
Officers," and "Section 16(a) Beneficial Ownership Reporting Compliance."

ITEM 11. EXECUTIVE COMPENSATION

         The following information included on pages 10 through 19, of the Proxy
Statement is incorporated herein by reference: "Management Salary Compensation
Committee Report on Executive Compensation," "Compensation Committee Interlocks
and Insider Participation," "Performance Graph," "Directors' Compensation,"
"Executive Compensation," "Employment Agreements," and "Benefits."


                                       36

<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following information included on pages 4 through 6, of the Proxy
Statement is incorporated herein by reference: "Security Ownership of Certain
Beneficial Owners and Management-Principal Shareholders of the Company," and
"Security Ownership of Management."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The following information included on page 19 of the Proxy Statement is
incorporated herein by reference: "Compensation of Directors and Executive
Officers - Transactions with Certain Related Persons."

                                     PART IV

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

Listed below are all financial statements and exhibits filed as part of this
report:
     a.    Financial Statements, Schedules, and Exhibits
     (1)   The consolidated balance sheets of Big Foot Financial Corp.
           and subsidiary as of June 30, 1999 and 1998, and the related
           consolidated statements of earnings, stockholders' equity, and
           cash flows for the years ended June 30, 1999 and 1998 and the
           eleven-month period ended June 30, 1997 together with the
           related notes and the independent auditors' report of KPMG
           LLP, independent certified public accountants.
     (2)   Schedules omitted as they are not applicable.
     (3)   See Exhibit Index on following page.
     b.    Reports on Form 8-K - None.


                                       37

<PAGE>



EXHIBIT NO.                      DESCRIPTION

     3.1        Articles of Incorporation of Big Foot Financial Corp.*

     3.2        Bylaws of Big Foot Financial Corp.*

     4.3        Specimen of Stock Certificate of Big Foot Financial Corp.*

     10.1(a)    Employee Stock Ownership Plan of Big Foot Financial Corp.*

     10.1(b)    ESOP Trust Agreement dated as of December 19, 1996.**

     10.2       Loan Agreement by and between Big Foot Financial Corp. Employee
                Stock Ownership Plan Trust and Big Foot Financial Corp. Made and
                Entered Into as of December 19, 1996, as amended.**

     10.3       Employment Agreement between Big Foot Financial Corp. and George
                M. Briody.**

     10.4       Form of Employment Agreement between Big Foot Financial Corp.
                and Executive Officers.**

     10.5       Employment Agreement between Fairfield Savings Bank, F.S.B. and
                George M. Briody.**

     10.6       Form of Employment Agreement between Fairfield Savings Bank,
                F.S.B. and Executive Officers.**

     10.7       Form of Employee Retention Agreement between Big Foot Financial
                Corp., Fairfield Savings Bank, F.S.B. and certain employees.**

     10.8       Lease Agreement of Fairfield Savings Bank, F.S.B. for Norridge
                Branch Office, dated April 29, 1976.*

     10.9       Amended and Restated Severance Pay Plan of Fairfield Savings
                Bank, F.S.B., Adopted on September 17, 1996, Effective on
                December 19, 1996.**

    10.10(a)    Fairfield Savings Bank Profit Sharing and Savings Plan (as
                amended and restated effective August 1, 1989).*

    10.10(b)    Amendments No.1 (dated September 21, 1993), No. 2 (dated July
                19, 1994) and No. 3 (dated November 18, 1996) to the Fairfield
                Savings Bank Profit Sharing and Savings Plan.**

    10.11(a)    Big Foot Financial Corp. 1997 Stock Option Plan ***

    10.11(b)    Amendment No. 1 to the Big Foot Financial Corp. 1997 Stock
                Option Plan

    10.12(a)    Big Foot Financial Corp. 1997 Recognition and Retention Plan****

    10.12(b)    Amendment No. 1 to the Big Foot Financial Corp.1997 Recognition
                and Retention Plan

    13.1        Portions of Big Foot Financial Corp. 1999 Annual Report to
                Stockholders.

                                       38
<PAGE>

    21.1        Subsidiaries of the Registrant*

    23.1        Consent of KPMG LLP

    27.1        Financial Data Schedule (Submitted only with filing in
                electronic format).

    99.1        Proxy Statement for 1999 Annual Meeting of Stockholders of Big
                Foot Financial Corp. (previously filed with the Securities and
                Exchange Commission on September 20, 1999.

*     Incorporated herein by reference to Registration Statement No. 333-12083
      on Form S-1 of Big Foot Financial Corp. filed with the Securities and
      Exchange Commission on September 16, 1996, as amended.

**    Incorporated herein by reference to the Registrant's Form 10-K for the
      transition period from August 1, 1996 to June 30, 1997, filed with the
      Securities and Exchange Commission on September 29, 1997.

***   Incorporated herein by reference to the Schedule 14A filed with the
      Securities and Exchange Commission on May 22, 1997.

****  Incorporated herein by reference to the Schedule 14A filed with the
      Securities and Exchange Commission on November 14, 1997.


                                       39

<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 September 21, 1999.

         Big Foot Financial Corp.

         By:  /s/    George M. Briody
            -------------------------
         George M. Briody
         President

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


<TABLE>
<CAPTION>
                      NAME                           TITLE                              DATE
<S>                                           <C>                              <C>
         /s/ George M. Briody
         --------------------------------     President, Director              September 21, 1999
         George M. Briody                     (Principal Executive Officer)


         /s/ F. Gregory Opelka
         --------------------------------     Executive Vice President,        September 21, 1999
         F. Gregory Opelka                    Director


         /s/ Timothy L. Mccue
         --------------------------------     Senior Vice President,           September 21, 1999
         Timothy L. McCue                     Chief Financial Officer


         /s/ Michael J. Cahill
         --------------------------------     Vice President, Controller       September 21, 1999
         Michael J. Cahill


         /s/ Stephen E. Nelson
         --------------------------------     Director                         September 21, 1999
         Stephen E. Nelson


         /s/ Eugene W. Pilawski
         --------------------------------     Director                         September 21, 1999
         Eugene W. Pilawski


         /s/ Joseph J. Nimrod
         --------------------------------     Director                         September 21, 1999
         Joseph J. Nimrod


         /s/ Walter E. Powers, M.D.
         --------------------------------     Director                         September 21, 1999
         Walter E. Powers, M.D.
</TABLE>


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