EXHIBIT 13











                 ALLIED FIRST BANCORP, INC. 2002 ANNUAL REPORT


<PAGE>


<TABLE>
<CAPTION>

                                Table of Contents
                                -----------------

<S>                                                                                                         <C>
President's Message..........................................................................................1
Selected Financial Data......................................................................................2
Management's Discussion And Analysis of
  Financial Condition And Results of Operations..............................................................4
Report of Independent Auditors..............................................................................19
Consolidated Balance Sheets as of June 30, 2002 and 2001....................................................20
Consolidated Statements of Income for the Years Ended June 30, 2002 and 2001................................21
Consolidated Statements of Changes in Shareholders' Equity for the Years
  Ended June 30, 2002 and 2001..............................................................................22
Consolidated Statements of Cash Flows for the Years Ended
  June 30, 2002 and 2001....................................................................................23
Notes to Consolidated Financial Statements..................................................................24
Stockholder Information.....................................................................................41
Corporate Information.......................................................................................42

</TABLE>

<PAGE>




To Our Valued Stockholders,

The Board of  Directors,  management,  and staff of Allied First Bancorp and its
wholly-owned subsidiary, Allied First Bank, sb are pleased to present our annual
report for the fiscal year ended June 30,  2002.  June 30, 2002  represents  the
completion of our second full quarter operating as a public company.

We continue to provide state-of-the-art delivery systems to our members with our
web site,  internet-based  home  banking,  bill  payment,  electronic  statement
delivery,  automated phone systems, and connectivity with PDA-enabled devises 24
hours per day,  7 days per week.  In  addition,  we have  upgraded  our  current
telephone  system to further improve our customer  service to our members.  This
upgrade  includes better  utilization of call groups,  allowing our customers to
access departments more quickly.  The call groups are skill based,  allowing the
most  qualified bank  representative  to assist our members in both a timely and
efficient  manner.  In  addition,  we have added the  services of Salomon  Smith
Barney Bank Investment Center to assist our members in their financial  planning
activities.  Our  efficient  delivery  systems  have  enabled  us to  offer  our
customers competitive rates on loan and deposit products.

The bank stores all  documents  electronically,  eliminating  the need for paper
file folders and better utilization of bank office space. Our current membership
base is  located  in all 50 states  and  several  countries.  We do not  promote
"walk-in"  transactions  at the bank,  but instead,  we "empower" our members to
perform all transactions remotely.  This has proven to allow the bank to compete
effectively in the marketplace with both deposit and loan rates to our members.

We believe that we have superior leadership at every level of the bank, from our
experienced  and dedicated board of directors to our  professional  officers and
supervisors. We are very proud of our well-trained employees.

We sincerely  appreciate and thank you for your continued  confidence,  loyalty,
and support as we commit to build on a promising future.

Very truly yours,




/s/ Kenneth L. Bertrand
-------------------------------------
Kenneth L. Bertrand
President and Chief Executive Officer



                                       1


<PAGE>


<TABLE>
<CAPTION>


                             SELECTED FINANCIAL DATA



                                                                                   At June 30,
                                                                                   -----------
                                                                              2002            2001
                                                                              ----            ----
                                                                                 (In Thousands)
<S>                                                                          <C>            <C>
Selected Financial Condition Data:
Total assets......................................                           $87,284        $82,195
Other interest earning assets.....................                            11,971         17,177
Securities available for sale.....................                             6,358            ---
Federal Home Loan Bank Stock......................                             1,532            237
Loans receivable, net.............................                            66,912         63,549
Deposits..........................................                            76,719         77,634
Total equity......................................                            10,073          4,244


                                                                              Years Ended June 30,
                                                                              --------------------
                                                                              2002            2001
                                                                              ----            ----
                                                                                 (In Thousands)
        Selected Operations Data:
         Interest income..........................................            $5,466         $6,206
         Interest expense.........................................             2,468          3,457
                                                                              ------         ------
           Net interest income....................................             2,998          2,749
        Provision for loan losses.................................               235            254
                                                                              ------         ------
           Net interest income after provision for loan losses....             2,763          2,495
                                                                              ------         ------

        Non-interest income:
        Credit and debit card transaction income
          and other fees..........................................               671            658
        First mortgage loan fees..................................                72             88
        Other income..............................................                37             47
                                                                              ------         ------
          Total non-interest income...............................               780            793
                                                                              ------         ------

        Non-interest expenses:
          Salaries and employee benefits..........................             1,106            978
          Office operations and equipment.........................               428            394
          Credit and debit card processing........................               523            506
          Professional fees.......................................               328            256
          Travel and conference...................................                84             49
          Marketing and promotions................................               171             80
          Data processing.........................................               236            213
          Occupancy...............................................                79             73
          Other expenses..........................................               100             59
                                                                              ------         ------
          Total non-interest expenses.............................             3,055          2,608
                                                                              ------         ------

        Income before income taxes: ..............................            $  488         $  680

        Income tax expense (benefit):                                            (43)           ---
                                                                              ------         ------
         Net income...............................................            $  531         $  680
                                                                              ======         ======

        Earnings per common share:
          Basic(1)................................................             $0.24            ---
          Diluted.................................................              0.24            ---



                                       2


<PAGE>




                                                                              Years Ended June 30,
                                                                              --------------------
                                                                              2002            2001
                                                                              ----            ----
Key Operating Ratios and Other Data:
-----------------------------------
Performance ratios:
  Return on assets (ratio of net income to average total assets)....            0.64%         0.87%
  Return on equity (ratio of net income to average equity)..........            6.98         17.09
Interest rate spread information:
   Average during period(2)........................................             2.89          2.67
   End of period (2)...............................................             3.66          3.41
   Net interest margin(3)..........................................             3.60          3.53
   Ratio of operating expense to average total assets..............             3.66          3.35
   Ratio of average interest-earning assets to average
      interest-bearing liabilities.................................           124.12        119.36

Quality ratios:
   Non-performing assets to total assets at end of period..........             0.08         0.01
   Allowance for loan losses to non-performing loans...............           923.43     6,270.00
   Allowance for loan losses to gross loans receivable.............             0.97         0.98

Capital ratios:
   Equity to total assets at end of period.........................            11.54         5.16
   Average equity to average assets................................             9.13         5.10

Other data:
   Number of full service offices..................................                1            1

<FN>
----------------------------

(1)  Basic  earnings per common share is net income since December 27, 2001, the
     date of the stock  conversion,  divided by the weighted  average  number of
     shares outstanding during the period.
(2)  Difference  between  average rate on interest  earning  assets and interest
     bearing liabilities.
(3)  Net interest income divided by average interest earning assets.

</FN>
</TABLE>



                                       3



<PAGE>


     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                  OF OPERATIONS

General

The following  discussion is intended to assist in  understanding  the financial
condition  and results of  operations  of Allied  First  Bancorp,  Inc.  and its
subsidiary,  Allied First Bank, sb (formerly known as Allied Pilots  Association
Federal Credit Union). On September 1st, 2001, Allied Pilots Association Federal
Credit  Union  converted  from a federal  credit  union  charter to an  Illinois
state-chartered mutual savings bank. On December 27, 2001, Allied First Bancorp,
Inc. sold 608,350 shares of common stock at $10 per share and received  proceeds
of $5,278,032 net of conversion  expenses of $805,468.  Approximately 98% of the
net  proceeds  were used by Allied  First  Bancorp,  Inc.  to acquire all of the
capital stock of Allied First Bank, sb. References to Allied First Bancorp, Inc.
include,  where  applicable,  Allied First Bank, sb or its  predecessor,  Allied
Pilots  Association  Federal  Credit Union.  The  information  contained in this
section should be read in conjunction with the consolidated financial statements
and the accompanying  notes to the consolidated  financial  statements and other
sections in the 10-KSB filing.

Allied First Bank,  sb was  originally  formed in January 1994 as Allied  Pilots
Association  Federal  Credit  Union and expanded  rapidly  through  2001.  Until
conversion to the mutual savings bank charter (effective September 1, 2001), the
customers  were  restricted  to current  and past  members of the Allied  Pilots
Association (American Airlines and American Eagle Union Pilots), certain related
organizations   and  their  immediate  family  members.   Given  the  geographic
dispersion  of the customer  base,  products  and  services are offered  through
various channels such as direct payroll deposit,  credit cards,  debit cards, 24
hour  telephone  access,  home banking  services and access through ATM networks
located  worldwide.  Allied First  Bancorp,  Inc.  maintains a consumer  lending
orientation  offering  various  secured and unsecured  forms of consumer  credit
(i.e.,  vehicle loans,  lines of credit,  home equity loans, first mortgages and
other consumer installment credit).

Forward-Looking Statements

When used in this filing and in future filings by Allied First Bancorp, Inc. and
Allied  First Bank,  sb with the U.S.  Securities  and Exchange  Commission,  in
Allied First Bancorp,  Inc. and Allied First Bank press releases or other public
or shareholder  communications,  or in oral statements made with the approval of
an authorized  executive officer, the words or phrases "would be," "will allow,"
"intends to," "will likely  result," "are  expected  to," "will  continue,"  "is
anticipated,"  "estimate,"  "project"  or similar  expressions  are  intended to
identify  "forward-looking   statements"  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995.

Such  statements  are  subject  to risks and  uncertainties,  including  but not
limited  to changes  in  economic  conditions  in our  market  area,  changes in
policies by regulatory  agencies,  fluctuations  in interest  rates,  demand for
loans in our  market  area and  competition,  all or some of which  could  cause
actual results to differ materially from historical earnings and those presently
anticipated or projected.

Allied First Bancorp, Inc. wishes to caution readers not to place undue reliance
on any such  forward-looking  statements,  which speak only as of the date made,
and advises  readers  that  various  factors,  including  regional  and national
economic  conditions,  substantial  changes in levels of market  interest rates,
credit and other risks of lending and investment  activities and competitive and
regulatory  factors,  could  affect our  financial  performance  and could cause
Allied  First  Bancorp,  Inc.'s  actual  results  for  future  periods to differ
materially from those anticipated or projected.


                                       4


<PAGE>




These risks and uncertainties should be considered in evaluating forward-looking
statements and you should not rely too much on these statements.

Impact of the Conversion to a Mutual Thrift

Allied Pilots  Association  Federal Credit Union initiated the conversion from a
federal  credit  union  charter  to an  Illinois  mutual  savings  bank  charter
primarily due to recent regulatory capital requirements placed on credit unions.
Prior to the conversion, the Credit Union was classified as undercapitalized and
had an  approved  net worth  restoration  plan in place that  contained  certain
requirements  including the  limitation of asset growth.  The  conversion to the
Illinois  mutual  savings bank charter was the first part of a two-part  plan to
increase capital.  The successful  conversion to an Illinois mutual savings bank
charter permitted the ability for the second part of the plan, which was raising
capital  through the formation of a holding  company and  converting  the mutual
savings bank to a  stock-based  institution.  The  successful  completion of the
stock offering permitted Allied First Bancorp, Inc. to acquire Allied First Bank
and also to be classified as  well-capitalized  under the capital regulations of
the regulatory supervisory agencies.

The  conversion  from a federally  charted  credit  union to an Illinois  mutual
savings bank charter impacted the financial condition and operating results. The
National  Credit Union Share  Insurance Fund required a deposit in the fund that
was refunded upon the  conversion.  In recent  years,  this deposit has received
interest  income.  The funds were invested by Allied First  Bancorp,  Inc. in an
interest-earning  asset. Also, the corporate credit union relationship  referred
to in the  balance  sheet of the  financial  statements  has  required a minimum
balance as a membership share that is uninsured and requires a three-year notice
before  withdrawal.  These  funds  are  interest-earning  assets.  Allied  First
Bancorp,  Inc. has  requested  the funds as soon as they are made  available and
will re-invest the funds in an interest-earning asset.

Due to the change to a mutual savings bank, Allied First Bancorp,  Inc. became a
for-profit,  taxable organization. As a credit union, Allied First Bancorp, Inc.
was a not-for-profit organization and was not subject to federal or state income
taxes. As a for-profit  organization,  Allied First Bancorp,  Inc. is subject to
federal and state  income  taxes.  Effective  September  1, 2001,  Allied  First
Bancorp,  Inc. was subject to federal and state income taxes at a combined  rate
of  38.74%.  As a result of the  change in tax  status  and in  accordance  with
Financial  Accounting  Standards No. 109,  Accounting  for Income Taxes,  Allied
First Bancorp,  Inc. recorded a net deferred tax asset in the amount of $205,000
on September 1, 2001. The recording of this net deferred tax asset increased the
net income of Allied First Bancorp, Inc. and the equity of Allied First Bancorp,
Inc.  by  $205,000.  The net  deferred  tax  asset is the  result  of  temporary
differences  that existed between the financial  statements and the tax bases of
assets and liabilities (primarily bad debts and fixed assets), using enacted tax
rates.  Being  subject to income  taxes  will have a  negative  impact on future
earnings  as  compared  to  previous  earnings.   Allied  First  Bancorp,   Inc.
anticipates  that the impact of income tax expense will be  partially  offset by
additional earnings from the investment of the proceeds from the stock offering.


                                       5




<PAGE>


Liquidity

Liquidity  management refers to the ability to generate  sufficient cash to fund
current  loan demand,  meet deposit  withdrawals,  and pay  operating  expenses.
Allied First Bancorp,  Inc.  relies on various  funding sources in order to meet
these demands. Primary sources of funds include  interest-earning  balances with
banks, money market funds, proceeds from pay downs of mortgage-backed securities
and related interest payments,  proceeds from principal and interest payments on
loans, as well as the ability to borrow funds.

Changes in Allied First Bancorp,  Inc.'s liquidity position are the results from
operating,  investing  and  financing  activities.  Cash  flows  from  operating
activities are generally the cash effects of transactions  and other events that
enter into the  determination of net income.  The primary  investing  activities
include loan originations,  loan repayments and investments in  interest-earning
balances and securities available for sale. Financing activities focus primarily
on the  generation  of  deposits.  Although,  the  Federal  Home Loan Bank is an
available resource for borrowings should the need arise.

At June 30, 2002,  Allied First Bancorp,  Inc. had $7.4 million in cash and cash
equivalents that could be used for its funding needs.  Cash and cash equivalents
decreased by $9.1 million from the June 30, 2001 balance of $16.5 million to the
June 30, 2002 balance of $7.4 million.

For 2002, cash provided from operating activities totaled $800,000,  compared to
$1.1  million  for 2001.  The  decrease in 2002 was due  primarily  to lower net
income in 2002 as compared to 2001.  Cash  outflows  from  investing  activities
totaled  $14.3 million in 2002 compared to cash inflows of $1.3 million in 2001.
This  increase in cash  outflows  was due to loan  originations  exceeding  loan
payoffs, purchase of $2.1 million of loans from another institution, purchase of
$7.0 million in available for sale securities,  purchase of $3.9 million in time
deposits  in other  financial  institutions,  and  purchase  of $1.2  million in
Federal Home Loan Bank Stock. Cash flows from financing  activities totaled $4.4
million of cash  inflows for 2002  compared to $7.5  million of cash inflows for
2001.  The cash  inflows  for 2002 were due to the  receipt  of $5.3  million in
proceeds from the sale of common stock, net of conversion costs, offset by a net
decrease in deposits of $.9 million.

For  further  liquidity,  Allied  First  Bancorp,  Inc.  may borrow  against its
mortgage-backed  securities  through the Federal  Home Loan Bank.  Allied  First
Bancorp,  Inc.  also  established  a Fed Funds line of $4.0 million with LaSalle
Bank during 2002. The total borrowing capacity is approximately $9.8 million.

Asset and Liability Management and Market Risk

General. Allied First Bancorp, Inc.'s profitability depends primarily on its net
interest income,  which is the difference  between the income it receives on its
loans,  securities  and other  interest-earning  balances and its cost of funds,
which   relates  to   interest-bearing   deposits  and  borrowed   funds.   When
interest-earning  assets  equal  or  exceed  interest-bearing  liabilities,  any
positive  interest rate spread will generate net interest  income.  Allied First
Bancorp,  Inc.'s  profitability  is also  affected  by the level of  income  and
expenses.  Non-interest  income  includes  interchange  income  and  other  fees
including  fees  received  on the sale of  first  mortgage  loans.  Non-interest
expenses  primarily include  compensation and benefits,  occupancy and equipment
expenses,  professional  fees,  loan  servicing  charges,  and  data  processing
expenses.   Allied  First  Bancorp,   Inc.'s  results  of  operations  are  also
significantly   affected  by  general   economic  and  competitive   conditions,
particularly  changes  in market  interest  rates,  government  legislation  and
regulation and monetary and fiscal policies.


                                       6



<PAGE>


Allied First Bancorp, Inc. monitors interest rate risk by analyzing and managing
assets and liabilities  based on their payment  streams and interest rates,  the
timing of their maturities, and their sensitivity to actual or potential changes
in market interest rates. In order to minimize the potential for adverse effects
of material and prolonged  increases in interest  rates,  the Board of Directors
maintains  an  asset  and  liability  management  policy  to  better  match  the
maturities and repricing terms of interest-earning  assets and  interest-bearing
liabilities.

The Executive  Committee  implements the asset and liability  management policy.
The Committee generally meets quarterly to review, among other things,  economic
conditions and interest rate outlook,  current and projected liquidity needs and
capital  position,  anticipated  changes  in the  volume  and mix of assets  and
liabilities  and interest rate risk exposure  limits versus current  projections
pursuant  to  net  present  value  of  portfolio   equity  analysis  and  income
simulations.  The objectives are to manage assets and funding sources to produce
results that are consistent with liquidity,  capital adequacy, growth, risk, and
profitability  goals.  The  Committee  reports  on the  effects  of  the  policy
implementations and strategies to the Board of Directors at least quarterly.

Quantitative Aspects of Market Risk.

Allied First Bancorp, Inc.'s primary market risk exposure is interest rate risk.
Interest rate risk is the risk that Allied First  Bancorp,  Inc.'s  earnings and
equity will be  adversely  affected by changes in  interest  rates.  The primary
approach to interest rate risk  management is one that focuses on adjustments to
Allied First Bancorp, Inc.'s asset/liability mix in order to limit the magnitude
of interest rate risk. Allied First Bancorp,  Inc.'s asset/liability  management
strategy sets limits on the change in net portfolio  value given certain changes
in  interest  rates.  The  table  presented  here,  as  of  June  30,  2002,  is
forward-looking  information about Allied First Bancorp,  Inc.'s  sensitivity to
changes in interest rates. The table incorporates  Allied First Bancorp,  Inc.'s
internal  system  generated  data as  related  to the  maturity,  repricing  and
repayment/withdrawal    of   interest-earning    assets   and   interest-bearing
liabilities.  Interest rate risk is measured by changes in net  portfolio  value
for  instantaneous  parallel  shifts  in the  yield  curve  in 100  basis  point
increments up and down 300 basis points, to the extent possible.

<TABLE>
<CAPTION>


     Change in                       Net Portfolio Value               Portfolio Value of Assets
   Interest Rates                    -------------------               -------------------------
  in Basis Points                                                        NPV         Basis Point
    (Rate Shock)          $ Amount      $ Change       % Change         Ratio          Change
                          --------      --------       --------         -----        -----------
                                          (Dollars in thousands)
<S>    <C>                <C>           <C>               <C>           <C>             <C>
        300                $7,254       $(3,053)          (30)%          8.61%          (310)
        200                 8,290        (2,017)          (20)           9.69           (202)
        100                 9,307        (1,000)          (10)          10.72            (99)
          0                10,307             0             0           11.71              0
       (100)               11,297           990            10           12.66             95
       (200)               12,279         1,972            19           13.57            186
       (300)               13,255         2,948            29           14.46            275

</TABLE>



                                       7

<PAGE>


In evaluating  the exposure to interest rate risk,  certain  simplifications  in
analysis must be considered.  For example,  although  assets and liabilities may
have similar  maturities or period to repricing,  they may react  differently to
changes in market  interest  rates.  In  addition,  the rates on some assets and
liabilities  may  fluctuate  before  changes  in market  interest  rates,  while
interest  rates  on other  types  may lag  behind.  Further,  if  rates  change,
prepayments and early withdrawal levels would likely deviate  significantly from
those assumed in calculating the table.  Finally,  the ability of many borrowers
to service their debt may differ from that presented in the foregoing table.

The following table shows Allied First Bancorp,  Inc.'s maturities and repricing
data on  interest-earning  assets  and  interest-bearing  liabilities,  commonly
called a "gap"  report,  as of June 30, 2002.  It gives an  indication of Allied
First Bancorp, Inc.'s interest rate sensitivity position; however, it is used by
management in conjunction  with other reports to determine  plans and strategies
for managing interest rate risk. Allied First Bancorp, Inc.'s past history shows
that  depositors  maintain  balances  for  periods  of time in  excess  of those
presented in the table.

<TABLE>
<CAPTION>




                                -----------------------------------Repricing or Maturing------------------------
                                                                     (In Thousands)
                                                                                      Not Rate
                                        Within        90 Days to        1 to 2      Sensitive or
                                       90 Days          1 Year          Years       Over 2 Years          Total
<S>                                  <C>                <C>            <C>            <C>               <C>
Interest-earning assets
    Loans                             $   25,714        $ 12,576       $ 11,925       $ 17,353          $ 67,568
    Deposits in banks                      8,315             495          2,280            701            11,791
    Securities                               199             495            622          5,042             6,358
    Federal Home Loan                      1,533               -              -              -             1,533
      Bank Stock                      ----------        --------       --------       --------          --------

Total interest-earning assets         $   35,761        $ 13,566       $ 14,827       $ 23,096          $ 87,250
                                      ==========        ========       ========       ========          ========

Interest-bearing liabilities
    Savings                           $   12,332                                                          12,332
    Checking                               8,655                                                           8,655
    Money market                          37,445                                                          37,445
    Time deposits                          3,158           7,441          2,724          4,964            18,287
                                      ----------        --------       --------       --------          --------
Total interest-bearing
  Liabilities                         $   61,590        $  7,441       $  2,724       $  4,964          $ 76,719
                                      ==========        ========       ========       ========          ========

Cumulative gap                        $  (25,829)      $ (19,704)      $ (7,601)
                                      ==========       =========       ========
Cumulative gap as a
  percentage of total assets              (29.59)%        (22.57)%        (8.71)%

</TABLE>


Changes in Financial Condition from June 30, 2001 to June 30, 2002

Total assets increased $5.1 million or 6.20% from $82.2 million at June 30, 2001
to $87.3 million at June 30, 2002. The increase in total assets was primarily in
the  growth of net loans and the  purchase  of  securities  available  for sale,
partially offset by a decrease in various deposits in banks. Net loans increased
$3.4  million  or 5.35% from  $63.5  million  in 2001 to $66.9  million in 2002.
Vehicle  loans  continued to decrease in the 2002 fiscal year from $17.1 million
to $14.7 or $2.4 million. The largest increases in loans were in home equity and
first  mortgage  loans.  Home equity loans  increased $4.6 million or 28.75% and
first  mortgages  totaled $2.9  million at the end of the 2002 fiscal year.  The
2002 fiscal year was the first year that Allied  First  Bancorp,  Inc.  has held
first  mortgages  in its  portfolio.


                                       8


<PAGE>

Investments,  which include cash and cash equivalents,  securities available for
sale, time deposits in other financial institutions,  and Federal Home Loan Bank
Stock,  increased  $2.3  million or 13.22%  from $17.4  million in 2001 to $19.7
million in 2002.  The ability to fund the growth in assets was  primarily due to
the increase in capital related to the stock conversion in December of 2001. The
proceeds  from the sale of  common  stock,  net of  conversion  costs  were $5.3
million.

Total deposits  decreased  $900,000 or 1.16% from $77.6 million at June 30, 2001
to $76.7 million at June 30, 2002.  The majority of the decrease in deposits was
in the time  deposit  accounts,  which  decreased  $500,000  or 3.19% from $18.8
million at June 30, 2001 to $18.3 million at June 30, 2002.

The total  shareholders'  equity of Allied First  Bancorp,  Inc.  increased $5.8
million or 138.10%,  from $4.3 million to $10.1 million.  The majority of growth
in capital was due to the  conversion  to stock on December 27, 2001 that netted
$5.3  million in proceeds.  The other  $551,000 in growth was from net income of
$531,000 as well as $20,000 in other comprehensive income due to appreciation in
the available for sale securities, net of tax.

Average Balances, Interest, and Average Yields/Cost

The following  table  presents  certain  information  for the periods  indicated
regarding average balances of assets and liabilities as well as the total dollar
amounts of interest  income from  average  interest-earning  assets and interest
expense on average  interest-bearing  liabilities  and average yields and costs.
The yields and costs for the periods indicated are derived by dividing income or
expense by the average balances of assets and liabilities, respectively, for the
periods  presented.  Average  balances  were  derived from  month-end  balances.
Management does not believe that the use of month-end  balances instead of daily
balances causes any material  differences in the information  presented.  No tax
equivalent  adjustments were made.  Non-accruing loans have been included in the
table as loans carrying a zero yield.


                                       9



<PAGE>

<TABLE>
<CAPTION>




                                             Year ending June 30,                             Year ending June 30,
                                                       2002                                                 2001
                                     --------------------------------------           --------------------------------------
                                        Average                  Average                 Average                  Average
INTEREST EARNING ASSETS                 Balance      Interest     Rate                   Balance      Interest     Rate
-----------------------                 -------      --------     -----                  -------      --------     ----
<S>                                   <C>             <C>         <C>                   <C>           <C>          <C>
Loans (1)                             $ 65,151        $ 4,970     7.63%                 $ 64,889      $ 5,773      8.90%
Securities available for sale            2,692            138     5.13%                        -            -      0.00%
Federal Home Loan Bank Stock             1,091             62     5.68%                      231           13      5.84%
Interest earning balances (2)           14,295            296     2.07%                   12,786          420      3.28%
                                      --------        -------     -----                 --------      -------      -----

Total interest-earning assets           83,229          5,466     6.57%                   77,906        6,206      7.97%
                                      --------        -------     -----                 --------      -------      -----


NON-INTEREST EARNING ASSETS
---------------------------

Premises and equipment                      79                                                99
Allowance for loan losses                 (678)                                             (647)
Other non-earning assets                   730                                               567
                                      --------                                          --------
Total assets                          $ 83,360                                          $ 77,925
                                      ========                                          ========

INTEREST BEARNING LIABILITIES
-----------------------------

Savings                               $ 12,407        $   185     1.49%                 $ 11,975      $   337      2.81%
Money market                            36,314          1,180     3.25%                   33,111        1,808      5.46%
Time deposits                           17,934          1,071     5.97%                   20,183        1,312      6.50%
Subordinated debt                          401             32     7.98%                        -            -      0.00%
                                      --------        -------     -----                 --------      -------      -----

                                        67,056          2,468     3.68%                   65,269        3,457      5.30%
                                      --------        -------     -----                 --------      -------      -----

NON-INTEREST BEARNING LIABILITIES AND EQUITY
--------------------------------------------
Checking                                 8,301                                             8,385
Other liabilities                          391                                               293
Equity                                   7,612                                             3,978
                                      --------                                          --------
Total liabilities and equity          $ 83,360                                          $ 77,925
                                      ========                                          ========


Net interest spread (3)                               $ 2,998     2.89%                               $ 2,749      2.67%
                                                      =================                               ==================

Net interest margin  (4)                                          3.60%                                            3.53%
                                                                  =====                                            =====
<FN>

(1)      Total loans less net deferred loan costs.
(2)      Includes interest-earning balances in other financial institutions and a money market account.
(3)      Net interest spread is calculated by subtracting average interest rate paid from average interest rate earned.
(4)      Net interest margin is net interest income dividend by average interest earning assets.

</FN>
</TABLE>



                                       10

<PAGE>


Rate/Volume Analysis

The following  table  presents the effects of changing  rates and volumes on the
interest  income and  interest  expense of Allied First  Bancorp,  Inc. The rate
column  shows the  effects  attributable  to  changes in rate  (changes  in rate
multiplied by prior volume). The volume column shows the effects attributable to
changes in volume (changes in volume  multiplied by prior rate). For purposes of
this  table,  changes  attributable  to changes in both rate and  volume,  which
cannot be segregated,  have been allocated proportionately based on the absolute
value of the change due to rate and the change due to volume.

<TABLE>
<CAPTION>



                                               Year ended Ended June 30                     Year ended Ended June 30
                                                    2002 vs. 2001                                2001 vs. 2000
                                      -------------------------------------------------------------------------------------------
                                              Increase/(Decrease) Due to                   Increase/(Decrease) Due to
                                      -------------------------------------------------------------------------------------------


                                          Total      Volume         Rate                Total       Volume         Rate
<S>                                      <C>          <C>         <C>                   <C>          <C>           <C>
Interest income
      Loans                              $(803)       $ 23        $  (826)              $183         $(86)         $269
     Securities available for sale         138         138              -                  -            -             -
     FHLB stock                             49          49              -                 10           10             -
     Interest earning balances            (124)         45           (169)               167          171            (4)
                                         -----        ----        -------               ----         ----          ----

          Total interest Income           (740)        255           (995)               360           95           265
                                         -----        ----        -------               ----         ----          ----

Interest expense
     Savings                              (152)         12           (164)                 7            7             -
     Money market                         (628)        161           (789)               176            9           167
     Time deposits                        (241)       (139)          (102)               232          161            71
     Subordinated debt                      32          32              -                  -            -             -
                                         -----        ----        -------               ----         ----          ----

          Total interest expense          (989)         66         (1,055)               415          177           238
                                         -----        ----        -------               ----         ----          ----

Net interest income                      $ 249        $189        $    60               $(55)        $(82)         $ 27
                                         =====        ====        =======               ====         ====          ====
</TABLE>


Results of Operations - Comparison of 2002 and 2001

General.  Net income for the year ended June 30, 2002 was  $531,000  compared to
net  income of  $680,000  for the year  ended  June 30,  2001 or a  decrease  of
$149,000.  The earnings  represent a return on average  assets of 0.64% for 2002
and 0.87% for 2001.

This decrease in net income was  primarily  due to the increase in  non-interest
expense.  Non-interest  expense increased $448,000 or 17.18%, from $2.61 million
for the year ended June 30,  2001 to $3.06  million  for the year ended June 30,
2002.  The  increase  in  non-interest  expense was offset by an increase in net
interest  income of $248,000  and an income tax benefit of $43,000.  The $43,000
tax benefit resulted from the $205,000 tax benefit recorded due to the change in
tax status and was  partially  offset by tax expense of


                                       11


<PAGE>

$162,000 related to the pre-tax  earnings of Allied First Bancorp,  Inc. for the
period September 1, 2001 through June 30, 2002.

Interest  Income.  Interest income for 2002 was $5.47 million  compared to $6.21
million  for the same period in 2001,  a decrease  of  $740,000  or 11.92%.  The
decrease was  primarily  the result of lower loan and  investment  yields during
2002.  The yield on loans  decreased to 7.63% for 2002 from 8.90% for 2001,  and
the yield on interest  earning  balances  held at other  financial  institutions
decreased  to 2.07% from 3.28%.  Allied First  Bancorp,  Inc. was able to offset
part of the lost income from loans and interest  earning  deposits by purchasing
longer-term  investments.  Allied First Bancorp, Inc. held an average balance of
$2.69 million in  securities  available for sale that yielded an average rate of
5.13%.  Allied First Bancorp,  Inc. also increased the average amount of Federal
Home Loan Bank Stock to $1.09 million that yielded an average rate of 5.68%.

Interest Expense.  Interest expense for 2002 was $2.47 million compared to $3.46
million for 2001, a decrease of $988,000, or 28.59%. The decrease was the result
of the declining rate environment  during the calendar year of 2001 and carrying
into the first six months of 2002.  This allowed Allied First  Bancorp,  Inc. to
reprice a  substantial  amount of its deposits to the lower  rates.  The average
rate paid on  interest-bearing  liabilities was 3.68% for 2002 compared to 5.30%
for 2001.

Net Interest Income. The decrease in interest income was more than offset by the
decrease in interest  expense to result in an increase in net interest income of
$248,000 or 9.03% from $2.75 million in 2001 to $3.00  million in 2002.  The net
interest margin increased to 3.60% for 2002 from 3.53% for 2001.

Provision for Loan Losses.  Allied First Bancorp,  Inc.  charges  provisions for
loan  losses  to  earnings  to  maintain  the  allowance  for loan  losses.  The
determination of the allowance is based on an evaluation of the portfolio,  past
loss  experience,   current  economic  conditions,   loan  volume,   growth  and
composition  of the  portfolio,  peer  group  information,  and  other  relevant
factors.  Allied First Bancorp,  Inc.'s policies  require the review of the loan
portfolio on a regular basis,  and management  appropriately  classifies  loans.
Allied First Bancorp,  Inc.  believes it uses the best information  available to
make a determination with respect to the allowance for loan losses,  recognizing
that  adjustments  may  be  necessary   depending  upon  a  change  in  economic
conditions.

Allied First  Bancorp,  Inc.'s  provision for loan losses for 2002  decreased by
$19,000 to $235,000  from  $254,000  for 2001.  Gross  charge-offs  in 2002 were
$244,000  or $87,000  lower  than  gross  charge-offs  in 2001 of  $331,000.  In
addition,  recoveries  on  previously  charged-off  loans  were  $38,000 in 2002
compared  to $25,000 in 2001.  Non-performing  loans to total  loans at June 30,
2002 were at 0.19%  compared to 0.02% at June 30, 2001.  The  allowance for loan
losses to gross loans receivable was 0.97% at June 30, 2002 compared to 0.98% at
June  30,  2001.  Management  believes  this  modest  decrease  of .01% of loans
correlates to the lower  charge-offs  during 2002 as well as the shift to a more
secured  loan  portfolio.   Allied  First  Bancorp,   Inc.  has  a  much  higher
concentration of loans in real estate including home equity loans, than in prior
years,  which typically have lower loan losses. At June 30, 2002, first mortgage
and home equity loans comprise nearly 35% of the loan portfolio  compared to 25%
at June 30, 2001.


                                       12


<PAGE>


Non-interest  Income.  Non-interest  income for 2002 was  $780,000  compared  to
$793,000  for 2001,  a  decrease  of  $13,000,  or 1.64%.  Credit and debit card
transaction  income  and other fees are the  largest  category  of  non-interest
income and was  $671,000 in 2002  compared to $658,000 for 2001.  For 2002,  the
fees collected for first mortgages originated and sold decreased by $16,000 as a
result of lower volumes than the prior period.  This was partially offset by the
increase in the standard  percentage  received on the loan balances  funded.  In
2002,  $13.9 million of first  mortgages  were  originated  and sold compared to
$25.7 million in 2001.  These loans are  underwritten by the investor and bought
at par value  from  Allied  First  Bancorp,  Inc.  Allied  First  Bancorp,  Inc.
initially  funds the loans and they are generally  purchased  within a few days.
Allied  First  Bancorp,  Inc.  receives a standard  fee based on the funded loan
amount.  For 2001,  the  standard  fee was  0.35%.  The  standard  fee  received
increased 0.15% or 15 basis points during 2002. The increased fee was applicable
for loans that originated after July 1, 2001. For 2002 other non-interest income
decreased  by $10,000 to $37,000 as a result of lower  commissions  received for
customer use of long distance  services.  Allied First Bancorp,  Inc. receives a
percentage of revenue on our customer's usage of this service.

Non-interest  Expense.  Non-interest expense for 2002 was $3.06 million compared
to $2.61  million for 2001,  an increase of $448,000 or 17.18%.  For 2002 salary
and employee  benefits  totaled $1.11 million compared to 980,000 for 2001 or an
increase of $129,000 or 13.19%.  This  increase  is  attributable  to  increased
staffing, normal merit increases, increased participants in retirement plans, as
well the increased cost of health  coverage.  Travel and conference  expense was
$84,000 in 2002 compared to $49,000 in 2001 for a 71.44% increase. This increase
was partially due to the strategic planning conference held in the first quarter
of 2002,  which focused on Allied First Bancorp,  Inc.'s new  opportunities as a
savings bank.  Also,  travel related expenses were incurred in 2002 for regional
marketing  functions as a result of a new marketing focus due to the elimination
of past credit  union  membership  restrictions  as well as an improved  capital
position for growth. Professional services for 2002 were $328,000,  resulting in
an  increase  of  $72,000 or 28.11%  from  $256,000  in 2001.  The  increase  in
professional  services  was  primarily  related to  additional  operating  costs
associated with being a public company and a taxable entity.  Those professional
fees included  both start up expenses as well as ongoing fees. In addition,  due
to the public company filing  requirements,  we incur additional  accounting and
legal fees associated with those filings. We also incur fees associated with tax
services.  For 2002 and 2001, we also incurred  professional fees of $49,000 and
$108,000,  respectively, for services related to our charter conversion. Similar
expenses  are not  anticipated  going  forward  as our  charter  conversion  was
effective  September  1, 2001.  Marketing  and  promotion  expense  for 2002 was
$171,000 compared to $80,000 for 2001 for an increase of $91,000 or 114.48%. Now
that our customer base is not limited and our capital position has been improved
through the stock  conversion,  Allied First  Bancorp,  Inc. has  increased  its
marketing  efforts within its existing  customer base as well as to new customer
bases. In general,  other categories of non-interest  expense are higher in 2002
compared to 2001. Some of these  increased  expenses relate to the change from a
credit union to a savings bank. For example, we are subject to higher regulatory
fees than previously paid as a credit union. In addition, management anticipates
that The Public Company  Accounting  Reform and Investor  Protection Act of 2002
signed into law on July 30, 2002 may cause non-interest  expenses to be incurred
in future periods that have not been incurred in 2002 or prior periods.

                                       13

<PAGE>


Income Tax  Expense  (Benefit).  For 2001,  there was no income  tax  expense or
benefit due to our  not-for-profit  status as a credit  union at that time.  For
2002,  we recorded an income tax benefit of $43,000.  As  previously  discussed,
this  amount  included a $205,000  tax  benefit as a result of the change in tax
status and in accordance with Financial Accounting Standards No. 109, Accounting
for Income  Taxes.  In  addition,  our profits as a savings  bank are subject to
federal  and state  income  taxes at a combined  rate of 38.74%.  Therefore,  we
recorded $162,000 of tax expense on our earnings recorded from September 1, 2001
through June 30, 2002.  Had our profits for July and August 2002 been subject to
income taxes, we would have recorded  additional  income tax expense of $25,000.
Had our profits for 2001 been subject to income  taxes,  we would have  recorded
tax expense of $263,000.

Results of Operations - Comparison of 2001 and 2000

General. Net income for 2001 was $680,000 compared to net income of $382,000 for
2000 or an  increase of  $298,000.  The  earnings  represent a return on average
assets of 0.87% for 2001 and 0.52% for 2000.

This increase was due to several  factors but primarily  because of the increase
in  non-interest  income and the  reduction  in the  provision  for loan losses.
Non-interest  income  increased  $158,000 or 24.88%,  from  $635,000 for 2000 to
$793,000 for 2001.  The provision for loan losses was $254,000 for 2001 compared
to $450,000 for 2000 or a decrease of $196,000.

Interest  Income.  Interest income for 2001 was $6.21 million  compared to $5.85
million  for the same period in 2000,  an  increase  of  $360,000  or 6.1%.  The
increase  was  primarily  the result of higher loan  yields  during 2001 and the
average   balance  of  interest   earning   deposits  held  in  other  financial
institutions  increasing  over the prior  period.  The  decrease  in the average
balance for loans during 2001  partially  offset the  increase in loan  interest
income from the higher  yields.  The yield on loans  increased to 8.90% for 2001
from 8.48% for 2000,  and the yield on interest  earning  deposits held at other
financial  institutions  decreased  slightly to 3.28% from 3.34%.  However,  the
average   balance  on  interest   earning   deposits  held  in  other  financial
institutions increased from $7.6 million in 2000 to $12.8 million in 2001.

Interest Expense.  Interest expense for 2001 was $3.46 million compared to $3.04
million for 2000, an increase of $420,000, or 13.8%. The increase was the result
of an increase in the average balance of  interest-bearing  liabilities to $73.7
million for 2001 from $69.8  million for 2000 and the higher  interest rate paid
on  the  interest-bearing   liabilities.   The  rate  paid  on  interest-bearing
liabilities  was 4.69% in 2001 and 4.36% in 2000,  which  represents  a 33 basis
point increase over the previous year.

Net Interest Income.  Net interest income decreased  $55,000 or 1.94% from $2.80
million in 2000 to $2.75 million in 2001.  This decrease in net interest  income
was caused by an increase in our interest  expense that was partially  offset by
an increase in our interest income. Our net interest margin decreased from 3.81%
for 2000 to 3.53% for 2001.

Provision  for Loan Losses.  Allied First  Bancorp,  Inc.'s  provision  for loan
losses for 2001  decreased by $196,000 to $254,000 from  $450,000 for 2000.  The
need for a larger provision for loan losses in 2000 was partially related to one
specific  borrower  situation  that resulted in a charge-off of $227,000.  Gross
charge-offs  in 2001 were $331,000 or $106,000  lower than gross  charge-offs in
2000 of $437,000.  Non-performing  loans to total loans at June 30, 2001 were at
0.02% compared to 0.16% at June 30, 2000. The allowance for loan losses to gross
loans  receivable was 0.98% at June 30, 2001 compared to 1.03% at


                                       14

<PAGE>

June 30, 2000.  Management  believes this is reflective of the lower charge-offs
in 2001 and lower  non-performing  loans at June 30,  2001  compared to June 30,
2000.

Non-interest  Income.  Non-interest  income for 2001 was  $793,000  compared  to
$635,000  for 2000,  an  increase  of  $158,000,  or  24.88%.  The  increase  in
non-interest  income  principally  is the result of increases in credit card and
debit card transaction income,  non-sufficient fund fees and first mortgage loan
fees.  Transaction income on customer use of credit and debit cards increased by
$65,000 in 2001 compared to 2000 due to increased usage. The non-sufficient fund
fees were $87,000 in 2001 compared to $17,000 in 2000 or an increase of $70,000.
This  increase  is  attributable  to a 100%  increase  in the  standard  fee for
non-sufficient  fund activity as well as a more aggressive  collection policy of
such fees. The collection  efforts on  non-sufficient  fund fees accounted for a
majority of the $70,000  increase.  The fees  collected on first  mortgage loans
originated  and sold to an investor  increased by $15,000 as a direct  result of
increased  volumes.  In 2001, $25.7 million were originated and sold compared to
$18.9 million in 2000.

Non-interest  Expense.  Non-interest  expense for 2001 was $2.6  million and was
unchanged from the $2.6 million for 2000. The largest  category  increase was in
salaries  and employee  benefits  which  increased  by $169,000 or 20.89%.  This
increase  is  attributable  to  increased  staffing  as  well  as  normal  merit
increases.  The largest decreases occurred in travel and conference expenses and
marketing and promotion activities as a result of less activity devoted to these
areas.

Income Tax Expense. Due to credit unions being not-for-profit organizations,  we
were not subject to federal or state income taxes for 2001 and 2000.  Therefore,
there was no income tax expense in our financial  statements for those reporting
periods.

Capital

Consistent  with  Allied  First  Bancorp,  Inc.'s  goal to  operate  a sound and
profitable financial organization, management actively seeks to maintain a "well
capitalized"  institution in accordance with regulatory standards.  Total equity
was $4.2  million at June 30,  2001,  or 5.16% of total  assets  for  regulatory
purposes.  As of June 30, 2001, Allied Pilots Association  Federal Credit Union,
the  predecessor  to Allied  First  Bank,  did not  exceed the  minimum  capital
requirements  for either  adequately or  well-capitalized  classifications.  The
regulatory   capital   requirement   at  June   30,   2001   to  be   considered
well-capitalized  was 7.00% and to be adequately  capitalized was 6.00%. At June
30, 2001,  Allied  Pilots  Association  Federal  Credit Union was  classified as
undercapitalized   by  its  regulatory   agency,   the  National   Credit  Union
Administration. Due to being undercapitalized, Allied Pilots Association Federal
Credit  Union  was  required  to file a net  worth  restoration  plan  with  the
regulatory  agency in March 2001. The net worth restoration plan was approved by
the regulatory agency in May 2001. The National Credit Union  Administration was
responsible for monitoring  Allied Pilots  Association 's ability to comply with
its net worth restoration plan. As discussed below, due to the conversion of its
charter,  Allied Pilots Association  Federal Credit Union is no longer under the
regulation and supervision of the National Credit Union Administration.

As discussed in Note 2 in the June 30, 2002 Consolidated  Financial Statements -
Plan Of Stock  Conversion  in Allied Pilots  Federal  Credit  Union's  financial
statements,  the Board of Directors' initiated a two-step plan to improve Allied
Pilots Federal Credit Union's capital  position.  The first step of the plan was
to convert Allied Pilots Federal  Credit Union's  charter to an Illinois  mutual
savings bank. In conjunction with the first step of the plan,  Allied First Bank
issued subordinated capital notes,  qualifying as Tier II capital, in the amount
of $1.0 million to provide for a total  risk-based  capital ratio of at least 8%
(adequately  capitalized).  Effective  September  1,  2001,  Allied  First  Bank
converted its


                                       15


<PAGE>

charter to an Illinois  mutual  savings bank and issued the  required  amount of
subordinated capital notes to be considered adequately  capitalized.  The second
step of the plan was to  initiate a mutual to stock  conversion.  The purpose of
the mutual to stock  conversion  was to  increase  the  capital of Allied  First
Bancorp,  Inc.  in order to  enable  it to meet the  capital  requirements  of a
Federal  Deposit  Insurance  Corporation  institution  and to support the future
growth of Allied First Bank. As part of this step,  Allied First Bank formed the
holding company, Allied First Bancorp, Inc. The holding company acquired 100% of
the stock of Allied  First Bank  through the sale of the Allied  First  Bancorp,
Inc. common stock. The proceeds from the stock offering increased the capital of
Allied First Bancorp,  Inc. and provided a  classification  of  well-capitalized
upon the  completion of the stock  conversion  effective  December 27, 2001. The
subordinated capital notes were retired upon completion of the stock conversion.

At June 30, 2002, Allied First Bancorp, Inc. had Tier I leverage capital, Tier I
risk  based-capital,  and Tier II risk based capital ratios of 11.9%, 13.6%, and
14.5%, respectively.  These ratios met or exceeded the Federal Deposit Insurance
Corporation "well-capitalized" minimums of 5.0%, 6.0%, and 10.0%.

Other than those indicated in this  management's  discussion,  management is not
aware of any known trends,  events or  uncertainties  that would have a material
effect on Allied  First  Bancorp,  Inc.'s  liquidity,  capital,  and  results of
operations.   In   addition,   management   is  not  aware  of  any   regulatory
recommendations that, if implemented, would have such an effect.

Recent Accounting Pronouncements

Adoption of new  accounting  standards did not have a material  effect on Allied
First Bancorp,  Inc.'s consolidated  financial position or results of operations
for 2002. The following is a discussion of recent accounting pronouncements.

In June 2001, the Financial Accounting Standards Board issued Statement No. 141,
which we refer to as FAS 141, Business Combinations and Statement No. 142, which
we refer to as FAS 142, Goodwill and Other Intangible  Assets. FAS 141 addresses
financial  accounting and reporting for business  combinations  and requires all
business  combinations  within the scope of the  Statement to be  accounted  for
using the purchase method.  However, for combinations between two or more mutual
enterprises,  FAS 141 is not effective until interpretative  guidance related to
the application of the purchase method to those  transactions is issued. FAS 142
addresses  financial  accounting  and reporting for acquired  goodwill and other
intangible   assets.   Management  does  not  believe  these  recent  accounting
pronouncements will have any impact on its operations at this time.

In August 2001,  the Financial  Accounting  Standards  Board issued FAS No. 143,
"Accounting for Asset Retirement  Obligations." FAS No. 143 requires a liability
to be  recognized  for  the  fair  value  of  obligations  associated  with  the
retirement of tangible,  long-lived assets. Adoption of this standard on July 1,
2002 is not expected to have a material  effect on Allied First Bancorp,  Inc.'s
consolidated financial position or results of operations.

Effective  July 1,  2002,  Allied  First  Bancorp,  Inc.  adopted  FAS No.  144,
"Accounting  for the  Impairment  or Disposal of  Long-Lived  Assets."  This new
accounting   standard   establishes  more   restrictive   requirements  for  the
classification  of  assets  "held  for  sale"  and  also  expands  the  types of
dispositions that are to be accounted for as discontinued  operations.  Adoption
of this standard did not have a material effect on Allied First Bancorp,  Inc.'s
consolidated financial position or results of operations.


                                       16

<PAGE>



The  Financial   Accounting   Standards  Board  recently  issued  FAS  No.  145,
"Rescission of FASB  Statements  No. 4, 44, and 64,  Amendment of FASB Statement
No. 13, and Technical Corrections" and No. 146, "Accounting For Costs Associated
with Exit or Disposal Activities". FAS No. 145 applies for years beginning after
May 14, 2002 and may be adopted sooner.  FAS No. 145 covers  extinguishments  of
debt and leases, and includes some minor technical  corrections.  Under previous
accounting  guidance,  gains or losses from  extinguishments of debt were always
treated  as  extraordinary  items.  Under  FAS No.  145 they  will no  longer be
considered extraordinary, except under very limited conditions. Upon adoption of
FAS No. 145,  any prior gains and losses  from  extinguishments  of debt must be
reclassified as ordinary gains and losses. Under FAS No. 145, if a capital lease
is  modified  to  become  an  operating  lease,  it will be  accounted  for as a
sale-leaseback,  by following the accounting  guidance of FAS No. 98, instead of
being  accounted  for as a new lease.  FAS No. 146 covers  accounting  for costs
associated  with  exit  or  long-lived  asset  disposal   activities,   such  as
restructurings,  consolidation or closing of facilities, lease termination costs
or employee  relocation or severance costs. FAS No. 146 replaces Emerging Issues
Task  Force  94-3,  and is to be  applied  prospectively  to  exit  or  disposal
activities initiated after December 31, 2002, and may be adopted sooner.  Allied
First Bancorp,  Inc. may not restate its previously issued financial statements.
FAS No. 146 requires exit or long-lived asset disposal costs to be recognized as
an expense  when the  liability  is incurred  and can be measured at fair value,
rather  than at the date of making a  commitment  to an exit or  disposal  plan.
Management  does not expect the effects of the future  adoptions  of FAS No. 145
and FAS No.146 to be  material  to Allied  First  Bancorp,  Inc.'s  consolidated
financial position or results of operations.

Effect of Inflation and Changing Prices

The financial  statements and related  financial data presented herein have been
prepared following accounting principles generally accepted in the United States
of America,  which require the  measurement of financial  position and operating
results in terms of historical  dollars  without  considering  the change in the
relative  purchasing  power of money  over time due to  inflation.  The  primary
impact of inflation is reflected in the increased  cost of Allied First Bancorp,
Inc.'s operations.  Unlike most industrial  companies,  virtually all the assets
and liabilities of a financial  institution are monetary in nature. As a result,
interest  rates  generally  have  a  more  significant  impact  on  a  financial
institution's performance than do general levels of inflation. Interest rates do
not  necessarily  move in the same direction or to the same extent as the prices
of goods and services.

Disclosure and Internal Controls

The Company has adopted interim disclosure  controls and procedures  designed to
facilitate Allied First Bancorp's financial reporting.  These interim disclosure
controls currently consist of communications between the Chief Executive Officer
and each department  head to identify any new  transactions,  events,  trends or
contingencies  which  may  be  material  to the  Allied  First  Bancorp,  Inc.'s
operations.  Allied First Bancorp, Inc. has evaluated the effectiveness of these
interim  disclosure  controls  within  the 90 days  prior to the  filing of this
report.

Allied First Bancorp,  Inc.  maintains  internal controls and has evaluated such
controls  within 90 days of the  filing of this  report.  There has not been any
significant  changes  in such  internal  controls  subsequent  to date of  their
evaluation.



                                       17


<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



Shareholders and Board of Directors
Allied First Bancorp, Inc.
Naperville, Illinois


We have audited the  accompanying  consolidated  balance  sheets of Allied First
Bancorp, Inc. (formally known as Allied Pilots Association Federal Credit Union)
as of June 30, 2002 and 2001 and the related consolidated  statements of income,
changes in shareholders'  equity, and cash flows for the years then ended. These
financial  statements are the  responsibility  of Allied First Bancorp,  Inc. 's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of Allied  First
Bancorp,  Inc. as of June 30, 2002 and 2001,  and the results of its  operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.



                                     /s/ Crowe, Chizek and Company LLP

Oak Brook, Illinois
August 1, 2002


--------------------------------------------------------------------------------
                                       18



<PAGE>


<TABLE>
<CAPTION>


                                                      ALLIED FIRST BANCORP, INC.
                                                     CONSOLIDATED BALANCE SHEETS
                                                        June 30, 2002 and 2001

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


                                                                                      2002                  2001
                                                                                      ----                  ----
<S>                                                                             <C>                <C>
ASSETS
Interest earning cash and cash equivalents                                      $     7,363,100    $     16,455,200
Time deposits in other financial institutions                                         3,869,403                   -
Membership shares at corporate credit union                                             558,000             722,000
Securities available for sale                                                         6,357,945                   -
Federal Home Loan Bank stock                                                          1,532,400             237,125
Loans, net                                                                           66,911,855          63,549,267
Premises and equipment, net                                                              67,932              82,448
National Credit Union Share Insurance Fund deposit                                            -             618,802
Accrued interest receivable                                                             269,613             189,775
Other assets                                                                            353,970             340,819
                                                                                ---------------    ----------------

     Total assets                                                               $    87,284,218    $     82,195,436
                                                                                ===============    ================


LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
     Non interest bearing deposits                                              $     8,654,978    $      8,798,380
     Interest bearing deposits                                                       68,064,386          68,835,274
                                                                                ---------------    ----------------
         Total deposits                                                              76,719,364          77,633,654
     Other liabilities                                                                  491,928             317,608
                                                                                ---------------    ----------------
         Total liabilities                                                           77,211,292          77,951,262

Shareholders' equity
     Preferred stock, $.01 par value, 2,000,000 shares authorized,
              none issued                                                                     -                   -
     Common stock, $.01 par value, 8,000,000 shares authorized,
              608,350 shares issued and outstanding at June 30, 2002                      6,084                   -
     Additional paid in capital                                                       5,271,948                   -
     Retained earnings                                                                4,775,108           4,244,174
     Accumulated other comprehensive income, net of tax                                  19,786                   -
                                                                                ---------------    ----------------
              Total shareholders' equity                                             10,072,926           4,244,174
                                                                                ---------------    ----------------

                  Total liabilities and shareholders' equity                    $    87,284,218    $     82,195,436
                                                                                ===============    ================

</TABLE>

--------------------------------------------------------------------------------
                                       19


              The accompanying notes are an integral part of these
                       consolidated financial statements.


<PAGE>


<TABLE>
<CAPTION>


                                                      ALLIED FIRST BANCORP, INC.
                                                  CONSOLIDATED STATEMENTS OF INCOME
                                                        June 30, 2002 and 2001

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

                                                                                       2002               2001
                                                                                       ----               ----
<S>                                                                               <C>               <C>
Interest income
     Loan, including fees                                                         $    4,970,301    $     5,773,082
     Taxable securities                                                                  137,785                  -
     Deposits with financial institutions                                                357,770            432,791
                                                                                  --------------    ---------------
                                                                                       5,465,856          6,205,873

Interest expense
     Deposits                                                                          2,439,480          3,454,944
     Other                                                                                28,863              1,699
                                                                                  --------------    ---------------
                                                                                       2,468,343          3,456,643

Net interest income                                                                    2,997,513          2,749,230

Provision for loan losses                                                                235,000            254,450
                                                                                  --------------    ---------------

Net interest income after
  provision for loan losses                                                            2,762,513          2,494,780

Non-interest income
     Credit and debit card transaction income and other fees                             670,786            657,782
     First mortgage loan fees                                                             72,111             87,526
     Other                                                                                37,227             47,388
                                                                                  --------------    ---------------
                                                                                         780,124            792,696
Non-interest expense
     Salaries and employee benefits                                                    1,106,422            977,515
     Office operations and equipment                                                     428,271            394,090
     Credit and debit card processing                                                    523,431            505,571
     Travel and conference                                                                83,734             48,843
     Professional services                                                               327,703            255,796
     Marketing and promotions                                                            171,094             79,771
     Data processing                                                                     235,623            213,454
     Occupancy                                                                            78,798             73,502
     Other                                                                               100,063             58,788
                                                                                  --------------    ---------------
                                                                                       3,055,139          2,607,330
                                                                                  --------------    ---------------

Income before income taxes                                                               487,498            680,146

Income tax expense (benefit)                                                             (43,436)                 -
                                                                                  --------------    ---------------

Net income                                                                        $      530,934    $       680,146
                                                                                  ==============    ===============

Earnings per common share:
     Basic                                                                        $          .24    $             -
     Diluted                                                                                 .24                  -

</TABLE>

--------------------------------------------------------------------------------
                                       20
              The accompanying notes are an integral part of these
                       consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>

                                                      ALLIED FIRST BANCORP, INC.
                                    CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER EQUITY
                                                        June 30, 2002 and 2001


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

                                                                                                                       Accumulated
                                                                                                   Additional              Other
                                              Common        Paid in             Retained           Comprehensive       Shareholders'
                                              - -----       -------             --------         ------------------       ------
<S>                                         <C>          <C>                <C>                  <C>                  <C>
Balance at July 1, 2000                     $       -    $           -      $   3,564,028        $          -         $    3,564,028

Net income                                          -                -           680,146                    -                680,146


Balance at June 30, 2001                            -                -         4,244,174                    -              4,244,174

Proceeds from 608,350 shares of
   common stock, net of conversion
   costs                                        6,084        5,271,948                 -                    -              5,278,032

Net income                                          -                -           530,934                    -                530,934
Net change in unrealized
    appreciation on securities
    available for sale, net of tax                  -                -                 -               19,786                 19,786
                                                                                                                      --------------

Comprehensive income                                -                -                 -                    -                550,720
                                            ---------    -------------      ------------         ------------         --------------


Balance at June 30, 2002                    $   6,084    $   5,271,948      $  4,775,108         $     19,786         $   10,072,926
                                            =========    =============      ============         ============         ==============

</TABLE>

--------------------------------------------------------------------------------
                                       21
              The accompanying notes are an integral part of these
                       consolidated financial statements.

<PAGE>

<TABLE>
<CAPTION>


                                                      ALLIED FIRST BANCORP, INC.
                                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                       June 30, 2002 and 2001


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

                                                                                         2002               2001
                                                                                         ----               ----
<S>                                                                               <C>                  <C>
Cash flows from operating activities
     Net income                                                                   $      530,934       $    680,146
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation and amortization                                                    63,947             88,273
         Provision for loan losses                                                       235,000            254,450
         FHLB of Chicago stock dividend                                                  (57,500)                 -
         Changes in
              Accrued interest receivable                                                (79,838)            (2,557)
              Other assets                                                               (25,381)            42,198
              Other liabilities                                                          174,320             10,627
                                                                                  --------------       ------------
                  Net cash from operating activities                                     841,482          1,073,137

Cash flows from investing activities
     Changes in
         Time deposits in other financial institutions                                (3,869,403)                 -
         Membership shares at corporate credit union                                     164,000             (6,600)
         Loans, net                                                                   (1,494,601)         1,407,462
         NCUSIF deposit                                                                  618,802            (11,945)
     Purchase of loans                                                                (2,102,987)                 -
     Purchase of securities available for sale                                        (7,045,638)                 -
     Paydown and maturity of securities available for sale                               708,871                  -
     Purchase of Federal Home Loan Bank stock                                         (1,237,775)           (16,276)
     Purchase of premises and equipment                                                  (38,593)           (51,930)
                                                                                  ---------------      ------------
              Net cash from investing activities                                     (14,297,324)         1,320,711

Cash flows from financing activities
     Net change in deposits                                                             (914,290)         7,527,268
     Proceeds from issuance of subordinated debt                                       1,000,000                  -
     Redemption of subordinated debt                                                  (1,000,000)                 -
     Proceeds from sale of common stock, net of conversion
       costs                                                                           5,278,032                  -
                                                                                  --------------       ------------
              Net cash from financing activities                                       4,363,742          7,527,268

Net change in cash and cash equivalents                                               (9,092,100)         9,921,116

Cash and cash equivalents at beginning of year                                        16,455,200          6,534,084
                                                                                  --------------       ------------

Cash and cash equivalents at end of year                                          $    7,363,100       $ 16,455,200
                                                                                  ==============       ============

Supplemental disclosures of cash flow information Cash paid during the year for:
         Interest                                                                 $    2,469,075       $  3,458,179
         Income taxes                                                             $            -       $          -



</TABLE>

--------------------------------------------------------------------------------
                                       22
              The accompanying notes are an integral part of these
                       consolidated financial statements.

<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Reporting: The consolidated financial statements include the account of
Allied First Bancorp, Inc. and its wholly-owned  subsidiary,  Allied First Bank,
sb,  together  referred  to  as  Allied  First  Bancorp,  Inc.  All  significant
intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations and  Concentrations  of Credit Risk:  Allied First Bancorp,
Inc.'s wholly owned  subsidiary,  Allied First Bank,  formally the Allied Pilots
Association  Federal  Credit Union (see Note 2),  headquartered  in  Naperville,
Illinois,  provides a broad range of financial services to its customers. Allied
First Bancorp,  Inc.'s primary  services include  accepting  deposits and making
loans.  Allied First Bancorp,  Inc.  grants  consumer  (including  credit card),
mortgage and home equity loans to its  customers.  The customers of Allied First
Bancorp,  Inc. are located throughout the United States,  with concentrations in
California,  Illinois,  Texas and Florida. The majority of the loans are secured
by collateral  including  autos and other types of vehicles,  deposit  accounts,
real estate and other  consumer  assets.  At June 30,  2002 and 2001,  unsecured
loans  represented 30% and 35% of gross loans. The customer base of Allied First
Bank as a credit  union was  restricted  to current  and past  members of Allied
Pilots Association (American Airlines and American Eagle Union pilots),  certain
related organizations, and their immediate family members and this concentration
remains.  This  concentration  in a limited  market  represents a potential  for
significant  financial  impact should adverse  economic events occur within this
limited market.

Use of Estimates:  The  preparation of  consolidated  financial  statements,  in
conformity with accounting principles generally accepted in the United States of
America,  requires  management to make estimates and assumptions that affect the
reported amounts of assets and liabilities,  the disclosure of contingent assets
and liabilities at the date of the consolidated  financial  statements,  and the
reported  amounts of income and expenses  during the  reporting  period.  Actual
results could differ from current estimates. Estimates that are more susceptible
to change in the near term  include the  allowance  for loan losses and the fair
values of financial instruments.

Securities:  Securities  are  classified  as held to  maturity  and  carried  at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Securities are classified as available for sale when they might be
sold before maturity.  Securities  available for sale are carried at fair value,
with unrealized holding gains and losses reported in other comprehensive income.
Trading securities are carried at fair value, with changes in unrealized holding
gains and losses included in income.  Other securities such as Federal Home Loan
Bank stock are carried at cost.

Interest income includes amortization of purchase premium or discount. Gains and
losses on sales are based on the amortized cost of the security sold. Securities
are written down to fair value when a decline in fair value is not temporary.

--------------------------------------------------------------------------------
                                       23
                                  (Continued)
<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans and Allowance for Loan Losses:  Loans that  management  has the intent and
ability  to hold for the  foreseeable  future or until  maturity  or payoff  are
reported at the  principal  balance  outstanding,  net of deferred loan fees and
costs and an allowance  for loan losses.  Loan held for sale are reported at the
lower of cost or market, on an aggregate basis.  Interest on loans is recognized
over the term of the loans and is calculated using the simple-interest method on
principal amounts outstanding.

Allied First  Bancorp,  Inc. does not currently  charge loan  origination  fees.
Certain  direct loan  origination  costs are  deferred for loans  originated  by
Allied First  Bancorp,  Inc., and the net cost is recognized as an adjustment to
interest  income  using the  interest  method over the  contractual  life of the
loans.  Direct loan  origination  costs  associated with loans held for sale are
incurred by the investor.

The accrual of interest on loans is discontinued at the time the loan is 90 days
delinquent.  Loans are placed on nonaccrual or charged-off at an earlier date if
collection of principal or interest is considered doubtful. All interest accrued
but not  collected  for loans that are placed on  nonaccrual  or charged  off is
reversed against  interest income.  The interest on these loans is accounted for
on the  cash-basis  or  cost-recovery  method,  until  qualifying  for return to
accrual.  Loans are  returned  to  accrual  status  when all the  principal  and
interest amounts  contractually  due are brought current and future payments are
reasonably assured.

The  allowance for loan losses is a valuation  allowance  for probable  incurred
credit  losses,  increased  by the  provision  for loan losses and  decreased by
charge-offs  less  recoveries.  Additions to the  allowance  for loan losses are
provided  based  on  management's  periodic  evaluation.  Management's  periodic
evaluation  of the  adequacy  of the  allowance  is  based on the  Allied  First
Bancorp,  Inc.'s  past loan loss  experience,  known and  inherent  risks in the
portfolio,  adverse  situations that may affect the customers  ability to repay,
estimated value of any underlying  collateral,  and current economic conditions.
Loans are charged against the allowance for loan losses when management believes
the uncollectibility of a loan balance is confirmed.

A loan is  impaired  when full  payment  under the loan  terms is not  expected.
Impairment  is evaluated in total for  smaller-balance  loans of similar  nature
such as home equity,  consumer and credit card loans,  and on an individual loan
basis for other  loans.  If a loan is  impaired,  a portion of the  allowance is
allocated so that the loan is reported,  net, at the present  value of estimated
future  cash  flows  using  the  loan's  existing  rate or at the fair  value of
collateral if repayment is expected solely from the collateral.

Loans Held for Sale:  Periodically,  Allied First  Bancorp,  Inc. will originate
first mortgage loans. These loans are sold within several days of origination at
their carrying value. All sales are made without recourse.  Upon the sale of the
loan,  Allied  First  Bancorp,  Inc.  receives  a  fee  equivalent  to a  stated
percentage  of the funded  loan  amount.  The fee was 0.50% in 2002 and 0.35% in
2001.  Beginning in 2002,  Allied First  Bancorp,  Inc. has retained  some first
mortgage loans in their portfolio.



--------------------------------------------------------------------------------
                                       24
                                  (Continued)

<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Premises  and  Equipment:  Premises  and  equipment  are stated at cost,  net of
accumulated  depreciation.  Depreciation is recorded on the straight-line method
based  on  estimated  useful  lives or the  remaining  life of the  lease,  when
applicable.  Maintenance and repairs are expensed,  and major  improvements  are
capitalized. Gains and losses on disposals are included in current operations.

Foreclosed  Assets:  Assets acquired  through or instead of loan foreclosure are
initially  recorded at fair value when acquired,  establishing a new cost basis.
If fair value declines, a valuation allowance is recorded through expense. Costs
after acquisition are expensed.

National Credit Union Share Insurance Fund Deposit:  The deposit in the National
Credit Union Share  Insurance Fund was in accordance  with National Credit Union
Administration regulations,  which required the maintenance of a deposit by each
insured  credit union in an amount  equal to one percent of its insured  shares.
The deposit was refunded to Allied Pilots Association  Federal Credit Union when
its insurance  coverage was terminated and it was converted to another source of
insurance coverage (Federal Deposit Insurance Corporation).

Long-term Assets: Premises and equipment and other long-term assets are reviewed
for impairment when events indicate their carrying amount may not be recoverable
from future  undiscounted  cash flows.  If impaired,  the assets are recorded at
fair value.

Financial  Instruments:  Financial  instruments include off-balance sheet credit
instruments, such as commitments to make loans and open-ended revolving lines of
credit issued to meet customer-financing  needs. The face amount for these items
represents  the exposure to loss,  before  considering  collateral or ability to
repay. Such financial instruments are recorded when they are funded.

Income Tax: Allied First Bancorp,  Inc.  records income tax expense based on the
amount of taxes due on its tax return plus deferred  taxes computed based on the
expected future tax consequences of temporary  differences  between the carrying
amounts  and tax  bases of  assets  and  liabilities,  using  enacted  tax rates
adjusted for  allowances  made for  uncertainty  regarding  the  realization  of
deferred  tax assets.  Allied  First Bank was  formerly a credit  union;  it was
exempt, by statute,  from federal and state income taxes until the conversion to
a state-chartered mutual thrift on September 1, 2001. Therefore, no income taxes
were recorded for fiscal year 2001 and the first two operating  months of fiscal
year 2002.

Earnings Per Common Share:  Basic  earnings per common share is net income since
December 27,  2001,  the date of the stock  conversion,  divided by the weighted
average number of shares  outstanding  during the period.  Diluted  earnings per
common share includes the dilutive effect of additional  potential common shares
issuable.  At June 30, 2002, no plans exist to cause additional potential common
shares.


--------------------------------------------------------------------------------
                                       25
                                  (Continued)


<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Benefit Plans: Allied First Bancorp, Inc. offers a qualified,  non-contributory,
defined  contribution  pension plan and a 401(k) deferred  compensation plan for
eligible employees.

Cash Flow Reporting:  Cash and cash  equivalents  include balances on deposit in
other  financial  institutions  and money  market  mutual  funds  with  original
maturities of three months or less. Allied First Bancorp,  Inc. reports net cash
flows for loan and deposit  transactions,  loans held for sale, corporate credit
union  membership  shares,  and the National  Credit Union Share  Insurance Fund
deposit.

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
comprehensive  income.  Other comprehensive income includes unrealized gains and
losses on securities  available for sale which are also recognized as a separate
component of equity.

Fair Values of Financial  Instruments:  Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed separately.  Fair value estimates involve uncertainties and matters of
significant  judgment regarding interest rates,  credit risk,  prepayments,  and
other factors,  especially in the absence of broad markets for particular items.
Changes in assumptions or in market  conditions could  significantly  affect the
estimates.

Loss  Contingencies:  Loss  contingencies,  including  claims  and legal  action
arising in the ordinary course of business, are recorded as liabilities when the
likelihood  of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there now are such matters that will have
a material effect on the financial statements.

Operating Segments:  While Allied First Bancorp,  Inc.'s management monitors the
revenue streams of the various products and services, operations are managed and
financial performance is evaluated on a Company-wide basis. Accordingly,  all of
Allied First  Bancorp,  Inc.'s  operations  are  considered  by management to be
aggregated in one reportable operating segment.

Reclassifications:  Some  items in the  prior  year  financial  statements  were
reclassified to conform to the current presentation.




--------------------------------------------------------------------------------
                                       26
                                  (Continued)


<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001




NOTE 2 - PLAN OF STOCK CONVERSION

On September 1, 2001,  Allied First Bank converted the existing  Credit Union to
an Illinois  mutual savings bank as the first part in a two-part plan to improve
the capital position of the  institution.  In conjunction with the first part of
the plan,  Allied First Bank issued  subordinated  capital notes,  qualifying as
Tier  2  capital,  in the  amount  of $1  million  on  September  1,  2001.  The
subordinated  capital  notes had a term of five years,  an interest rate of 8.5%
and were redeemable  without any prepayment  penalty.  The issuance of the notes
was  sufficient to qualify Allied First Bank as adequately  capitalized.  In the
second part of the Plan, on September 17, 2001, the Board of Directors of Allied
First Bank adopted a Plan of Stock Conversion to convert from an Illinois mutual
savings bank to an Illinois stock savings bank with the concurrent  formation of
the  holding  company.  The  purpose  of the mutual to stock  conversion  was to
increase  the  capital  of Allied  First  Bank in order to enable it to meet the
well-capitalized  requirements of an FDIC insured institution and to support the
future growth of the institution.  The  subordinated  capital notes were retired
upon  completion  of the stock  conversion.  On December 27, 2001,  Allied First
Bancorp,  Inc. sold 608,350 shares of common stock at $10 per share and received
proceeds of $5,278,032 net of conversion expenses of $805,468. Approximately 98%
of the net proceeds  were used by Allied First  Bancorp,  Inc. to acquire all of
the capital stock of Allied First Bank.

In accordance with Statement of Financial Accounting Standards No. 141, Business
Combinations,  when  accounting  for a transfer  of assets or exchange of shares
between  entities under common control,  the entity that receives the net assets
or the equity  interests  shall  initially  recognize the assets and liabilities
transferred at their carrying amounts in the accounts of the transferring entity
at the date of transfer.  Therefore,  Allied First  Bancorp,  Inc.  recorded the
acquisition of Allied First Bank at historical cost.

At the time of conversion,  Allied First Bank established a liquidation  account
in an  amount  equal to its  total  net  worth  as of the  latest  statement  of
financial condition  appearing in the final prospectus.  The liquidation account
will be  maintained  for the  benefit of  eligible  depositors  who  continue to
maintain  their  accounts  at  Allied  First  Bank  after  the  conversion.  The
liquidation  account  will be  reduced  annually  to the  extent  that  eligible
depositors have reduced their qualifying deposits. Subsequent increases will not
restore an eligible account holder's interest in the liquidation account. In the
event of a complete  liquidation,  each eligible  depositor  will be entitled to
receive a distribution from the liquidation  account in an amount  proportionate
to the  current  adjusted  qualifying  balances  for  accounts  then  held.  The
liquidation account balance is not available for payment of dividends.


--------------------------------------------------------------------------------
                                       27
                                  (Continued)



<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001


NOTE 3 - RESTRICTED FUNDS

As a credit union, Allied First Bancorp,  Inc. was required to maintain balances
with  Mid-States  Corporate  Federal Credit Union as membership  shares that are
uninsured  and require a three-year  notice  before  withdrawal.  The  remaining
corporate credit union membership shares have been requested to be withdrawn and
will be available in 2004.

Allied First Bancorp, Inc. also maintains  compensating balances for credit card
clearings at other financial institutions totaling $443,804 and $463,252 at June
30, 2002 and 2001.


NOTE 4 - SECURITIES

The fair value of available for sale securities and the related gains and losses
recognized in accumulated other comprehensive income were as follows:


<TABLE>
<CAPTION>


                                                                                          Gross           Gross
                                                                        Fair           Unrealized      Unrealized

                                                                        Value             Gains          Losses
                                                                        -----             -----          ------
Available for Sale
------------------
<S>                                                               <C>                 <C>              <C>
2002
----
    U.S. Government agency securities
      (mortgaged-backed securities)                               $     6,357,945     $     32,016     $          -

</TABLE>


As of June 30, 2001,  there were no available for sale securities held by Allied
First  Bancorp,  Inc.  There were no sales of  securities  during either 2002 or
2001.


--------------------------------------------------------------------------------
                                       28
                                  (Continued)


<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001





NOTE 5 - LOANS

At June 30, 2002 and 2001, loans were as follows:

                                                    2002                2001
                                                    ----                ----

     Vehicle                                $    14,677,518     $    17,140,112
     First mortgage                               2,939,304                   -
     Airplane                                     4,746,184           3,136,379
     Boat                                         4,303,708           4,833,402
     Signature (unsecured)                        5,225,091           5,913,424
     Lines of credit (unsecured)                  9,267,658          11,117,438
     Deposit secured                                111,656             227,625
     Home equity                                 20,642,383          16,071,667
     Credit card (unsecured)                      5,565,592           5,681,516
                                            ---------------     ---------------
                                                 67,479,094          64,121,563
     Allowance for loan losses                     (655,633)           (626,715)
     Net deferred loan costs                         88,394              54,419
                                            ---------------     ---------------
                                            $    66,911,855     $    63,549,267
                                            ===============     ===============

In 2002, Allied First Bancorp,  Inc. purchased $2,102,987 of participation loans
secured by airplanes from another financial institution.

Activity in the allowance for loan losses is summarized as follows:

                                                      2002             2001
                                                      ----             ----

     Balance at beginning of period            $       626,715  $       678,484
     Provision for loan losses                         235,000          254,450
     Loans charged-off                                (243,675)        (331,269)
     Recoveries on charged-off loans                    37,593           25,050
                                               ---------------  ---------------

     Balance at end of period                  $       655,633  $       626,715
                                               ===============  ===============

At June 30,  2002 and 2001,  loans for which the  accrual of  interest  had been
discontinued amounted to approximately $71,000 and $10,000.  There were no loans
individually  classified  as impaired at or during the years ended June 30, 2002
and 2001.


--------------------------------------------------------------------------------
                                       29
                                  (Continued)

<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001



NOTE 6 - PREMISES AND EQUIPMENT

At year end, premises and equipment were as follows:

                                                      2002             2001
                                                      ----             ----

     Furniture, fixtures and equipment        $        70,358  $        61,171
     Leasehold improvements                            31,930           31,930
     Computer equipment                               349,732          461,352
                                              ---------------  ---------------
                                                      452,020          554,453
     Accumulated depreciation                        (384,088)        (472,005)
                                              ---------------  ---------------

                                              $        67,932  $        82,448
                                              ===============  ===============


NOTE 7 - DEPOSITS

At June 30, 2002 and 2001, deposits are summarized as follows:

                                                     2002              2001
                                                     ----              ----

     Checking                                $      8,654,978  $     8,798,380
     Savings                                       12,331,985       12,553,928
     Money market                                  37,444,826       37,486,333
     Time deposits                                 18,287,575       18,795,013
                                             ----------------  ---------------

                                             $     76,719,364  $    77,633,654
                                             ================  ===============

Deposits in  denominations of $100,000 or more at June 30, 2002 and 2001 totaled
approximately $20,725,000 and $20,090,000.

At year end 2002, the scheduled maturities of time deposits are as follows:

              2003                                   $     10,612,204
              2004                                          2,725,172
              2005                                          2,353,207
              2006                                          2,139,717
              2007                                            457,275
                                                     ----------------

                                                     $     18,287,575
                                                     ================


--------------------------------------------------------------------------------
                                       30
                                  (Continued)

<PAGE>



                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001




NOTE 8 - EMPLOYEE BENEFITS

Allied First Bancorp, Inc. sponsors a noncontributory, defined contribution plan
covering   substantially   all  employees  who  meet  certain  age  and  service
requirements.  Allied  First  Bancorp,  Inc.  's  contribution  is  made  at the
discretion of the Board of Directors and was 10% of eligible employee's salaries
for 2002 and 2001.  Plan expense was  approximately  $74,000 and $62,000 in 2002
and 2001. The plan provides for 100% vested  interest  after  completion of five
years of service.

Allied First Bancorp,  Inc. also maintains a 401(k) plan covering  substantially
all  employees  who meet  certain age and  service  requirements.  Allied  First
Bancorp,  Inc.  matches  50% of employee  contributions  to this plan up to 10%.
Allied First Bancorp,  Inc.'s matching  contribution  and expense for the 401(k)
plan was approximately $23,000 and $14,000 in 2002 and 2001.


NOTE 9 - INCOME TAXES

As a credit union, Allied First Bancorp,  Inc. was not subject to federal income
taxes or state income taxes.  Effective September 1, 2001, Allied First Bancorp,
Inc. became subject to federal income taxes and state income taxes at a combined
rate of 38.74% of pre-tax income. As a result of the change in tax status and in
accordance with Financial  Accounting  Standards No. 109,  Accounting for Income
Taxes,  Allied  First Bank  recorded a net  deferred  tax asset in the amount of
$205,000 on September 1, 2001.  The recording of this net deferred tax asset was
reflected as an income tax benefit in the income statement.



--------------------------------------------------------------------------------
                                       31
                                  (Continued)



<PAGE>



                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001





NOTE 9 - INCOME TAXES (Continued)

Income tax expense (benefit) was as follows for the fiscal year ended June 30,
2002.
                                                                  2002
                                                                  ----
     Current federal                                         $    148,771
     Current state                                                 33,784
     Deferred federal                                             (17,129)
     Deferred state                                                (3,862)
     Change in tax status                                        (205,000)
                                                             ------------

         Total expense (benefit)                             $    (43,436)
                                                             ============

Effective  tax  rates  differ  from  federal  statutory  rates  applied  to  the
consolidated financial statement income due to the following.

                                                                  2002
                                                                  ----
     Federal statutory rate times financial statement
       income                                                $    165,749
     Effect of:
         Tax-exempt earnings from July 1, 2001
         through August 31, 2001                                  (24,693)
     Change in tax status                                        (205,000)
         State taxes, net of federal benefit                       19,686
         Other, net                                                   822
                                                             ------------

         Total expense (benefit)                             $    (43,436)
                                                             ============

     Effective tax rate is 34%.

Year-end deferred tax assets and liabilities were due to the following.

                                                                  2002
                                                                  ----
     Deferred tax assets:
         Allowance for loan losses                           $    182,804
         Accumulated depreciation                                  65,463
                                                             ------------
              Total                                               248,267
                                                             ------------

     Deferred tax liabilities:
         FHLB stock dividends                                     (22,276)
         Net unrealized appreciation on
           securities available for sale                          (12,230)
                                                             ------------
              Total                                               (34,506)
                                                             ------------

     Net deferred tax asset                                  $    213,761
                                                             ============

There is no valuation allowance at June 30, 2002.

--------------------------------------------------------------------------------
                                       32
                                  (Continued)


<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001






NOTE 10 - RELATED PARTY TRANSACTIONS

Loans to principal  officers,  directors,  and their  affiliates in 2002 were as
follows.

                  Beginning balance                                 $   138,326
                  New loans                                                   -
                  Effect of changes in related parties                        -
                  Repayments                                            (12,205)
                                                                    -----------
                  Ending balance                                    $   126,121
                                                                    ===========

Deposits from principal  officers,  directors,  and their affiliates at year end
2002 and 2001 were $206,000 and $514,000.


NOTE 11 - COMMITMENTS AND CONTINGENCIES

Allied  First  Bancorp,   Inc.  is  a  party  to  financial   instruments   with
off-balance-sheet  risk in the normal course of business to meet financing needs
of its customers.  These financial instruments include commitments to make loans
and open-end  revolving  lines of credit to  customers.  Allied  First  Bancorp,
Inc.'s exposure to credit loss in the event of nonperformance by the other party
to the  financial  instruments  for  commitments  to  make  loans  and  open-end
revolving  lines of credit is  represented  by the  contractual  amount of those
instruments. Allied First Bancorp, Inc. uses the same credit policy to make such
commitments as it uses for on-balance-sheet items.

Off-balance-sheet commitments are as follows:

<TABLE>
<CAPTION>



                                                          2002                                 2001
                                                          ----                                 ----
                                              Fixed Rate        Variable Rate      Fixed Rate         Variable Rate
                                           ----------------    --------------     --------------    ---------------
<S>                                        <C>                 <C>                <C>               <C>
Home equity lines                          $              -    $    8,306,000     $            -    $     7,962,000
Other lines of credit                            26,705,000         5,115,000         38,553,000          4,990,000
Credit cards                                     18,877,000                 -         21,250,000                  -
Overdraft protection                              2,221,000                 -                  -                  -
                                           ----------------    --------------     --------------    ---------------

                                           $     47,803,000    $   13,421,000     $   59,803,000    $    12,952,000
                                           ================    ==============     ==============    ===============
</TABLE>


At June  30,  2002  and  2001,  the  interest  rate for  other  lines of  credit
commitments with a fixed rate was 11.9%. At June 30, 2002 and 2001, the range of
interest rates on credit card commitments was 12.3% to 14.9%. With proper notice
provided to the  customer,  Allied First  Bancorp,  Inc. can change the rates on
credit cards at its discretion.


--------------------------------------------------------------------------------
                                       33
                                  (Continued)



<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001



NOTE 11 - COMMITMENTS AND CONTINGENCIES (Continued)

At June 30, 2002, Allied First Bancorp,  Inc. had a federal funds overnight line
of credit available at LaSalle Bank totaling  $4,000,000.  There were no amounts
outstanding  at June 30, 2002.  The interest  rate is determined by LaSalle Bank
from time to time based upon current market conditions.

Allied First Bancorp,  Inc. is obligated under a  noncancelable  operating lease
for office space.  This lease expires  January 31, 2003. It contains  escalation
clauses  providing  for increased  rentals based  primarily on increases in real
estate taxes and operating costs.  The related rental expense was  approximately
$65,000 and $60,000 for 2002 and 2001.

The future minimum commitments at June 30, 2002 for all noncancelable leases are
as follows:

         Year Ending June 30,                                       Amount
         --------------------                                      --------

                2003                                             $     40,161
                                                                 ============


NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The  estimated  fair value of  financial  instruments  and the related  carrying
amounts at June 30 are presented below:

<TABLE>
<CAPTION>



                                            --------------2 0 0 2------------     -------------2 0 01--------------
                                                          -------                              ------
                                                Carrying           Estimated         Carrying          Estimated
                                                 Amount           Fair Value          Amount          Fair Value
                                            ---------------    --------------     --------------    ---------------
<S>                                         <C>                <C>                <C>               <C>
FINANCIAL ASSETS
    Cash and cash equivalents               $     7,363,100    $    7,363,000     $   16,455,200    $    16,455,000
    Time deposits in other financial
      institutions                                3,869,403         3,869,000                  -                  -
    Membership shares at corporate
      credit union                                  558,000           558,000            722,000            722,000
    Securities available for sale                 6,357,945         6,358,000                  -                  -
    Federal Home Loan Bank stock                  1,532,400         1,532,000            237,125            237,000
    Loans, net                                   66,911,855        67,646,000         63,549,267         63,881,000
    NCUSIF deposit                                        -                 -            618,802            619,000
    Accrued interest receivable                     269,613           270,000            189,775            190,000

FINANCIAL LIABILITIES
    Deposits with no
      stated maturities                     $   (58,431,789)   $  (58,432,000)    $  (58,838,641)   $   (58,839,000)
    Deposits with
      stated maturities                         (18,287,575)      (18,717,000)       (18,795,013)       (19,216,000)
</TABLE>





--------------------------------------------------------------------------------
                                       34
                                  (Continued)




<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001



NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

For  purposes  of  the  disclosures  of  estimated  fair  value,  the  following
assumptions were used as of June 30, 2002 and 2001. The estimated fair value for
cash and cash  equivalents,  time deposits in other financial  institutions  and
accrued  interest is  considered to  approximate  cost.  The carrying  amount of
Federal Home Loan Bank stock,  membership  shares at corporate credit union, and
the National  Credit Union Share Insurance Fund deposit  approximate  fair value
based on the  redemption  provisions.  Security  fair values are based on market
prices or dealer quotes,  and if no such  information is available,  on the rate
and term of the security and  information  about the issuer.  The estimated fair
value for loans is based on  estimates of the rate Allied  First  Bancorp,  Inc.
would charge for similar  such loans at June 30, 2002 and 2001,  applied for the
time period until estimated payment.  The estimated fair value for deposits with
no stated  maturities is based on their carrying value. The estimated fair value
for  deposits  with stated  maturities  is based on estimates of the rate Allied
First  Bancorp,  Inc.  would  pay on such  deposits  at June 30,  2002 and 2001,
applied for the time period until  maturity.  The estimated fair values of other
financial  instruments and off-balance-sheet  loan commitments  approximate cost
and are not considered significant for this presentation.


NOTE 13 - REGULATORY CAPITAL REQUIREMENTS

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

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

At June 30, 2002 Allied First Bank was classified as well-capitalized. There are
no conditions or events since that  notification  that management  believes have
changed Allied First Bank's category.





--------------------------------------------------------------------------------
                                       35
                                  (Continued)

<PAGE>



                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001






NOTE 13 - REGULATORY CAPITAL REQUIREMENTS (Continued)

Actual and required capital amounts (in millions) and ratios are presented below
for June 30, 2002.  Although  Allied First  Bancorp,  Inc. was a credit union at
June 30, 2001 and  subject to the capital  regulations  of the  National  Credit
Union  Administration,  the actual and required  amounts as a Bank are shown for
2001 for comparability.


<TABLE>
<CAPTION>




                                                                                                    Minimum
                                                                                                  Requirement
                                                                         Minimum                  To Be Well
                                                                       Requirement             Capitalized Under
                                                                       For Capital             Prompt Corrective
                                               Actual               Adequacy Purposes          Action Provisions
                                               ------               -----------------          -----------------
                                        Amount        Ratio        Amount        Ratio        Amount        Ratio
                                        ------        -----        ------        -----        ------        -----

<S>                                    <C>            <C>        <C>             <C>         <C>           <C>
2002
Total capital to risk
  weighted assets                      $   10.44      14.5%      $    5.75       8.0%        $   7.19      10.0%

Tier 1 (Core) capital to risk
  weighted assets                           9.79      13.6            2.87       4.0             4.31       6.0

Tier 1 (Core) capital to
  average assets                            9.79      11.9            3.30       4.0             4.13       5.0

2001
Total capital to risk
  weighted assets                      $    4.87       7.1%      $    5.51       8.0%        $   6.89      10.0%

Tier 1 (Core) capital to risk
  weighted assets                           4.24       6.2            2.76       4.0             4.13       6.0

Tier 1 (Core) capital to
  average assets                            4.24       5.2            3.29       4.0             4.11       5.0

</TABLE>

Allied  First  Bancorp,  Inc.  or Allied  First Bank may not declare or pay cash
dividends  on or  repurchase  any of its  shares of common  stock if the  effect
thereof  would  cause its  regulatory  capital  to be reduced  below  applicable
regulatory requirements.



--------------------------------------------------------------------------------
                                       36
                                  (Continued)

<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001




NOTE 14 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of Allied First Bancorp, Inc. follows.

                            CONDENSED BALANCE SHEETS
                                  June 30, 2002


     ASSETS
     Cash and cash equivalents                                $        51,824
     Investment in bank subsidiary                                 10,006,513
     Other assets                                                      21,423
                                                              ---------------
         Total assets                                         $    10,079,760
                                                              ===============

     LIABILITIES AND SHAREHOLDERS'  EQUITY
     Other liabilities                                        $         6,834
     Shareholders' equity                                          10,072,926
                                                              ---------------
         Total liabilities and shareholders' equity           $    10,079,760
                                                              ===============


                          CONDENSED STATEMENT OF INCOME
             For the period December 27, 2001 through June 30, 2002



     Interest income                                          $         3,539
     Equity in undistributed income of subsidiary                     177,701
                                                              ---------------
                                                                      181,260

     Interest expense                                                   2,933
     Other expense                                                     55,616
                                                              ---------------
                                                                       58,549

     Income before income taxes                                       122,691

     Income tax expense (benefit)                                     (21,423)
                                                              ---------------

     Net income                                               $       144,114
                                                              ===============


--------------------------------------------------------------------------------
                                       37
                                  (Continued)

<PAGE>


                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001




NOTE 14 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
  (Continued)

                       CONDENSED STATEMENTS OF CASH FLOWS
             For the period December 27, 2001 through June 30, 2002


   Cash flows from operating activities
     Net income                                                 $       144,114
     Adjustments:
       Equity in undistributed income of subsidiary                    (177,701)
       Change in other assets                                           (21,423)
       Change in other liabilities                                        6,834
                                                                ---------------
           Net cash from operating activities                           (48,176)

   Cash flows from investing activities
     Purchase of stock of bank subsidiary                            (5,178,032)
                                                                ---------------
       Net cash from financing activities                            (5,178,032)

   Cash flows from financing activities
     Proceeds from sale of common stock, net of
       conversion costs                                               5,278,032
                                                                ---------------
       Net cash from financing activities                             5,278,032
                                                                ---------------

   Net change in cash and cash equivalents                               51,824

   Beginning cash and cash equivalents                                        -
                                                                ---------------

   Ending cash and cash equivalents                             $        51,824
                                                                ===============






--------------------------------------------------------------------------------
                                       38
                                  (Continued)


<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2002 and 2001







NOTE 15 - EARNINGS PER COMMON SHARE

The factors used in the earnings  per common  share  computation  for the period
December 27, 2001 through June 30, 2002 follows:

                                                                       2002
                                                                       ----
     Basic
           Net income                                             $     144,114
                                                                  =============

           Weighted average common shares
             outstanding                                                608,350
                                                                  =============

         Basic earnings per common share                          $         .24
                                                                  =============

     Diluted
           Net income                                             $     144,114
                                                                  =============

           Weighted average common shares
             outstanding for basic earnings per
             common share                                               608,350
           Add:  Dilutive effects of potential
             common shares                                                    -
                                                                  -------------

           Average shares and dilutive potential
             common shares                                              608,350
                                                                  =============

         Diluted earnings per common share                        $         .24
                                                                  =============




--------------------------------------------------------------------------------
                                       39

<PAGE>


                   ALLIED FIRST BANCORP, INC. AND SUBSIDIARIES
                             STOCKHOLDER INFORMATION

ANNUAL MEETING

The annual meeting of stockholders  will be at 8:30 a.m.,  Naperville,  Illinois
time,  October  17,  2002,  at Allied  First Bank  located at 387 Shuman  Blvd.,
Naperville, Illinois.

STOCK LISTING

Allied  First  Bancorp,  Inc.'s stock is traded on the OTC  Electronic  Bulletin
Board under the symbol "AFBA."

PRICE RANGE OF COMMON STOCK

The following  table sets forth the quarterly  high and low bid prices of Allied
First Bancorp's  common stock since it began trading on December 27, 2001. These
prices do not represent actual  transactions and do not include retail mark-ups,
mark-downs or commissions.

<TABLE>
<CAPTION>



                      Quarter ended                                High                Low             Dividends
----------------------------------------------------------- ------------------- ------------------ ------------------
<S>                 <C>                                           <C>                <C>                  <C>
                      June 30, 2002                               $12.60             $11.85               N/A
                      March 31, 2002                              $12.10             $11.66               N/A
                    December 31, 2001                             $11.90             $11.90               N/A
</TABLE>

Allied First  Bancorp,  Inc. has not declared any dividends  during fiscal 2002.
Dividend payment  decisions are made with  consideration of a variety of factors
including earnings,  financial condition,  market  considerations and regulatory
restrictions.

As  of  June  30,  2002,  Allied  First  Bancorp,  Inc.  had  approximately  442
stockholders of record and 608,350 outstanding shares of common stock.

SHAREHOLDERS AND GENERAL INQUIRIES          TRANSFER AGENT

Kenneth L. Bertrand                         Registrar and Transfer Company
Allied First Bancorp, Inc.                  10 Commerce Drive
387 Shuman Blvd., Suite 120 W               Cranford, New Jersey 07016
Naperville, Illinois 6056                   (908) 272-8511
(630) 778-7700

ANNUAL AND OTHER REPORTS

Allied First  Bancorp,  Inc. is required to file an annual report on Form 10-KSB
for its fiscal  year ended  June 30,  2002,  with the  Securities  and  Exchange
Commission.  Copies of the Form 10-KSB annual  report and Allied First  Bancorp,
Inc.'s quarterly reports may be obtained without charge by contacting:

                               Kenneth L. Bertrand
                           Allied First Bancorp, Inc.
                          387 Shuman Blvd., Suite 120 W
                           Naperville, Illinois 60563


                                       40


<PAGE>


                   ALLIED FIRST BANCORP, INC. AND SUBSIDIARIES
                              CORPORATE INFORMATION

COMPANY AND BANK ADDRESS
387 Shuman Blvd.                                       Telephone: (630) 778-7700
Suite 120W                                             Fax:  (630) 778-7754
Naperville, Illinois 60563

DIRECTORS OF THE BOARD

John G. Maxwell, Jr.                                   Brien J. Nagle
Chairman of the Board                                  Partner
Captain                                                Nagle & Higgins, P.C.
American Airlines                                      Naperville, Illinois
DFW Airport, Texas

Kenneth L. Bertrand                                    Paul F. Renneisen
President and Chief Executive Officer                  Captain
Allied First Bancorp, Inc. and Allied First Bank       American Airlines
Naperville, Illinois                                   DFW Airport, Texas

William G. McKeown                                     Frank K. Voris
Captain                                                Retired
American Airlines                                      Aurora, Illinois
DFW Airport, Texas

               ALLIED FIRST BANCORP, INC. AND SUBSIDIARY OFFICERS

Kenneth L. Bertrand
President and Chief Executive Officer

INDEPENDENT AUDITORS             SPECIAL COUNSEL

Crowe, Chizek and Company LLP    Jenkens & Gilchrist, a Professional Corporation
One Mid America Plaza            1919 Pennsylvania Avenue, N.W., Suite 600
P.O. Box 3697                    Washington, DC 20016-3404
Oak Brook, Illinois 60522-3697



                                       41