Exhibit 13

                          ANNUAL REPORT TO STOCKHOLDERS


                                Table of Contents



                                                                            Page
                                                                            ----

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.............................................  17

Consolidated Balance Sheets as of June 30, 2003 and 2002...................  18

Consolidated Statements of Income for the Years Ended June 30, 2003
and 2002...................................................................  19

Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended June 30, 2003 and 2002.........................................  20

Consolidated Statements of Cash Flows for the Years Ended June 30, 2003
and 2002...................................................................  21

Notes to Consolidated Financial Statements.................................  22

Stockholder Information....................................................  39

Corporate Information......................................................  40



<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, 2003. This fiscal year represents the
completion of our first full fiscal year operating as a public company.

During this past year while the economy struggled and particularly the airline
industry, Allied First Bank grew its assets by 16.36% over fiscal 2002. In
addition, our profits before income taxes increased by more than 30.57% over
fiscal 2002 and our net loans grew by 30.40%. We believe that our successes are
directly attributable to our efficient delivery systems which have enabled us to
offer our customers competitive rates on loans and deposit products. 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,



Kenneth L. Bertrand
President and Chief Executive Officer



                                       1
<PAGE>

                         SELECTED FINANCIAL DATA
                                                               At June 30,
                                                           2003          2002
                                                         --------       -------
                                                             (In Thousands)
Selected Consolidated Balance Sheet Data:
Total assets ......................................      $101,562       $87,284
Other interest earning assets .....................         6,173        11,791
Securities available for sale .....................         3,806         6,358
Federal Home Loan Bank stock ......................         1,640         1,532
Loans, net ........................................        87,250        66,912
Deposits ..........................................        91,243        76,719
Total shareholders' equity ........................         9,816        10,073

                                                           Years Ended June 30,
                                                           2003          2002
                                                         --------       -------
                                                             (In Thousands)
Selected Consolidated Statements of Income Data:
Interest income ...................................      $  5,328       $ 5,466
Interest expense ..................................         2,026         2,468
                                                         --------       -------
  Net interest income .............................         3,302         2,998
Provision for loan losses .........................           281           235
                                                         --------       -------
  Net interest income after provision for loan losses       3,021         2,763
                                                         --------       -------

Noninterest income:
Credit and debit card transaction income and other
fees ..............................................           678           671
First mortgage loan fees ..........................            87            72
Gain on sale of securities ........................             4            --
Other .............................................            31            37
                                                         --------       -------
  Total noninterest income ........................           800           780
                                                         --------       -------

Noninterest expenses:
Salaries and employee benefits ....................         1,213         1,106
Office operations and equipment ...................           409           428
Credit and debit card processing ..................           521           523
Travel and conference .............................            77            84
Professional Services .............................           310           328
Marketing and promotions ..........................           237           171
Data Processing ...................................           246           236
Occupancy .........................................            91            79
Other .............................................            80           100
                                                         --------       -------
Total noninterest expenses ........................         3,184         3,055
                                                         --------       -------

Income before income taxes ........................           637           488

Income tax expense (benefit) ......................           250           (43)
                                                         --------       -------

Net income ........................................      $    387       $   531
                                                         ========       =======

Earnings per common share:
  Basic(1) ........................................      $   0.64       $  0.24
  Diluted .........................................          0.64          0.24


                                        2



<PAGE>
<TABLE>
<CAPTION>
                                                                   At June 30,
                                                                 2003       2002
                                                               --------   --------
                                                                   (In Thousands)
<S>                                                            <C>          <C>
Key Operating Ratios and Other Data:
Performance ratios:
  Return on assets (ratio of net income to average assets)         0.42%      0.64%
  Return on equity  (ratio of net income to average equity)        3.81       6.98
Interest rate spread information:
  Average during period(2)                                         3.07       2.89
  End of period(2)                                                 3.47       3.66
  Net interest margin(3)                                           3.58       3.60
  Ratio of operating expense to average total assets               3.44       3.66
  Ratio of average interest-earning assets to average
  interest earning liabilities                                    123.1     124.12

Quality ratios:
  Non-performing asset to total assets at end of period            0.02%      0.08%
  Allowance for loan losses to non-performing loans            3,700.00     923.43
  Allowance for loan losses to gross loans receivable              0.67       0.97

Capital ratios:
  Equity to total assets at end of period                          9.67      11.54
  Average equity to average assets                                10.97       9.13

Other data:

  Number of full service offices                                      1          1
</TABLE>

(1)   Basic and diluted earnings per common share for 2002 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.



                                        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. ("Company")
and its subsidiary, Allied First Bank, sb ("Bank") (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, the
Company 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 the Company to acquire all of the capital stock
of the Bank. References to Allied First Bancorp, Inc. include, where applicable,
Allied First Bank, sb or its predecessor, Allied Pilots Association Federal
Credit Union ("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. 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. The Company 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 (Allied First Bank) with the 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.

                                       4
<PAGE>

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.

The Company 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 the Company's
actual results for future periods to differ materially from those anticipated or
projected.

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

The Credit Union initiated the conversion from a federal credit union charter to
an Illinois mutual savings bank charter primarily due to 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 the Company to acquire the
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 (NCUSIF) 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 the Company 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. The Company has
requested the funds as soon as they are made available and will re-invest the
funds in an interest-earning asset.


                                       5
<PAGE>

Due to the change to a mutual savings bank, the Company became a for-profit,
taxable organization. As a credit union, the Company was a not-for-profit
organization and was not subject to federal or state income taxes. As a
for-profit organization, the Company is subject to federal and state income
taxes. Effective September 1, 2001, the Company 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, the Company 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 the Company and the equity of the Company 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. The Company 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.

Critical Accounting Policies

Certain of the Company's accounting policies are important to the portrayal of
the Company's financial condition, since they require management to make
difficult, complex or subjective judgments, some of which may relate to matters
that are inherently uncertain. Estimates associated with these policies are
susceptible to material changes as a result of changes in facts and
circumstances. Some of the facts and circumstances which could affect these
judgments include changes in interest rates, in the performance of the economy
or in the financial condition of borrowers. Management believes that its
critical accounting policies include determining the allowance for loan losses
and determining the fair value of securities and other financial instruments.

Liquidity

Liquidity management refers to the ability to generate sufficient cash to fund
current loan demand, meet deposit withdrawals, and pay operating expenses. The
Company 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 the Company'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 and purchases, loan repayments and investments in interest-earning
balances and securities available for sale. Financing activities focus primarily
on the generation of deposits. Although, the Company has used short term
borrowings periodically.

At June 30, 2003, the Company had $3.0 million in cash and cash equivalents that
could be used for its funding needs. Cash and cash equivalents decreased by $4.3
million from the June 30, 2002 balance of $7.4 million.


                                       6
<PAGE>

For 2003, cash outflows from operating activities totaled $1.3 million, compared
to cash provided from operating activities of $800,000 for 2002. The decrease in
2003 was due to lower net income and the increase of $1.1 million in servicing
agent receivable in 2003 as compared to 2002. Cash outflows from investing
activities totaled $16.9 million in 2003 compared to $14.3 million in 2002. This
increase in cash outflows was due primarily to loan purchases of $33.2 million.
It is offset by cash inflows from loan payoffs, net of $12.6 million and $8.5
million from the sale of securities and pay downs in available for sale
securities. Cash flows from financing activities totaled $13.9 million of cash
inflows for 2003 compared to $4.4 million of cash inflows for 2002. The increase
in cash inflows for 2003, were primarily due to the increase in deposits of
$14.5 million.

For further liquidity, the Company may borrow against its mortgage-backed
securities and first mortgages through the Federal Home Loan Bank. The Company
also established a fed funds line of $4.0 million with LaSalle Bank during 2002.
The total borrowing capacity is approximately $26.6 million.

Asset and Liability Management and Market Risk

General. The Company'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. The Company's profitability is also
affected by the level of non-interest income and non-interest expenses.
Non-interest income includes interchange income and other fees including fees
received on sale of first mortgage loans. Non-interest expenses primarily
include compensation and benefits, office operations and equipment expenses,
professional services, credit and debit card processing, data processing
expenses, and marketing. The Company'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.

The Company 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.


                                       7
<PAGE>

Quantitative Aspects of Market Risk.

The Company's primary market risk exposure is interest rate risk. Interest rate
risk is the risk that the Company'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 the Company's
asset/liability mix in order to limit the magnitude of interest rate risk. The
Company's asset/liability management strategy sets limits on the change in net
portfolio value (NPV) given certain changes in interest rates. The table
presented here, as of June 30, 2003, is forward-looking information about the
Company's sensitivity to changes in interest rates. The table incorporates the
Company'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 NPV for instantaneous
parallel shifts in the yield curve in 100 basis point increments up to 300 basis
points and down in increments of 50 basis points to 100 basis points, to the
extent possible.

<TABLE>
<CAPTION>
Change in
Interest Rates
in Basis Points
(Rate Shock)
                                Net Portfolio Value                 Portfolio Value of Assets
                                -------------------                 -------------------------
                         Dollars in Thousands                          NPV         Basis Point
                        $ Amount      $ Change       % Change         Ratio          Change
                        --------      --------       --------         -----          ------
<S>                        <C>            <C>           <C>           <C>             <C>
        300                $9,307         $(746)        (7.4)%        9.50%           (27)
        200                 9,746          (307)        (3.1)         9.78              1
        100                 9,968           (85)        (0.8)         9.84              7
          0                10,053             0          0.0          9.77              0
        (50)               10,045            (8)        (0.1)         9.69             (8)
       (100)               10,006           (47)        (0.5)         9.58            (19)
</TABLE>

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 the Company's maturities and repricing data on
interest-earning assets and interest-bearing liabilities, commonly called a
"gap" report, as of June 30, 2003. It gives an indication of the Company'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. The Company's past history shows that depositors maintain
balances for periods of time in excess of those presented in the table.

                                       8
<PAGE>


<TABLE>
<CAPTION>
                                -------------------Repricing or Maturing------------------
                                                  (Dollars 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
    Other interest bearing
        assets                  $  4,387     $  1,387     $    399     $     --   $  6,173
    Securities available for
        sale                         119          296          372        3,019      3,806
    Federal Home Loan
      Bank stock                   1,640           --           --           --      1,640
    Loans                         28,170       17,310       17,144       25,360     87,984
                                --------     --------     --------     --------   --------
Total interest-earning assets   $ 34,316     $ 18,993     $ 17,915     $ 28,379   $ 99,603
                                ========     ========     ========     ========   ========
Interest-bearing liabilities
    Interest checking           $  4,338     $     --     $     --     $     --   $  4,338
    Savings                       14,823           --           --           --     14,823
    Money market                  44,855           --           --           --     44,855
    Time deposits                  2,520        8,116        3,493        4,712     18,841
                                --------     --------     --------     --------   --------
Total interest-bearing
  Liabilities                   $ 66,536     $  8,116     $  3,493     $  4,712   $ 82,857
                                ========     ========     ========     ========   ========

Cumulative gap                  $(32,220)    $(21,343)    $ (6,921)
                                ========     ========     ========
Cumulative gap as a
  percentage of total assets      (31.72)%     (21.01)%    (6.81)%
</TABLE>

Changes in Financial Condition from June 30, 2002 to June 30, 2003

Total assets increased $14.3 million or 16.36% from $87.3 million at June 30,
2002 to $101.6 million at June 30, 2003. The increase in total assets was
primarily due to the growth of net loans, which was partially offset by a
decrease in securities, as well as decreases in various deposits in financial
institutions. Net loans increased $20.3 million or 30.40% from $66.9 million in
2002 to $87.3 million in 2003. Non-real estate consumer loans continued to
decrease in the 2003 fiscal year from $41.8 million to $33.0 million. The
largest increase in loans was first mortgage loans. First mortgages increased
$31.0 million to total $33.8 million at the end of the 2003 fiscal year. The
increase in first mortgage balances is due to the purchase of $33.2 million in
first mortgage loans from other financial institutions. Investments which
include cash and cash equivalents, securities available for sale, time deposits
in other financial institutions, and Federal Home Loan Bank stock, decreased
$7.8 million or 40.96% from $19.7 million in 2002 to $11.6 million in 2003.
Other assets increased $1.2 million to total $1.6 million at the end of the 2003
fiscal year. The reason for the increase in other assets is a receivable that is
recognized when our mortgage servicing institution processes payments or
mortgage payoffs that are due to the Company at the end of the month. At the end
of the fiscal year 2003 there were $1.1 million in payments and mortgage pay off
funds due from the servicing institution.


                                       9
<PAGE>

Total deposits increased $14.5 million or 18.93% from $76.7 million at June 30,
2002 to $91.2 million at June 30, 2003. The majority of the increase in deposits
was in savings and money market deposit accounts, which increased $9.9 million
or 19.89% from $49.8 million at June 30, 2002 to $59.7 million at June 30, 2003.
During the fiscal year 2003, the company introduced an interest-earning checking
account that ended the fiscal year with deposit balances of $8.4 million.
Deposits increased due to economic conditions as well the Company's competitive
rates on both money market accounts and interest checking accounts.

The total shareholders' equity of the Company decreased by $300,000 or 2.55%,
from $10.1 million to $9.8 million at fiscal year ended June 30, 2003. The
decrease in capital was due to the stock repurchase that occurred in May of
2003. The Company repurchased 50,000 shares of common stock at an average price
of $13.25, which established treasury stock of $662,500. The stock was
repurchased to increase both the price to earnings ratio and the return on
stockholders equity. Net income for 2003 was $387,000, which offset a portion of
the decrease from the stock repurchase.

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.

<TABLE>
<CAPTION>
                                           Year ended June 30,                   Year ended June 30,
                                                   2003                                 2002
                                      -----------------------------         ---------------------------
                                       Average              Average          Average            Average
INTEREST EARNING ASSETS                Balance    Interest    Rate           Balance   Interest   Rate
-----------------------------------   --------    --------    ----          --------   --------   ----
<S>                                   <C>         <C>         <C>           <C>        <C>        <C>
Other interest earning balances (2)   $ 11,640    $    200    1.72%         $ 14,295   $    296   2.07%
Loans (1)                               72,256       4,735    6.55%           65,151      4,970   7.63%
Securities available for sale            6,782         304    4.48%            2,692        138   5.13%
Federal Home Loan Bank stock             1,585          89    5.62%            1,091         62   5.68%
                                      --------    --------    ----          --------   --------   ----

Total interest-earning assets           92,263       5,328    5.77%           83,229      5,466   6.57%
                                      --------    --------    ----          --------   --------   ----

NON-INTEREST EARNING ASSETS

Premises and equipment                      67                                    79
Allowance for loan losses                 (639)                                 (678)
Other non-earning assets                   837                                   730
                                      --------                              --------
Total assets                          $ 92,528                              $ 83,360
                                      ========                              ========
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                      Year ended June 30,            Year ended June 30,
                                                             2003                            2002
                                              ----------------------------------------------------------------
                                               Average                Average   Average                Average
                                               Balance    Interest     Rate     Balance     Interest    Rate
<S>                                           <C>         <C>          <C>      <C>         <C>          <C>
INTEREST BEARING LIABILITIES

Interest checking                             $   6,427   $    170     2.65%          --          --       --
Savings                                          11,957         99      .83%    $ 12,407    $    185     1.49%
Money market                                     37,349        863     2.31%      36,314       1,180     3.25%
Time deposits                                    18,417        878     4.77%      17,934       1,071     5.97%
Borrowings                                          797         16     2.01%          --          --     0.00%
Subordinated debt                                    --         --     0.00%         401          32     7.98%
                                              ---------   --------     ----     --------    --------     ----

Total interest-earning Liabilities               74,947      2,026     2.70%      67,056       2,468     3.68%
                                              ---------   --------     ----     --------    --------     ----

NON-INTEREST BEARING LIABILITIES AND EQUITY

Checking                                         6,922                             8,301
Other liabilities                                  511                               391
Equity                                          10,148                             7,612
                                             ---------                          --------
Total liabilities and equity                 $  92,528                          $ 83,360
                                             =========                          ========

Net interest spread (3)                                   $  3,302     3.07%                $  2,998     2.89%
                                                          ========     ====                 ========     ====

Net interest margin  (4)                                               3.58%                             3.60%
                                                                       ====                              ====
</TABLE>

(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.

Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on the
interest income and interest expense of the Company. 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.

                                       11
<PAGE>

<TABLE>
<CAPTION>
                                             Year ended June 30                  Year ended June 30
                                               2003 vs. 2002                       2002 vs. 2001
                                      --------------------------------------------------------------------
                                         Increase/(Decrease) Due to          Increase/(Decrease) Due to
                                      --------------------------------------------------------------------

                                       Total       Volume       Rate        Total      Volume       Rate

<S>                                   <C>         <C>         <C>         <C>         <C>         <C>
Interest income
     Interest earning balances        $   (96)    $   (50)    $   (46)    $  (124)    $    45     $  (169)
     Loans                               (235)        509        (744)       (803)         23        (826)
     Securities available for sale        166         185         (19)        138         138          --
     Federal Home Loan Bank
     stock                                 27          28          (1)         49          49          --
                                      -------     -------     -------     -------     -------     -------

          Total interest Income          (138)        672        (810)       (740)        255        (995)
                                      -------     -------     -------     -------     -------     -------

Interest expense
     Interest checking                    170         170          --          --          --          --
     Savings                              (86)         (6)        (80)       (152)         12        (164)
     Money market                        (317)         33        (350)       (628)        161        (789)
     Time deposits                       (193)         28        (221)       (241)       (139)       (102)
     Borrowings                            16          16          --          --          --          --
     Subordinated debt                    (32)        (32)         --          32          32          --
                                      -------     -------     -------     -------     -------     -------

          Total interest expense         (442)        209        (651)       (989)         66      (1,055)
                                      -------     -------     -------     -------     -------     -------

Net interest income                   $   304     $   463     $  (159)    $   249     $   189     $    60
                                      =======     =======     =======     =======     =======     =======
</TABLE>

Results of Operations - Comparison of 2003 and 2002

General. Net income for the year ended June 30, 2003 was $387,000 compared to
net income of $531,000 for the year ended June 30, 2002 or a decrease of
$144,000. The earnings represent a return on average assets of .42% for 2003 and
..64% for 2002.

This decrease in net income was primarily due to the increase in income tax
expense. Income tax expense increased $293,000, from a tax benefit of $43,000
for the year ended June 30, 2002 to an expense of $250,000 for the year ended
June 30, 2003. The net benefit recorded in 2002 was a result of the change in
tax status that occurred on September 1, 2001 resulting in a gross benefit of
$205,000.


                                       12
<PAGE>

Interest Income. Interest income for 2003 was $5.3 million compared to $5.5
million for the same period in 2002, a decrease of $138,000 or 2.52%. The
decrease was primarily the result of lower yields on loans and interest earning
balances during 2003. The yield on loans decreased to 6.55% for 2003 from 7.63%
for 2002. The Company was able to offset part of the lost income from loans by
purchasing additional long-term investments. The Company also held an average
balance of $6.8 million in securities available for sale that yielded 4.48%
during the fiscal year 2003, compared to an average balance of $2.7 million and
a yield of 5.13% during 2002.

Interest Expense. Interest expense for 2003 was $2.0 million compared to $2.5
million for 2002, a decrease of $442,000, or 17.91%. The decrease was the result
of the declining rate environment. This allowed the Company to reprice a
substantial amount of its deposits at lower rates. The average rate paid on
interest-bearing liabilities was 2.70% for 2003 compared to 3.68% for 2002.

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
$304,000 or 10.14% from $3.0 million in 2002 to $3.3 million in 2003. The net
interest margin decreased slightly to 3.58% for 2003 from 3.60% for 2002.

Provision for Loan Losses. The Company 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. The Company's
policies require the review of the loan portfolio on a regular basis, and
management appropriately classifies loans. The Company 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 and other factors.

The Company's provision for loan losses increased by 19.57% or $46,000 for 2003
to $281,000 from $235,000 for 2002. Gross charge-offs in 2003 were $355,000 or
$111,000 higher than gross charge-offs in 2002 of $244,000. Gross charge-offs in
2003 and 2002 were all related to unsecured loan products. Recoveries on
previously charged-off loans were $11,000 in 2003 compared to $38,000 in 2002.
Non-performing loans to total loans at June 30, 2003 were at .02% compared to
..11% at June 30, 2002. The allowance for loan losses to gross loans receivable
was .67% at June 30, 2003 compared to .97% at June 30, 2002. Management believes
the decrease of .30% of loans correlates to a significant shift to a more
secured loan portfolio. The Company 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, 2003, first mortgage and home equity loans
comprise nearly 62% of the loan portfolio compared to 35% at June 30, 2002. In
addition, approximately $24 million of first mortgage loans were purchased in
June 2003. Unsecured loans dropped from 30% of the loan portfolio in 2002 to 18%
of the loan portfolio at June 30, 2003.


                                       13
<PAGE>

Approximately 93% of our customer base consists of American Airlines pilots and
their family members. Although this customer base had historically relatively
stable employment and sources of income, the terrorist attacks on the United
States in September 2001, the war in Iraq and the current economic environment
have adversely affected the airline industry including American Airlines. As a
result of these factors, the stability of the employment and income of the
American Airline pilots has been adversely affected and could negatively affect
the ability of our customers to repay their loans, although the effect on our
loan delinquencies and loan losses cannot be identified with reasonable
certainty at this time. As a result of these factors, we may have higher loan
delinquencies and defaults in future periods.

Non-interest Income. Non-interest income for 2003 was $800,000 compared to
$780,000 for 2002, an increase of $20,000, or 2.56%. Credit and debit card
transaction income and other fees are the largest category of non-interest
income and was $678,000 in 2003 compared to $671,000 for 2002. Account fees,
which are included in the totals above, were $148,000 in 2003, an increase of
$48,000 or 48.00% compared to $100,000 in 2002. The primary reason for the
increase in account fees is the establishment of an overdraft privilege program,
which allows customers to overdraft their checking accounts up to a specific
dollar threshold for a fee. This has increased overdraft fees by approximately
$35,000 or 37.00%. For 2003, the fees collected for first mortgages originated
and sold increased by $15,000 as a result of higher volumes than the prior
period. In 2003, $15.7 million of first mortgages were originated and sold
compared to $13.9 million in 2002. These loans are underwritten by the investor
and bought at par value from the Company. The Company initially funds the loans
and they are generally purchased within a few days. The Company receives a
standard fee based on the funded loan amount plus daily interest. The standard
fee was .50% or 50 basis points for both 2002 and 2003.

Non-interest Expense. Non-interest expense for 2003 was $3.2 million compared to
$3.1 million for 2002, an increase of $129,000 or 4.22%. For 2003 salary and
employee benefits totaled $1.2 million compared to $1.1 million for 2002 or an
increase of $107,000 or 9.67%. This increase is attributable to normal merit
increases, increased participants in retirement plans, as well the increased
cost of health coverage. Marketing and promotion expense for 2003 was $237,000
compared to $171,000 for 2002 for an increase of $66,000 or 38.60%. The Company
has continued to increase its marketing efforts within its existing customer
base as well as to new customer bases. Marketing efforts have expanded to
include trade magazines and local newspaper advertisements, which accounts for a
significant portion of the additional marketing and promotion expense.

Income Tax Expense (Benefit). For 2003, there was income tax expense of
$250,000, a $293,000 increase over the tax benefit recorded in 2002. For 2002,
the Company 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 2001 been subject to
income taxes, we would have recorded additional income tax expense of $25,000.
The increase in income tax expense in 2003 is a result of a 30.56% increase in
income before income taxes and the non-recurring tax benefit recorded in 2002.


                                       14
<PAGE>

Capital

Consistent with the Company's goal to operate a sound and profitable financial
organization, management actively seeks to maintain a "well capitalized"
institution in accordance with regulatory standards. As discussed in Note 2 in
the Consolidated Financial Statements - Plan Of Stock Conversion in the
Company's financial statements, the Board of Directors' initiated a two-step
plan to improve the Credit Union's capital position. The first step of the plan
was to convert the Credit Union's charter to an Illinois mutual savings bank. In
conjunction with the first step of the plan, the Bank issued subordinated
capital notes, qualifying as Tier II capital, in the amount of $1,000,000 to
provide for a total risk-based capital ratio of at least 8% (adequately
capitalized). Effective September 1, 2001, the Bank converted its 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 the Bank in order to enable it
to meet the capital requirements of a Federal Deposit Insurance Corporation
(FDIC) insured institution and to support the future growth of the 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 the Bank 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.

Pursuant to federal law, Allied First Bank must meet three separate minimum
capital ratio requirements. As of June 30, 2003, Allied First Bank had core
capital, Tier I risk-based and total risk-based ratios of 9.5%, 12.1% and 12.9%
compared to well-capitalized requirements of 5.00%, 6.00% and 10.00%. At June
30, 2002, Allied First Bank had core capital, Tier I risk-based and total
risk-based ratios of 11.9%, 13.6% and 14.5%.

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 the Company'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 the
Company's consolidated financial position or results of operations for 2003. The
following is a discussion of recent accounting pronouncements.

The Financial Accounting Standards Board (FASB) recently issued two new
accounting standards, Statement 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities, and Statement 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equities,
both of which generally become effective in the quarter beginning July 1, 2003.
Because the Company does not have these instruments or is normally not involved
in these instruments, the new accounting standards will not materially affect
the Company's operating results or financial condition.


                                       15
<PAGE>

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 the Company'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 communication between the Chief Executive Officer
and each department head to identify any new transactions, events, trends or
contingencies which may be material to 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 have not been any
significant changes in such internal controls subsequent to the date of their
evaluation.


                                       16
<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. as of June 30, 2003 and 2002 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 the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with 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, 2003 and 2002, 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 LLC
                                                --------------------------------
                                                Crowe Chizek and Company LLC

Oak Brook, Illinois
July 30, 2003

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


                                       17
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                             June 30, 2003 and 2002

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

<TABLE>
<CAPTION>
                                                                            2003             2002
                                                                            ----             ----
<S>                                                                    <C>              <C>
ASSETS
Interest earning cash and cash equivalents                             $   3,035,791    $   7,363,100
Time deposits in other financial institutions                              2,579,257        3,869,403
Membership shares at corporate credit union                                  558,000          558,000
Securities available for sale                                              3,805,606        6,357,945
Loans held for sale                                                          734,151               --
Loans, net                                                                87,250,293       66,911,855
Premises and equipment, net                                                   66,050           67,932
Federal Home Loan Bank stock, at cost                                      1,640,100        1,532,400
Accrued interest receivable                                                  315,421          269,613
Servicing agent receivable                                                 1,105,087               --
Other assets                                                                 471,755          353,970
                                                                       -------------    -------------

     Total assets                                                      $ 101,561,511    $  87,284,218
                                                                       =============    =============


LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
     Non interest bearing deposits                                     $   8,385,779    $   8,654,978
     Interest bearing deposits                                            82,857,586       68,064,386
                                                                       -------------    -------------
         Total deposits                                                   91,243,365       76,719,364
     Other liabilities                                                       501,753          491,928
                                                                       -------------    -------------
         Total liabilities                                                91,745,118       77,211,292

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 558,350 shares outstanding at
       June 30, 2003 and 608,350 shares outstanding at June 30, 2002           6,084            6,084
     Additional paid in capital                                            5,271,948        5,271,948
     Retained earnings                                                     5,162,001        4,775,108
     Accumulated other comprehensive income, net of tax                       38,860           19,786
     Treasury stock, at cost 50,000 shares                                  (662,500)              --
                                                                       -------------    -------------
         Total shareholders' equity                                        9,816,393       10,072,926
                                                                       -------------    -------------

                  Total liabilities and shareholders' equity           $ 101,561,511    $  87,284,218
                                                                       =============    =============
</TABLE>

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

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


                                       18
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                       Years ended June 30, 2003 and 2002

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

<TABLE>
<CAPTION>
                                                                   2003          2002
                                                                   ----          ----

<S>                                                            <C>           <C>
Interest income
     Loan, including fees                                      $ 4,734,738   $ 4,970,301
     Taxable securities                                            303,841       137,785
     Deposits with financial institutions                          289,062       357,770
                                                               -----------   -----------
                                                                 5,327,641     5,465,856

Interest expense
     Deposits                                                    2,010,122     2,439,480
     Other                                                          15,891        28,863
                                                               -----------   -----------
                                                                 2,026,013     2,468,343

Net interest income                                              3,301,628     2,997,513

Provision for loan losses                                          281,000       235,000
                                                               -----------   -----------

Net interest income after
  provision for loan losses                                      3,020,628     2,762,513

Noninterest income
     Credit and debit card transaction income and other fees       678,010       670,786
     First mortgage loan fees                                       87,156        72,111
     Net gain on the sale of securities available for sale           4,132            --
     Other                                                          30,214        37,227
                                                               -----------   -----------
                                                                   799,512       780,124
Noninterest expense
     Salaries and employee benefits                              1,213,238     1,106,422
     Office operations and equipment                               408,771       428,271
     Credit and debit card processing                              521,141       523,431
     Travel and conference                                          77,066        83,734
     Professional services                                         310,216       327,703
     Marketing and promotions                                      236,728       171,094
     Data processing                                               246,244       235,623
     Occupancy                                                      91,312        78,798
     Other                                                          80,351       100,063
                                                               -----------   -----------
                                                                 3,183,637     3,055,139
                                                               -----------   -----------

Income before income taxes                                         636,503       487,498

Income tax expense (benefit)                                       249,610       (43,436)
                                                               -----------   -----------

Net income                                                     $   386,893   $   530,934
                                                               ===========   ===========

Earnings per common share:
     Basic                                                     $       .64   $       .24
     Diluted                                                           .64           .24
</TABLE>

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

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


                                       19
<PAGE>

                           ALLIED FIRST BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                       Years ended June 30, 2003 and 2002

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

<TABLE>
<CAPTION>
                                                                                     Accumulated
                                                                                        Other
                                                      Additional                     Comprehensive                        Total
                                         Common        Paid in        Retained         Income,         Treasury       Shareholders'
                                         Stock         Capital        Earnings        Net of Tax        Stock            Equity
                                         -----        ----------      --------      --------------      -----            ------
<S>             <C>                   <C>            <C>             <C>              <C>             <C>             <C>
Balance at July 1, 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

Net income                                     --             --         386,893               --              --         386,893

Net change in unrealized
   appreciation on securities
   available for sale, net of tax              --             --              --           19,074              --          19,074
                                                                                                                      -----------

Comprehensive income                           --             --              --               --              --         405,967

Purchase of treasury stock,
  50,000 shares                                --             --              --               --        (662,500)       (662,500)
                                      -----------    -----------     -----------      -----------     -----------     -----------

Balance at June 30, 2003              $     6,084    $ 5,271,948     $ 5,162,001      $    38,860     $  (662,500)    $ 9,816,393
                                      ===========    ===========     ===========      ===========     ===========     ===========
</TABLE>

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

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


                                       20
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       Years ended June 30, 2003 and 2002

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

<TABLE>
<CAPTION>
                                                                                       2003            2002
                                                                                       ----            ----
<S>                                                                                <C>             <C>
Cash flows from operating activities
     Net income                                                                    $    386,893    $    530,934
     Adjustments to reconcile net income to net cash from
       operating activities
         Depreciation                                                                    44,409          53,109
         Net amortization of securities                                                 136,485          10,838
         Net gain on the sale of securities available for sale                           (4,132)             --
         Provision for loan losses                                                      281,000         235,000
         FHLB stock dividend                                                           (107,700)        (57,500)
         Changes in
              Loans held for sale                                                      (734,151)             --
              Servicing agent receivable                                             (1,105,087)             --
              Accrued interest receivable                                               (45,808)        (79,838)
              Other assets                                                             (129,404)        (25,381)
              Other liabilities                                                           9,825         174,320
                                                                                   ------------    ------------
                  Net cash from operating activities                                 (1,267,670)        841,482

Cash flows from investing activities
     Changes in
         Time deposits in other financial institutions                                1,290,146      (3,869,403)
         Membership shares at corporate credit union                                         --         164,000
         Loans, net                                                                  12,572,877      (1,494,601)
         NCUSIF deposit                                                                      --         618,802
     Purchase of loans                                                              (33,192,315)     (2,102,987)
     Purchase of securities available for sale                                       (6,068,154)     (7,045,638)
     Proceeds from sale of securities available for sale                              4,172,635              --
     Paydown and maturity of securities available for sale                            4,346,198         708,871
     Purchase of Federal Home Loan Bank stock                                                --      (1,237,775)
     Purchase of premises and equipment                                                 (42,527)        (38,593)
                                                                                   ------------    ------------
              Net cash from investing activities                                    (16,921,140)    (14,297,324)

Cash flows from financing activities
     Net change in deposits                                                          14,524,001        (914,290)
     Borrowings                                                                      11,500,000              --
     Repayment of borrowings                                                        (11,500,000)             --
     Proceeds from issuance of subordinated debt                                             --       1,000,000
     Redemption of subordinated debt                                                         --      (1,000,000)
     Repurchase of common stock                                                        (662,500)             --
     Proceeds from sale of common stock, net of conversion
       costs                                                                                 --       5,278,032
                                                                                   ------------    ------------
              Net cash from financing activities                                     13,861,501       4,363,742

Net change in cash and cash equivalents                                              (4,327,309)     (9,092,100)

Cash and cash equivalents at beginning of year                                        7,363,100      16,455,200
                                                                                   ------------    ------------

Cash and cash equivalents at end of year                                           $  3,035,791    $  7,363,100
                                                                                   ============    ============

Supplemental disclosures of cash flow information Cash paid during the year for:
         Interest                                                                  $  2,024,584    $  2,469,075
         Income taxes                                                              $    238,945    $         --
</TABLE>

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

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


                                       21
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Nature of Operations and Concentrations of Credit Risk: The Company, formally
known as Allied Pilots Association Federal Credit Union (see Note 2),
headquartered in Naperville, Illinois, provides a broad range of financial
services to its customers. The Company's primary services include accepting
deposits and making loans. The Company grants consumer (including credit card),
mortgage (including commercial real estate) and home equity loans to its
customers. The customers of the Company 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, 2003 and 2002, unsecured loans represented 18% and 30% of gross loans. The
customer base of the Company as a credit union was 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 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.
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.

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


                                       22
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

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, purchased loan premiums, and an allowance for loan losses. Loans 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.

The Company has purchased certain real estate loans at premiums. The loan
premiums are recognized as an adjustment to interest income over the life of the
loans.

The Company does not currently charge loan origination fees. Certain direct loan
origination costs are deferred for loans originated by the Company, 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 Company's past loan
loss experience, peer group information, 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. Large
groups of smaller balance homogenous loans, such as consumer and residential
real estate loans, are collectively evaluated for impairment, and accordingly,
they are not separately identified for impairment disclosures. 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, the Company will originate first mortgage
loans. Most of these loans are sold within a few days of origination at their
carrying value. All sales are made without recourse. Upon the sale of the loan,
the Company receives a fee equivalent to a stated percentage of the funded loan
amount. The fee was .50% in 2003 and 2002. Beginning in 2002, the Company has
retained some first mortgage loans in its portfolio.

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


                                       23
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

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.

Servicing Agent Receivable: The Bank has loans purchased from other financial
institutions that are serviced by those other financial institutions. The
servicing agent remits payments received from borrowers at least monthly. These
cash amounts are reflected as a servicing agent receivable on the consolidated
balance sheets.

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.

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: The Company 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. The
Company 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 the first two
operating months of fiscal year 2002.

Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of shares outstanding during the period. For 2002
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, 2003
and 2002, no plans existed to cause additional potential common shares.

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

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


                                       24
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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. The Company reports net cash flows for loan
and deposit transactions, loans held for sale, servicing agent receivable,
corporate credit union membership shares, and the NCUSIF 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 is 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 the Company's chief decision-makers monitor 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
the Company'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.

Recent Accounting Pronouncements: The Financial Accounting Standards Board
(FASB) recently issued two new accounting standards, Statement 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities, and Statement
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equities, both of which generally become effective in the
quarter beginning July 1, 2003. Because the Company does not have these
instruments or is normally not involved in these instruments, the new accounting
standards will not materially affect the Company's operating results or
financial condition.

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


                                       25
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 2 - PLAN OF STOCK CONVERSION

On September 1, 2001, the Bank converted from a credit union to an Illinois
mutual savings bank as the first part in a two-part plan to improve the capital
position of the credit union. In conjunction with the first part of the plan,
the 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 the Bank
as adequately capitalized. In the second part of the Plan, on September 17,
2001, the Board of Directors of the 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 the 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, the
Company 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 the Company to acquire all of the capital stock
of the 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 the Bank at historical cost.

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

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


                                       26
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 3 - RESTRICTED FUNDS

As a credit union, the Company 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.

The Company also maintains compensating balances for credit card clearings at
other financial institutions totaling $342,871 and $443,804 at June 30, 2003 and
2002.

NOTE 4 - SECURITIES

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

                                                         Gross         Gross
                                            Fair       Unrealized    Unrealized
                                            Value        Gains         Losses
                                            -----      ----------    ----------
Available for Sale

2003
    U.S. Government agency securities
      (mortgaged-backed securities)      $ 3,805,606   $    62,709   $        --
                                         ===========   ===========   ===========

Available for Sale

2002
    U.S. Government agency securities
      (mortgaged-backed securities)      $ 6,357,945   $    32,016   $        --
                                         ===========   ===========   ===========

Sales of available for sale securities
  were as follows                                    2003             2002
                                                     ----             ----

   Proceeds                                      $ 4,172,635      $        --
   Gross gains                                        23,362               --
   Gross losses                                      (19,230)              --

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


                                       27
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 5 - LOANS

At June 30, 2003 and 2002, loans were as follows:

                                                   2003                 2002
                                                   ----                 ----

Vehicle                                       $ 11,464,619         $ 14,677,518
Residential 1 - 4 family                        32,626,573            2,939,304
Commercial real estate                           1,221,515                   --
Airplane                                         3,311,589            4,746,184
Boat                                             3,042,627            4,303,708
Signature (unsecured)                            4,176,429            5,225,091
Lines of credit (unsecured)                      7,169,633            9,267,658
Deposit secured                                     86,745              111,656
Home equity                                     19,374,975           20,642,383
Credit card (unsecured)                          4,769,667            5,565,592
                                              ------------         ------------
                                                87,244,372           67,479,094
Allowance for loan losses                         (592,373)            (655,633)
Unamortized premiums                               457,371                   --
Net deferred loan costs                            140,923               88,394
                                              ------------         ------------

                                              $ 87,250,293         $ 66,911,855
                                              ============         ============

During 2003, the Company purchased loans from other financial institutions
totaling $33,192,315. These loans were primarily first mortgage loans secured by
1 to 4 family residential properties. Approximately $24 million of such loans
were purchased in June 2003.

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

                                                       2003              2002
                                                       ----              ----

Balance at beginning of period                      $ 655,633         $ 626,715
Provision for loan losses                             281,000           235,000
Loans charged-off                                    (355,099)         (243,675)
Recoveries on charged-off loans                        10,839            37,593
                                                    ---------         ---------

Balance at end of period                            $ 592,373         $ 655,633
                                                    =========         =========

At June 30, 2003 and 2002, loans for which the accrual of interest had been
discontinued amounted to approximately $16,000 and $71,000. There were no loans
individually classified as impaired at or during the years ended June 30, 2003
and 2002.

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


                                       28
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 6 - PREMISES AND EQUIPMENT

At year end, premises and equipment were as follows:

                                                       2003              2002
                                                       ----              ----

Furniture, fixtures and equipment                   $  80,050         $  70,358
Leasehold improvements                                 31,930            31,930
Computer equipment                                    382,566           349,732
                                                    ---------         ---------
                                                      494,546           452,020
Accumulated depreciation                             (428,496)         (384,088)
                                                    ---------         ---------

                                                    $  66,050         $  67,932
                                                    =========         =========

In June 2003, the Company signed a contract with a new computer system service
provider. The contract amount to convert to the new system is approximately
$108,000 and at June 30, 2003 approximately $54,000 was paid and is included as
a prepaid asset.

NOTE 7 - DEPOSITS

Time deposits in denominations of $100,000 or more at June 30, 2003 and 2002
totaled approximately $4,496,000 and $5,439,000.

At year end 2003, the scheduled maturities of time deposits are as follows:

              2004                               $ 10,653,248
              2005                                  3,492,052
              2006                                  2,451,699
              2007                                  1,074,522
              2008                                  1,169,861
                                                 ------------

                                                 $ 18,841,382
                                                 ============

NOTE 8 - EMPLOYEE BENEFITS

The Company sponsors a noncontributory, defined contribution plan covering
substantially all employees who meet certain age and service requirements. The
Company's contribution is made at the discretion of the Board of Directors and
was 10% of eligible employees' salaries for 2003 and 2002. Plan expense was
approximately $79,000 and $74,000 in 2003 and 2002. The plan provides for 100%
vested interest after completion of five years of service.

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


                                       29
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 8 - EMPLOYEE BENEFITS (Continued)

The Company also maintains a 401(k) plan covering substantially all employees
who meet certain age and service requirements. The Company matches 50% of
employee contributions to this plan up to 10%. The Company's matching
contribution and expense for the 401(k) plan was approximately $24,000 and
$23,000 for 2003 and 2002.

NOTE 9 - INCOME TAXES

As a credit union, the Company was not subject to federal income taxes or state
income taxes. Effective September 1, 2001, the Company 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, the 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.

Income tax expense (benefit) was as follows for the years ended June 30, 2003
and 2002.

                                                           2003          2002
                                                           ----          ----

Current federal                                         $ (56,099)    $ 148,771
Current state                                              (7,281)       33,784
Deferred federal                                          274,379       (17,129)
Deferred state                                             38,611        (3,862)
Change in tax status                                           --      (205,000)
                                                        ---------     ---------

    Total expense (benefit)                             $ 249,610     $ (43,436)
                                                        =========     =========

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

                                                            2003         2002
                                                            ----         ----
Federal statutory rate times financial statement
  income                                                 $ 216,411    $ 165,749
Effect of:
    Tax-exempt earnings from July 1, 2001
      through August 31, 2002                                   --      (24,693)
    Change in tax status                                        --     (205,000)
    State taxes, net of federal benefit                     12,716       19,686
    Other, net                                              20,483          822
                                                         ---------    ---------

    Total expense (benefit)                              $ 249,610    $ (43,436)
                                                         =========    =========

Effective federal tax rate is 34%.

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


                                       30
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 9 - INCOME TAXES (Continued)

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

                                                        2003             2002
                                                        ----             ----
Deferred tax assets:
    Allowance for loan losses                        $      --        $ 182,804
    Accumulated depreciation                            31,487           65,463
                                                     ---------        ---------
         Total                                          31,487          248,267
                                                     ---------        ---------

Deferred tax liabilities:
    Allowance for loan losses                          (49,290)              --
    FHLB stock dividends                               (56,999)         (22,276)
    Net unrealized appreciation on
      securities available for sale                    (23,489)         (12,230)
    Other                                              (12,197)              --
                                                     ---------        ---------
         Total                                        (141,975)         (34,506)
                                                     ---------        ---------

Net deferred tax asset (liability)                   $(110,488)       $ 213,761
                                                     =========        =========

There is no valuation allowance at June 30, 2003 and 2002.

NOTE 10 - RELATED PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates in 2003 and 2002
were as follows:

                                                                         2003
                                                                         ----

Beginning balance                                                     $ 126,121
New loans                                                                    --
Effect of changes in related parties                                         --
Repayments                                                              (19,673)
                                                                      ---------
Ending balance                                                        $ 106,448
                                                                      =========

Deposits from principal officers, directors, and their affiliates at year end
2003 and 2002 were $213,000 and $206,000.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

The Company 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. The Company'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

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


                                       31
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 11 - COMMITMENTS AND CONTINGENCIES (Continued)

represented by the contractual amount of those instruments. The Company uses the
same credit policy to make such commitments as it uses for on-balance-sheet
items.

Off-balance-sheet commitments are as follows:

                                     2003                        2002
                                     ----                        ----
                           Fixed Rate  Variable Rate   Fixed Rate  Variable Rate
                           ----------  -------------   ----------  -------------

First mortgages           $ 2,949,000   $17,100,000   $        --   $        --
Home equity lines                  --    10,737,000            --     8,306,000
Other lines of credit      26,610,000     5,025,000    26,705,000     5,115,000
Credit cards               31,938,000            --    18,877,000            --
Overdraft protection        2,372,000            --     2,221,000            --
                          -----------   -----------   -----------   -----------

                          $63,869,000   $32,862,000   $47,803,000   $13,421,000
                          ===========   ===========   ===========   ===========

At June 30, 2003 and 2002, the interest rate for other lines of credit
commitments with a fixed rate was 11.9%. At June 30, 2003 and 2002, the range of
interest rates on credit card commitments was 9.9% to 14.9%. At June 30, 2003,
the range of interest rates on fixed rate first mortgages was 4.75% to 6.00%.
There were no fixed rate first mortgages at June 30, 2002. With proper notice
provided to the customer, the Company can change the rates on credit cards at
its discretion.

At June 30, 2003, the Company had commitments to purchase first mortgage loans
secured by residential properties totaling $20,049,000. The weighted average
interest was 4.62% and the loan terms were 30 year fixed and variable. These
loans were purchased on July 29, 2003. The Company partially funded the purchase
from proceeds on Federal Home Loan Bank advances in the amount of $15,000,000.
The terms of the advances were one, two and three years with $5.0 million due in
each year and have fixed interest rates of 1.34%, 1.70% and 2.12%.

At June 30, 2003 and 2002, the Company had a federal funds overnight line of
credit available at LaSalle Bank totaling $4,000,000. There were no amounts
outstanding at June 30, 2003 and 2002. The interest rate is determined by
LaSalle Bank from time to time based upon current market conditions.

At June 30, 2003, the Company had a line of credit available at the Federal Home
Loan Bank of Chicago totaling approximately $23 million. There were no amounts
outstanding as of June 30, 2003. The interest rate is determined by the Federal
Home Loan Bank of Chicago from time to time based upon current market
conditions.

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


                                       32
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 11 - COMMITMENTS AND CONTINGENCIES (Continued)

The Company is obligated under a non-cancelable operating lease for office
space. This lease expires October 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 $86,000
and $65,000 for 2003 and 2002.

The Company is currently negotiating with the current lessor for new space in
the same facility. Management anticipates negotiating a five-year lease term
with additional space.

The future minimum commitments at June 30, 2003 for all noncancelable leases are
as follows:

         Year Ending June 30,                        Amount
         --------------------                        ------
               2004                                $  34,424
                                                   =========

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>
                                                  2003                            2002
                                                  ----                            ----
                                         Carrying       Estimated        Carrying       Estimated
                                          Amount        Fair Value        Amount        Fair Value
                                         --------       ----------       --------       ----------
<S>                                    <C>             <C>             <C>             <C>
FINANCIAL ASSETS
    Cash and cash equivalents          $  3,035,791    $  3,036,000    $  7,363,100    $  7,363,000
    Time deposits in other financial
      institutions                        2,579,257       2,579,000       3,869,403       3,869,000
    Membership shares at corporate
      credit union                          558,000         558,000         558,000         558,000
    Securities available for sale         3,805,606       3,806,000       6,357,945       6,358,000
    Loans held for sale                     734,151         734,000              --              --
    Loans, net                           87,250,293      88,054,293      66,911,855      67,646,000
    Federal Home Loan Bank stock          1,640,100       1,640,000       1,532,400       1,532,000
    Accrued interest receivable             315,421         315,000         269,613         270,000
    Servicing agent receivable            1,105,087       1,105,000              --              --

FINANCIAL LIABILITIES
    Deposits with no
      stated maturities                $(72,401,983)   $(72,402,000)   $(58,431,789)   $(58,432,000)
    Deposits with
      stated maturities                 (18,841,382)    (19,501,000)    (18,287,575)    (18,717,000)
</TABLE>

For purposes of the disclosures of estimated fair value, the following
assumptions were used as of June 30, 2003 and 2002. The estimated fair value for
cash and cash equivalents, time deposits in other financial institutions,
servicing agent receivable and accrued interest is considered to

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


                                       33
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

approximate cost. The carrying amount of Federal Home Loan Bank stock and
membership shares at corporate credit union 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
held for sale is equal to the carrying amount as such loans are sold at par
value. The estimated fair value for loans is based on estimates of the rate the
Company would charge for similar such loans at June 30, 2003 and 2002, 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 the Company would pay on such deposits at June 30, 2003 and 2002,
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

The 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, including
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, 2003 and 2002 the Bank was classified as well-capitalized. There are
no conditions or events since that notification that management believes have
changed the Bank's category.

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


                                       34
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 13 - REGULATORY CAPITAL REQUIREMENTS (Continued)

Actual and required capital amounts (in millions) and ratios are presented below
for June 30, 2003 and 2002.

<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>
2003
Total capital to risk
  weighted assets                $  9.92      12.9%    $  6.17       8.0%    $  7.72      10.0%

Tier 1 (Core) capital to risk
  weighted assets                   9.33      12.1        3.09       4.0        4.63       6.0

Tier 1 (Core) capital to
  average assets                    9.33       9.5        3.92       4.0        4.90       5.0

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
</TABLE>

One of the principal sources of cash for the Company is dividends from the Bank.
Regulatory agencies can place dividend restrictions on the Bank based on their
evaluation of its financial condition. No restrictions are currently imposed by
regulatory agencies on the Bank other than the limitations found in the
regulations that govern the payment of dividends to the Company. Under the most
restrictive of these regulations, the Bank is limited to paying dividends equal
to the net income per calendar year without prior regulatory approval.

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


                                       35
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 14 - PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

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

                            CONDENSED BALANCE SHEETS
                             June 30, 2003 and 2002

                                                        2003           2002
                                                        ----           ----

ASSETS
Cash and cash equivalents                           $    227,868   $     51,824
Investment in bank subsidiary                          9,545,975     10,006,513
Other assets                                              54,550         21,423
                                                    ------------   ------------
    Total assets                                    $  9,828,393   $ 10,079,760
                                                    ============   ============

LIABILITIES AND SHAREHOLDERS'  EQUITY
Other liabilities                                   $     12,000   $      6,834
Shareholders' equity                                   9,816,393     10,072,926
                                                    ------------   ------------
    Total liabilities and shareholders' equity      $  9,828,393   $ 10,079,760
                                                    ============   ============

                         CONDENSED STATEMENTS OF INCOME
                   Year ended June 30, 2003 and for the period
                     December 27, 2001 through June 30, 2002

                                                        2003           2002
                                                        ----           ----

Interest income                                     $        652   $      3,539
Dividend income from subsidiary                          920,000             --
Equity in undistributed income of subsidiary            (479,612)       177,701
                                                    ------------   ------------
                                                         441,040        181,260

Interest expense                                              --          2,933
Other expense                                             87,274         55,616
                                                    ------------   ------------
                                                          87,274         58,549

Income before income taxes                               353,766        122,691

Income tax expense (benefit)                             (33,127)       (21,423)
                                                    ------------   ------------

Net income                                          $    386,893   $    144,114
                                                    ============   ============

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


                                       36
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

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

                       CONDENSED STATEMENTS OF CASH FLOWS
                Year ended June 30, 2003 and for the period ended
                     December 27, 2001 through June 30, 2002

                                                        2003           2002
                                                        ----           ----
Cash flows from operating activities
  Net income                                        $   386,893    $   144,114
  Adjustments:
    Equity in undistributed income of subsidiary        479,612       (177,701)
    Change in other assets                              (33,127)       (21,423)
    Change in other liabilities                           5,166          6,834
                                                    -----------    -----------
        Net cash from operating activities              838,544        (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
  Purchase of common stock                             (662,500)            --
  Proceeds from sale of common stock, net of
    conversion costs                                         --      5,278,032
                                                    -----------    -----------
    Net cash from financing activities                 (662,500)     5,278,032
                                                    -----------    -----------

Net change in cash and cash equivalents                 176,044         51,824

Beginning cash and cash equivalents                      51,824             --
                                                    -----------    -----------

Ending cash and cash equivalents                    $   227,868    $    51,824
                                                    ===========    ===========

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


                                       37
<PAGE>

                           ALLIED FIRST BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2003 and 2002

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

NOTE 15 - EARNINGS PER COMMON SHARE

The factors used in the earnings per common share computation for the year ended
June 30, 2003 and for the period December 27, 2001 through June 30, 2002 are as
follows:

                                                             2003         2002
                                                             ----         ----
Basic
      Net income                                          $ 386,893    $ 144,114
                                                          =========    =========

      Weighted average common shares
        outstanding                                         601,048      608,350
                                                          =========    =========

    Basic earnings per common share                       $     .64    $     .24
                                                          =========    =========

Diluted
      Net income                                          $ 386,893    $ 144,114
                                                          =========    =========

      Weighted average common shares
        outstanding for basic earnings per
        common share                                        601,048      608,350
      Add:  Dilutive effects of potential
        common shares                                            --           --
                                                          ---------    ---------

      Average shares and dilutive potential
        common shares                                       601,048      608,350
                                                          =========    =========

    Diluted earnings per common share                     $     .64    $     .24
                                                          =========    =========

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


                                       38
<PAGE>

                    ALLIED FIRST BANCORP, INC. AND SUBSIDIARY
                             STOCKHOLDER INFORMATION

ANNUAL MEETING

The annual meeting of stockholders will be at 8:30 a.m., Naperville, Illinois
time, October 23, 2003, 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 the
Company's common stock and dividends paid for each quarter of fiscal 2003 and
for the period December 27, 2001 though June 30, 2002. These prices do not
represent actual transactions and do not include retail mark-ups, mark-downs or
commissions.

                                2003                           2002
                     High       Low     Dividends   High       Low     Dividends
                     ----       ---     ---------   ----       ---     ---------

First Quarter       $11.90     $10.60      N/A      $ N/A      $ N/A      N/A
Second Quarter       12.25      11.35      N/A      11.90      11.90      N/A
Third Quarter        12.55      11.70      N/A      12.10      11.66      N/A
Fourth Quarter       13.55      11.45      N/A      12.60      11.85      N/A

Allied First Bancorp, Inc. has not declared any dividends since its formation.
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, 2003, Allied First Bancorp, Inc. had approximately 217
stockholders of record and 558,350 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 60563                      (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, 2003, 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


                                       39
<PAGE>

                    ALLIED FIRST BANCORP, INC. AND SUBSIDIARY
                              CORPORATE INFORMATION

COMPANY AND BANK ADDRESS

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


DIRECTORS OF THE BOARD

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

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

               ALLIED FIRST BANCORP, INC. AND SUBSIDIARY OFFICERS

Kenneth L. Bertrand
President and Chief Executive Officer

INDEPENDENT AUDITORS             SPECIAL COUNSEL

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


                                       40