##### Table of Contents

---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



---



(Mark one)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended March 31, 2004



or



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



For the transition period from              to



Commission file number 0-18121



---



MAF BANCORP, INC.

(Exact name of registrant as specified in its charter)



---



|                                                      |  |                                     
|----------------------------------------------------- |  | ------------------------------------
|Delaware                                              |  | 36-3664868                          
|(State of Incorporation)                              |  | (I.R.S. Employer Identification No.)
|                                                      | 
|55th Street & Holmes Avenue Clarendon Hills, Illinois |  | 60514                               
|(Address of Principal Executive Offices)              |  | (Zip Code)                          



Registrants
telephone number: (630) 325-7300



---



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No ̈



Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act).    Yes  x    No ̈



The number of shares outstanding of the issuers common stock, par value
$.01 per share, was 32,684,947 at May 7, 2004.



---



---

##### Table of Contents

MAF BANCORP, INC. AND SUBSIDIARIES



FORM 10-Q



|         |  |                                                                                                                 |  |     
|-------- |  | --------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                 |  | Page
|Part I.  |  | Financial Information                                                                                           |  |     
|         |  |                                                                                                                
|Item 1.  |  | Financial Statements                                                                                            |  |     
|         |  |                                                                                                                
|         |  | Consolidated Statements of Financial Condition as of March 31, 2004 and December 31, 2003 (unaudited)           |  | 3   
|         |  |                                                                                                                
|         |  | Consolidated Statements of Operations for the Three Months Ended March 31, 2004 and 2003 (unaudited)            |  | 4   
|         |  |                                                                                                                
|         |  | Consolidated Statement of Changes in Stockholders Equity for the Three Months Ended March 31, 2004 (unaudited) |  | 5   
|         |  |                                                                                                                
|         |  | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003 (unaudited)            |  | 6   
|         |  |                                                                                                                
|         |  | Notes to Consolidated Financial Statements (unaudited)                                                          |  | 7   
|         |  |                                                                                                                
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                           |  | 11  
|         |  |                                                                                                                
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                      |  | 30  
|         |  |                                                                                                                
|Item 4.  |  | Controls and Procedures                                                                                         |  | 30  
|         |  |                                                                                                                
|Part II. |  | Other Information                                                                                               |  |     
|         |  |                                                                                                                
|Item 1.  |  | Legal Proceedings                                                                                               |  | 30  
|         |  |                                                                                                                
|Item 2.  |  | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities                                |  | 30  
|         |  |                                                                                                                
|Item 3.  |  | Defaults Upon Senior Securities                                                                                 |  | 31  
|         |  |                                                                                                                
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                             |  | 31  
|         |  |                                                                                                                
|Item 5.  |  | Other Information                                                                                               |  | 31  
|         |  |                                                                                                                
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                                |  | 31  
|         |  |                                                                                                                
|         |  | Signature Page                                                                                                  |  | 33  



2



---

##### Table of Contents

Part I. Financial Information



Item 1. Financial Statements



MAF BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(Dollars in thousands)

(Unaudited)



|                                                                                                                                                  |  |               |           |   |                  |          
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ---------------- | ---------
|                                                                                                                                                  |  | March 31,2004 |           |   | December 31,2003
|Assets                                                                                                                                            |  |               |           |   |                  |          
|Cash and due from banks                                                                                                                           |  | $             | 134,608   |   |                  | 144,290  
|Interest-bearing deposits                                                                                                                         |  |               | 58,452    |   |                  | 57,988   
|Federal funds sold                                                                                                                                |  |               | 15,502    |   |                  | 19,684   
|                                                                                                                                                  |  |               |           |   |                  |          
|Total cash and cash equivalents                                                                                                                   |  |               | 208,562   |   |                  | 221,962  
|                                                                                                                                                  |  |               |           |   |                  |          
|Investment securities available for sale, at fair value                                                                                           |  |               | 362,595   |   |                  | 365,334  
|Stock in Federal Home Loan Bank of Chicago, at cost                                                                                               |  |               | 390,893   |   |                  | 384,643  
|Mortgage-backed securities available for sale, at fair value                                                                                      |  |               | 940,003   |   |                  | 971,969  
|Mortgage-backed securities held to maturity (fair value of $105,856)                                                                              |  |               | 105,139   |   |                  |         
|Loans receivable held for sale                                                                                                                    |  |               | 36,696    |   |                  | 44,511   
|Loans receivable, net of allowance for losses of $34,437 and $34,555                                                                              |  |               | 6,417,514 |   |                  | 6,324,596
|Accrued interest receivable                                                                                                                       |  |               | 31,354    |   |                  | 31,168   
|Foreclosed real estate                                                                                                                            |  |               | 1,920     |   |                  | 3,200    
|Real estate held for development or sale                                                                                                          |  |               | 32,557    |   |                  | 32,093   
|Premises and equipment, net                                                                                                                       |  |               | 129,895   |   |                  | 122,817  
|Other assets                                                                                                                                      |  |               | 121,279   |   |                  | 130,615  
|Goodwill                                                                                                                                          |  |               | 262,217   |   |                  | 262,488  
|Intangibles                                                                                                                                       |  |               | 37,129    |   |                  | 38,189   
|                                                                                                                                                  |  |               |           |   |                  |          
|                                                                                                                                                  |  | $             | 9,077,753 |   |                  | 8,933,585
|                                                                                                                                                  |  |               |           |   |                  |          
|Liabilities and Stockholders Equity                                                                                                              |  |               |           |   |                  |          
|Liabilities:                                                                                                                                      |  |               |           |   |                  |          
|Deposits                                                                                                                                          |  | $             | 5,618,127 |   |                  | 5,580,455
|Borrowed funds                                                                                                                                    |  |               | 2,381,838 |   |                  | 2,299,427
|Advances by borrowers for taxes and insurance                                                                                                     |  |               | 44,404    |   |                  | 41,149   
|Accrued expenses and other liabilities                                                                                                            |  |               | 118,520   |   |                  | 110,950  
|                                                                                                                                                  |  |               |           |   |                  |          
|Total liabilities                                                                                                                                 |  |               | 8,162,889 |   |                  | 8,031,981
|                                                                                                                                                  |  |               |           |   |                  |          
|                                                                                                                                                  |  |              
|Stockholders equity:                                                                                                                             |  |               |           |   |                  |          
|Preferred stock, $.01 par value; authorized 5,000,000 shares; none outstanding                                                                    |  |               |          |   |                  |         
|Common stock, $.01 par value; 80,000,000 shares authorized; 33,121,465 and 33,063,853 shares issued; 32,915,327 and 33,063,853 shares
outstanding |  |               | 331       |   |                  | 331      
|Additional paid-in capital                                                                                                                        |  |               | 497,375   |   |                  | 495,747  
|Retained earnings, substantially restricted                                                                                                       |  |               | 418,435   |   |                  | 402,402  
|Accumulated other comprehensive income, net of tax                                                                                                |  |               | 6,510     |   |                  | 2,109    
|Stock in Gain Deferral Plan; 241,900 and 240,879 shares                                                                                           |  |               | 1,059     |   |                  | 1,015    
|Treasury stock, at cost; 206,138 shares at March 31, 2004                                                                                         |  |               | (8,846    | ) |                  |         
|                                                                                                                                                  |  |               |           |   |                  |          
|Total stockholders equity                                                                                                                        |  |               | 914,864   |   |                  | 901,604  
|                                                                                                                                                  |  |               |           |   |                  |          
|                                                                                                                                                  |  | $             | 9,077,753 |   |                  | 8,933,585
|                                                                                                                                                  |  |               |           |   |                  |          



See
accompanying notes to unaudited consolidated financial statements.



3



---

##### Table of Contents

MAF BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)



|                                                    |  |                              |         |      |        |  
|--------------------------------------------------- |  | ---------------------------- | ------- | ---- | ------ | -
|                                                    |  | Three Months Ended March 31, |        
|                                                    |  | 2004                         |         | 2003 |       
|Interest income:                                    |  |                              |         |      |        |  
|Loans receivable                                    |  | $                            | 82,908  |      | 66,985 |  
|Mortgage-backed securities available for sale       |  |                              | 9,012   |      | 3,523  |  
|Investment securities available for sale            |  |                              | 9,522   |      | 5,345  |  
|Interest-bearing deposits and federal funds sold    |  |                              | 565     |      | 1,173  |  
|                                                    |  |                              |         |      |        |  
|Total interest income                               |  |                              | 102,007 |      | 77,026 |  
|                                                    |  |                              |         |      |        |  
|Interest expense:                                   |  |                              |         |      |        |  
|Deposits                                            |  |                              | 17,253  |      | 16,962 |  
|Borrowed funds                                      |  |                              | 20,725  |      | 19,009 |  
|                                                    |  |                              |         |      |        |  
|Total interest expense                              |  |                              | 37,978  |      | 35,971 |  
|                                                    |  |                              |         |      |        |  
|Net interest income                                 |  |                              | 64,029  |      | 41,055 |  
|Provision for loan losses                           |  |                              | 300     |      |       |  
|                                                    |  |                              |         |      |        |  
|Net interest income after provision for loan losses |  |                              | 63,729  |      | 41,055 |  
|Non-interest income:                                |  |                              |         |      |        |  
|Gain (loss) on sale or writedown of:                |  |                              |         |      |        |  
|Loans receivable held for sale                      |  |                              | 1,780   |      | 7,548  |  
|Mortgage-backed securities                          |  |                              | 489     |      | 5,352  |  
|Investment securities                               |  |                              | 2,834   |      | (5,712 | )
|Foreclosed real estate                              |  |                              | 146     |      | (69    | )
|Income from real estate operations                  |  |                              | 1,102   |      | 1,635  |  
|Deposit account service charges                     |  |                              | 7,856   |      | 5,439  |  
|Loan servicing fee expense, net                     |  |                              | 241     |      | (1,376 | )
|Valuation recovery of mortgage servicing rights     |  |                              | 555     |      |       |  
|Brokerage commissions                               |  |                              | 1,096   |      | 731    |  
|Other                                               |  |                              | 4,296   |      | 2,467  |  
|                                                    |  |                              |         |      |        |  
|Total non-interest income                           |  |                              | 20,395  |      | 16,015 |  
|                                                    |  |                              |         |      |        |  
|Non-interest expense:                               |  |                              |         |      |        |  
|Compensation and benefits                           |  |                              | 25,634  |      | 15,638 |  
|Office occupancy and equipment                      |  |                              | 6,503   |      | 3,531  |  
|Advertising and promotion                           |  |                              | 2,407   |      | 1,321  |  
|Data processing                                     |  |                              | 2,118   |      | 973    |  
|Other                                               |  |                              | 9,488   |      | 4,833  |  
|Amortization of core deposit intangibles            |  |                              | 740     |      | 379    |  
|                                                    |  |                              |         |      |        |  
|Total non-interest expense                          |  |                              | 46,890  |      | 26,675 |  
|                                                    |  |                              |         |      |        |  
|Income before income taxes                          |  |                              | 37,234  |      | 30,395 |  
|Income tax expense                                  |  |                              | 12,440  |      | 11,107 |  
|                                                    |  |                              |         |      |        |  
|Net income                                          |  | $                            | 24,794  |      | 19,288 |  
|                                                    |  |                              |         |      |        |  
|Basic earnings per share                            |  | $                            | .75     |      | .83    |  
|                                                    |  |                              |         |      |        |  
|Diluted earnings per share                          |  | $                            | .73     |      | .81    |  
|                                                    |  |                              |         |      |        |  



See
accompanying notes to unaudited consolidated financial statements.



4



---

##### Table of Contents

MAF BANCORP, INC. AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders Equity

(Dollars in thousands)

(Unaudited)



|                                                                                                               |  |                                   |     |                          |         |                  |         |   |                                     |        |   |                          |       |               |         |   |       |         |  
|-------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | --- | ------------------------ | ------- | ---------------- | ------- | - | ----------------------------------- | ------ | - | ------------------------ | ----- | ------------- | ------- | - | ----- | ------- | -
|                                                                                                               |  | Three Months Ended March 31, 2004 |    
|                                                                                                               |  | Commonstock                       |     | Additionalpaid-incapital |         | Retainedearnings |         |   | Accumulatedothercomprehensiveincome |        |   | Stock ingaindeferralplan |       | Treasurystock |         |   | Total |        
|Balance at December 31, 2003                                                                                   |  | $                                 | 331 |                          | 495,747 |                  | 402,402 |   |                                     | 2,109  |   |                          | 1,015 |               |        |   |       | 901,604 |  
|                                                                                                               |  |                                   |     |                          |         |                  |         |   |                                     |        |   |                          |       |               |         |   |       |         |  
|Comprehensive income:                                                                                          |  |                                   |     |                          |         |                  |         |   |                                     |        |   |                          |       |               |         |   |       |         |  
|Net income                                                                                                     |  |                                   |    |                          |        |                  | 24,794  |   |                                     |       |   |                          |      |               |        |   |       | 24,794  |  
|Other comprehensive income, net of tax:                                                                        |  |                                   |     |                          |         |                  |         |   |                                     |        |   |                          |       |               |         |   |       |         |  
|Unrealized holding gain during the period                                                                      |  |                                   |    |                          |        |                  |        |   |                                     | 6,614  |   |                          |      |               |        |   |       | 6,614   |  
|Less: reclassification adjustment of gain included in net income                                               |  |                                   |    |                          |        |                  |        |   |                                     | (2,213 | ) |                          |      |               |        |   |       | (2,213  | )
|                                                                                                               |  |                                   |     |                          |         |                  |         |   |                                     |        |   |                          |       |               |         |   |       |         |  
|Total comprehensive income                                                                                     |  |                                   |    |                          |        |                  | 24,794  |   |                                     | 4,401  |   |                          |      |               |        |   |       | 29,195  |  
|                                                                                                               |  |                                   |     |                          |         |                  |         |   |                                     |        |   |                          |       |               |         |   |       |         |  
|Exercise of 145,558 stock options, issuing 57,612 new shares and reissuance of 87,946 shares of treasury stock |  |                                   |    |                          | 1,162   |                  | (1,810  | ) |                                     |       |   |                          |      |               | 2,551   |   |       | 1,903   |  
|Tax benefits from stock-related compensation                                                                   |  |                                   |    |                          | 466     |                  |        |   |                                     |       |   |                          |      |               |        |   |       | 466     |  
|Purchase of shares of treasury stock                                                                           |  |                                   |    |                          |        |                  |        |   |                                     |       |   |                          |      |               | (11,397 | ) |       | (11,397 | )
|Cash dividends declared ($.21 per share)                                                                       |  |                                   |    |                          |        |                  | (6,951  | ) |                                     |       |   |                          |      |               |        |   |       | (6,951  | )
|Dividends paid to gain deferral plan                                                                           |  |                                   |    |                          |        |                  |        |   |                                     |       |   |                          | 44    |               |        |   |       | 44      |  
|                                                                                                               |  |                                   |     |                          |         |                  |         |   |                                     |        |   |                          |       |               |         |   |       |         |  
|Balance at March 31, 2004                                                                                      |  | $                                 | 331 |                          | 497,375 |                  | 418,435 |   |                                     | 6,510  |   |                          | 1,059 |               | (8,846  | ) |       | 914,864 |  
|                                                                                                               |  |                                   |     |                          |         |                  |         |   |                                     |        |   |                          |       |               |         |   |       |         |  



See
accompanying notes to unaudited consolidated financial statements.



5



---

##### Table of Contents

MAF BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)



|                                                                                  |  |                              |          |   |      |          |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---- | -------- | -
|                                                                                  |  | Three Months Ended March 31, |         
|                                                                                  |  | 2004                         |          |   | 2003 |         
|Operating activities:                                                             |  |                              |          |   |      |          |  
|Net income                                                                        |  | $                            | 24,794   |   |      | 19,288   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |          |   |      |          |  
|Depreciation and amortization                                                     |  |                              | 3,259    |   |      | 1,805    |  
|Provision for loan losses                                                         |  |                              | 300      |   |      |         |  
|FHLB of Chicago stock dividend                                                    |  |                              | (6,250   | ) |      | (4,705   | )
|Deferred income tax (benefit) expense                                             |  |                              | 7,640    |   |      | (3,337   | )
|Amortization of core deposit intangibles                                          |  |                              | 740      |   |      | 379      |  
|Amortization of premiums, discounts, and deferred loan fees                       |  |                              | (2,719   | ) |      | 957      |  
|Amortization and valuation recovery of mortgage servicing rights                  |  |                              | 1,463    |   |      | 2,955    |  
|Net gain on sale of loans receivable held for sale                                |  |                              | (1,780   | ) |      | (7,548   | )
|Net (gain) loss on sale of investment securities and mortgage-backed securities   |  |                              | (3,322   | ) |      | 360      |  
|Net gain on real estate held for development or sale                              |  |                              | (1,102   | ) |      | (1,635   | )
|(Increase) decrease in accrued interest receivable                                |  |                              | (186     | ) |      | 4,883    |  
|Net increase in other assets and liabilities                                      |  |                              | 2,102    |   |      | 27,642   |  
|Loans purchased for sale                                                          |  |                              | (7,125   | ) |      |         |  
|Loans originated for sale                                                         |  |                              | (118,633 | ) |      | (378,761 | )
|Sale of loans originated for sale                                                 |  |                              | 134,578  |   |      | 483,502  |  
|                                                                                  |  |                              |          |   |      |          |  
|Net cash provided by operating activities                                         |  |                              | 33,759   |   |      | 145,785  |  
|                                                                                  |  |                              |          |   |      |          |  
|Investing activities:                                                             |  |                              |          |   |      |          |  
|Loans originated for investment                                                   |  |                              | (778,326 | ) |      | (676,734 | )
|Principal repayments on loans receivable                                          |  |                              | 581,587  |   |      | 628,512  |  
|Principal repayments on mortgage-backed securities                                |  |                              | 43,674   |   |      | 57,173   |  
|Proceeds from maturities of investment securities available for sale              |  |                              | 27,487   |   |      | 37,724   |  
|Proceeds from sale of:                                                            |  |                              |          |   |      |          |  
|Investment securities available for sale                                          |  |                              | 34,318   |   |      | 34,968   |  
|Mortgage-backed securities available for sale                                     |  |                              | 17,598   |   |      | 151,708  |  
|Real estate held for development or sale                                          |  |                              | 4,504    |   |      | 5,185    |  
|Purchases of:                                                                     |  |                              |          |   |      |          |  
|Investment securities available for sale                                          |  |                              | (55,057  | ) |      | (57,865  | )
|Mortgage-backed securities available for sale                                     |  |                              | (24,847  | ) |      | (61,383  | )
|Stock in FHLB of Chicago                                                          |  |                              |         |   |      | (30,000  | )
|Real estate held for development or sale                                          |  |                              | (1,191   | ) |      | (7,206   | )
|Premises and equipment                                                            |  |                              | (9,100   | ) |      | (3,662   | )
|                                                                                  |  |                              |          |   |      |          |  
|Net cash provided by (used in) investing activities                               |  | $                            | (159,353 | ) |      | 78,420   |  
|                                                                                  |  |                              |          |   |      |          |  
|Financing activities:                                                             |  |                              |          |   |      |          |  
|Proceeds from FHLB of Chicago advances                                            |  | $                            | 305,000  |   |      |         |  
|Repayment of FHLB of Chicago advances                                             |  |                              | (306,562 | ) |      | (55,000  | )
|Net change in other borrowings                                                    |  |                              | 87,225   |   |      |         |  
|Net increase in deposits                                                          |  |                              | 38,412   |   |      | 63,950   |  
|Increase in advances by borrowings for taxes and insurance                        |  |                              | 3,255    |   |      | 452      |  
|Proceeds from exercise of stock options                                           |  |                              | 2,069    |   |      | 486      |  
|Purchase of treasury stock                                                        |  |                              | (11,397  | ) |      |         |  
|Cash dividends paid                                                               |  |                              | (5,907   | ) |      | (3,450   | )
|                                                                                  |  |                              |          |   |      |          |  
|Net cash provided by financing activities                                         |  |                              | 112,095  |   |      | 6,438    |  
|                                                                                  |  |                              |          |   |      |          |  
|Increase (decrease) in cash and cash equivalents                                  |  |                              | (13,499  | ) |      | 230,643  |  
|Cash and cash equivalents at beginning of period                                  |  |                              | 221,962  |   |      | 262,680  |  
|                                                                                  |  |                              |          |   |      |          |  
|Cash and cash equivalents at end of period                                        |  | $                            | 208,463  |   |      | 493,323  |  
|                                                                                  |  |                              |          |   |      |          |  
|Supplemental disclosure of cash flow information:                                 |  |                              |          |   |      |          |  
|Cash paid during the period for:                                                  |  |                              |          |   |      |          |  
|Interest on deposits and borrowed funds                                           |  | $                            | 34,825   |   |      | 35,975   |  
|Income taxes                                                                      |  |                              | 501      |   |      | 1,278    |  
|Summary of non-cash transactions:                                                 |  |                              |          |   |      |          |  
|Transfer of loans receivable to foreclosed real estate                            |  |                              | 504      |   |      | 626      |  
|Loans receivable swapped into mortgage-backed securities                          |  | $                            | 104,582  |   |      | 103,289  |  
|                                                                                  |  |                              |          |   |      |          |  



See accompanying notes
to unaudited consolidated financial statements.



6



---

##### Table of Contents

MAF BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2004 and 2003

(Unaudited)



(1) Basis of Presentation



The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals)
necessary for a fair presentation have been included. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of results that may be expected for the year ending December 31, 2004.



The consolidated financial statements include the accounts of MAF Bancorp,
Inc. (Company), and its wholly-owned subsidiaries, Mid America Bank, fsb and subsidiaries (Bank) and MAF Developments, Inc. (MAFD), for the three month periods ended March 31, 2004 and 2003 and as of March 31,
2004 and December 31, 2003. All material intercompany balances and transactions have been eliminated in consolidation.



(2) Earnings Per Share



Earnings per share is determined by dividing net income for the period by the weighted average number of shares outstanding. Stock options are
regarded as potential common stock and are considered in the diluted earnings per share calculations to the extent that they have a dilutive effect. Stock options are the only adjustment made to average shares outstanding in computing diluted
earnings per share. Weighted average shares used in calculating earnings per share are summarized below for the periods indicated:



|                                                                 |  |                                               |        |                     |            |                 |   |                   |  |                     |        |                 |            |  |   |    
|---------------------------------------------------------------- |  | --------------------------------------------- | ------ | ------------------- | ---------- | --------------- | - | ----------------- |  | ------------------- | ------ | --------------- | ---------- |  | - | ---
|                                                                 |  | Three Months Ended March 31,                 
|                                                                 |  | 2004                                          |        | 2003               
|                                                                 |  | Income(Numerator)                             |        | Shares(Denominator) |            | Per-ShareAmount |   | Income(Numerator) |  | Shares(Denominator) |        | Per-ShareAmount
|                                                                 |  | (Dollars in thousands, except per share data)
|Basic earnings per share:                                        |  |                                               |        |                     |            |                 |   |                   |  |                     |        |                 |            |  |   |    
|Income available to common shareholders                          |  | $                                             | 24,794 |                     | 33,063,842 |                 | $ | .75               |  | $                   | 19,288 |                 | 23,300,671 |  | $ | .83
|                                                                 |  |                                               |        |                     |            |                 |   |                   |  |                     |        |                 |            |  |   |    
|Effect of dilutive securities:                                   |  |                                               |        |                     |            |                 |   |                   |  |                     |        |                 |            |  |   |    
|Stock options                                                    |  |                                               |        |                     | 867,927    |                 |   |                   |  |                     |        |                 | 551,513    |  |   |    
|                                                                 |  |                                               |        |                     |            |                 |   |                   |  |                     |        |                 |            |  |   |    
|Diluted earnings per share:                                      |  |                                               |        |                     |            |                 |   |                   |  |                     |        |                 |            |  |   |    
|Income available to common shareholders plus assumed conversions |  | $                                             | 24,794 |                     | 33,931,769 |                 | $ | .73               |  | $                   | 19,288 |                 | 23,852,184 |  | $ | .81
|                                                                 |  |                                               |        |                     |            |                 |   |                   |  |                     |        |                 |            |  |   |    



(3) Commitments and Contingencies



At March 31, 2004, the Bank had outstanding commitments
to originate mortgage loans of $815.9 million, of which $395.3 million were fixed-rate loans and $420.6 million were adjustable-rate loans. Prospective borrowers had locked the interest rate on $334.5 million of these commitments, of which $180.6
million were fixed-rate loans, with rates ranging from 4.125% to 7.0%, and $153.9 million were adjustable rate loans with rates ranging from 2.75% to 6.5%. The interest rates on the remaining commitments of $481.4 million float at current market
rates. At March 31, 2004, the Bank had outstanding forward commitments to sell $112.8 million of fixed-rate mortgage loans.



7



---

##### Table of Contents

At March 31, 2004, the Bank had outstanding standby letters of credit totaling $65.6 million. Of this
amount $42.4 million is comprised of letters of credit to enhance developers industrial revenue bond financings of commercial real estate in the Banks market. Additionally, the Company had outstanding standby letters of credit totaling
$5.0 million related to real estate development improvements.



The contractual amounts of credit-related financial instruments such as commitments to extend credit, and letters of credit, represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer default,
and the value of any existing collateral become worthless. At March 31, 2004, the Bank had $11.2 million of credit risk related to loans sold to the Federal Home Loan Bank Mortgage Partnership Finance Program (MPF), $62.7 million of
loans sold with recourse to other investors, and approximately $20.2 million of credit risk related to loans with private mortgage insurance in force.



(4) Statement of Cash Flows



For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, interest-bearing deposits and federal funds
sold. Generally, federal funds are sold for one-day periods and interest-bearing deposits mature within one day to three months.



(5) Reclassifications



Certain reclassifications of 2003 amounts have been made to conform with the current period presentation.



(6) Segment Information



The Company utilizes the management approach for segment reporting. This approach is based on the way that a
chief decision maker for the Company organizes segments for making operating decisions and assessing performance.



The Company operates two separate lines of business. The Banking segment represents the retail bank, which engages primarily in residential mortgage
portfolio lending, deposit gathering and offering other financial services mainly to individuals and small businesses. Land development consists primarily of acquiring and developing raw land into improved residential lots for sale to builders. All
goodwill has been allocated to the Banking segment. Selected segment information is included in the tables below:



|                           |  |                                   |           |                 |        |                   |          
|-------------------------- |  | --------------------------------- | --------- | --------------- | ------ | ----------------- | ---------
|                           |  | Three Months Ended March 31, 2004
|                           |  | Banking                           |           | LandDevelopment |        | ConsolidatedTotal
|                           |  | (In thousands)                   
|Interest income            |  | $                                 | 102,007   |                 |       |                   | 102,007  
|Interest expense           |  |                                   | 37,978    |                 |       |                   | 37,978   
|                           |  |                                   |           |                 |        |                   |          
|Net interest income        |  |                                   | 64,029    |                 |       |                   | 64,029   
|Provision for loan losses  |  |                                   | 300       |                 |       |                   | 300      
|Non-interest income        |  |                                   | 19,293    |                 | 1,102  |                   | 20,395   
|Non-interest expense       |  |                                   | 46,300    |                 | 590    |                   | 46,890   
|                           |  |                                   |           |                 |        |                   |          
|Income before income taxes |  |                                   | 36,722    |                 | 512    |                   | 37,234   
|Income tax expense         |  |                                   | 12,237    |                 | 203    |                   | 12,440   
|                           |  |                                   |           |                 |        |                   |          
|Net income                 |  | $                                 | 24,485    |                 | 309    |                   | 24,794   
|                           |  |                                   |           |                 |        |                   |          
|Average assets             |  | $                                 | 8,908,952 |                 | 32,929 |                   | 8,941,881
|                           |  |                                   |           |                 |        |                   |          



8



---

##### Table of Contents

|                           |  |                                   |           |                 |        |                   |          
|-------------------------- |  | --------------------------------- | --------- | --------------- | ------ | ----------------- | ---------
|                           |  | Three Months Ended March 31, 2003
|                           |  | Banking                           |           | LandDevelopment |        | ConsolidatedTotal
|                           |  | (In thousands)                   
|Interest income            |  | $                                 | 77,026    |                 |       |                   | 77,026   
|Interest expense           |  |                                   | 35,971    |                 |       |                   | 35,971   
|                           |  |                                   |           |                 |        |                   |          
|Net interest income        |  |                                   | 41,055    |                 |       |                   | 41,055   
|Non-interest income        |  |                                   | 14,379    |                 | 1,635  |                   | 16,014   
|Non-interest expense       |  |                                   | 26,105    |                 | 569    |                   | 26,674   
|                           |  |                                   |           |                 |        |                   |          
|Income before income taxes |  |                                   | 29,329    |                 | 1,066  |                   | 30,395   
|Income tax expense         |  |                                   | 10,684    |                 | 423    |                   | 11,107   
|                           |  |                                   |           |                 |        |                   |          
|Net income                 |  | $                                 | 18,645    |                 | 643    |                   | 19,288   
|                           |  |                                   |           |                 |        |                   |          
|Average assets             |  | $                                 | 5,909,086 |                 | 16,872 |                   | 5,925,958
|                           |  |                                   |           |                 |        |                   |          



(7) Goodwill and Intangible
Assets



Goodwill currently has a net
carrying amount of $262.2 million at March 31, 2004. The Company evaluates goodwill for impairment at least annually. An evaluation was completed as of May 31, 2003. No impairment was deemed necessary as a result of the Companys analysis.



All of the Companys goodwill is in the banking segment.
For the three months ended March 31, 2004 compared to December 31, 2003, the balance of goodwill decreased by $271,000 due to adjustments related to amounts recorded in connection with previous acquisitions.



The changes in the carrying amount of intangibles for the three months ended
March 31, 2004 is as follows:



|                             |  |                         |        |   |                            |        |   |       |        |  
|---------------------------- |  | ----------------------- | ------ | - | -------------------------- | ------ | - | ----- | ------ | -
|                             |  | Core DepositIntangibles |        |   | MortgageServicingRights(1) |        |   | Total |       
|                             |  | (Dollars in thousands)  |       
|Balance at December 31, 2003 |  | $                       | 14,061 |   |                            | 24,128 |   |       | 38,189 |  
|Additions                    |  |                         |       |   |                            | 1,248  |   |       | 1,248  |  
|Amortization expense         |  |                         | (740   | ) |                            | (2,123 | ) |       | (2,863 | )
|Valuation recovery           |  |                         |       |   |                            | 555    |   |       | 555    |  
|                             |  |                         |        |   |                            |        |   |       |        |  
|Balance at March 31, 2004    |  | $                       | 13,321 |   |                            | 23,808 |   |       | 37,129 |  
|                             |  |                         |        |   |                            |        |   |       |        |  



The following is a
summary of intangible assets subject to amortization:



|                             |  |                        |        |                         |         |   |                    |        |                      |        |                         |         |   |                    |       
|---------------------------- |  | ---------------------- | ------ | ----------------------- | ------- | - | ------------------ | ------ | -------------------- | ------ | ----------------------- | ------- | - | ------------------ | ------
|                             |  | As of March 31, 2004   |        | As of December 31, 2003
|                             |  | Gross CarryingAmount   |        | AccumulatedAmortization |         |   | Net CarryingAmount |        | Gross CarryingAmount |        | AccumulatedAmortization |         |   | Net CarryingAmount
|                             |  | (Dollars in thousands)
|Core deposit intangibles     |  | $                      | 24,570 |                         | (11,249 | ) |                    | 13,321 |                      | 24,570 |                         | (10,509 | ) |                    | 14,061
|Mortgage servicing rights(1) |  |                        | 27,612 |                         | (3,804  | ) |                    | 23,808 |                      | 26,988 |                         | (2,860  | ) |                    | 24,128
|                             |  |                        |        |                         |         |   |                    |        |                      |        |                         |         |   |                    |       
|Total                        |  | $                      | 52,182 |                         | (15,053 | ) |                    | 37,129 |                      | 51,558 |                         | (13,369 | ) |                    | 38,189
|                             |  |                        |        |                         |         |   |                    |        |                      |        |                         |         |   |                    |       

---

|(1) | The carrying amounts for March 31, 2004 and December 31, 2003 are net of impairment reserves
of $1.7 million and $2.2 million, respectively.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------



9



---

##### Table of Contents

Amortization expense for core deposit intangibles and mortgage servicing rights for the three months
ended March 31, 2004 and estimates for the nine months ended December 31, 2004 and five years thereafter are as follows. These estimates are based on the carrying value of the Banks core deposit intangibles and mortgage servicing rights as of
March 31, 2004.



|                                             |  |                        |       |                         |      
|-------------------------------------------- |  | ---------------------- | ----- | ----------------------- | -----
|                                             |  | CoreDepositIntangibles |       | MortgageServicingRights
|                                             |  | (Dollars in thousands)
|Aggregate Amortization Expense:              |  |                        |       |                         |      
|For the Three months Ended March 31, 2004    |  | $                      | 740   |                         | 2,123
|Estimated Amortization Expense:              |  |                        |       |                         |      
|For the Nine Months Ending December 31, 2004 |  |                        | 2,200 |                         | 4,900
|For the Year Ending:                         |  |                        |       |                         |      
|December 31, 2005                            |  |                        | 2,500 |                         | 5,000
|December 31, 2006                            |  |                        | 1,900 |                         | 3,900
|December 31, 2007                            |  |                        | 1,300 |                         | 3,200
|December 31, 2008                            |  |                        | 1,200 |                         | 2,600
|December 31, 2009                            |  |                        | 1,100 |                         | 2,100
|                                             |  |                        |       |                         |      



(8) Stock Option Plans



The Company applies APB Opinion 25, Accounting for
Stock Issued to Employees, and related Interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for its stock option plans. Had compensation cost for the Companys stock option plans
been determined based on the fair value at the grant dates for awards under those plans consistent with the method of SFAS No. 123, Accounting for Stock-Based Compensation, amended by SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, the Companys net income and earnings per share would have been reduced to the pro forma amounts indicated in the table below:



|                                                                                                                                             |  |                                               |        |      |       
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ------ | ---- | ------
|                                                                                                                                             |  | Three Months Ended March 31,                 
|                                                                                                                                             |  | 2004                                          |        | 2003
|                                                                                                                                             |  | (Dollars in thousands, except per share data)
|Net income, as reported                                                                                                                      |  | $                                             | 24,794 |      | 19,288
|Deduct: total stock option employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                               | 782    |      | 802   
|                                                                                                                                             |  |                                               |        |      |       
|Pro-forma net income                                                                                                                         |  | $                                             | 24,012 |      | 18,486
|                                                                                                                                             |  |                                               |        |      |       
|Basic Earnings per Share                                                                                                                     |  |                                               |        |      |       
|As Reported                                                                                                                                  |  |                                               | .75    |      | .83   
|Pro-forma                                                                                                                                    |  |                                               | .73    |      | .79   
|Diluted Earnings Per Share                                                                                                                   |  |                                               |        |      |       
|As Reported                                                                                                                                  |  |                                               | .73    |      | .81   
|Pro-forma                                                                                                                                    |  |                                               | .73    |      | .79   
|                                                                                                                                             |  |                                               |        |      |       



(9) Post-Retirement Plans



The Bank sponsors a supplemental executive retirement
plan (SERP) for the purpose of providing certain retirement benefits to executive officers and other corporate officers approved by the Board of Directors. The Bank also provides a long term medical plan for the purpose of providing
employees and directors post retirement medical benefits. The components of the net periodic benefit cost of post-retirement plans are as follows:



|                                                       |  |                              |     |                   |     |      |    |      |   
|------------------------------------------------------ |  | ---------------------------- | --- | ----------------- | --- | ---- | -- | ---- | --
|                                                       |  | Three Months Ended March 31,
|                                                       |  | SERP                         |     | Long Term Medical
|                                                       |  | 2004                         |     | 2003              |     | 2004 |    | 2003
|                                                       |  | (Dollars in thousands)      
|Service cost                                           |  | $                            | 168 |                   | 139 |      | 25 |      | 16
|Interest cost                                          |  |                              | 77  |                   | 64  |      | 25 |      | 17
|Amortization of unrecognized net transition obligation |  |                              |    |                   |    |      | 2  |      | 2 
|Unrecognized net loss                                  |  |                              |    |                   |    |      | 6  |      | 4 
|                                                       |  |                              |     |                   |     |      |    |      |   
|Net periodic benefit cost                              |  | $                            | 245 |                   | 203 |      | 58 |      | 39
|                                                       |  |                              |     |                   |     |      |    |      |   



10



---

##### Table of Contents

(10) New Accounting Pronouncements



In December 2003, the American Institute of Certified Public Accountants (AICPA) released Statement of Position
03-3, Accounting for Certain Loans or Debt Securities Acquired in a transfer (SOP 03-3). SOP 03-3 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investors
initial investment in loans or debt securities acquired in a transfer if those differences are attributable to credit quality. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004. Adoption of this Statement is
not expected to have a material impact on the Companys consolidated financial statements.



In March 2004, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 105 (SAB No. 105), Application of Accounting
Principles to Loan Commitments. SAB 105 prohibits the inclusion of estimated servicing cash flows and internally-developed intangible assets within the valuation of interest rate lock commitments under Statement of Accounting Standards No.
133. SAB No. 105 is effective for disclosures and interest rate lock commitments initiated after March 31, 2004. The Bank currently includes a portion of the value of the associated servicing cash flows when recognizing saleable loan commitments at
inception and throughout its life. The adoption of SAB No. 105 is currently estimated to result in an approximately $600,000  $900,000 pre-tax earnings decrease in the second quarter of 2004 based upon managements estimates of the level of
anticipated loan originations in the second quarter. The estimate could change based upon actual activity and the size of the loan pipeline in the second quarter. However, the ongoing economic value of this business is not affected.



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Cautionary Statement Regarding Forward-Looking Information



This report, in Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere, contains,
and other periodic reports and press releases of the Company may contain, certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes
of invoking these safe harbor provisions. These forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words
believe, expect, intend, anticipate, estimate, project, plan, or similar expressions. The Companys ability to predict results or the actual effect of future
plans or strategies is inherently uncertain and actual results may differ from those predicted. The Company undertakes no obligation to update these forward-looking statements in the future. Factors which could have a material adverse effect on
operations and could affect managements outlook or future prospects of the Company and its subsidiaries include, but are not limited to, delays in the St. Francis data processing and systems conversions, difficulties implementing the
Companys business model in the Milwaukee area markets, unanticipated changes in interest rates or flattening of the yield curve, deteriorating economic conditions which could result in increased delinquencies in the Companys loan
portfolio, higher than expected overhead, infrastructure and compliance costs needed to support growth in the Companys operations, legislative or regulatory developments, monetary and fiscal policies of the U.S. Government, including policies
of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the Companys loan or investment portfolios, demand for loan products, secondary mortgage market conditions, deposit flows, competition, demand for financial
services and residential real estate in the Companys market area, unanticipated slowdowns in real estate lot sales or problems in closing pending real estate contracts, delays in real estate development projects, the possible short-term
dilutive effect of other potential acquisitions, if any, and changes in accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be
placed on such statements.



11



---

##### Table of Contents

General



MAF Bancorp, Inc. (Company) is a registered savings and loan holding company incorporated under the laws of the state of Delaware and is
primarily engaged in the retail banking business through its wholly-owned subsidiary, Mid America Bank, fsb (Bank), and in the residential land development business primarily through MAF Developments, Inc.



The Bank offers various financial services to its retail and business banking
customers through a network of 67 branches in Illinois and southeastern Wisconsin. The Illinois franchise is comprised of 44 branches in suburban and urban communities in the Chicago metropolitan area including 16 locations in the City of Chicago, a
strong presence in western Cook County and DuPage Counties, an increasing penetration of the rapidly-growing Will and Kane Counties, as well as a presence in the north and southwest suburbs of Chicago. In Wisconsin, the Bank serves communities in
Milwaukee and Waukesha counties and portions of Ozaukee, Washington and Walworth Counties through 23 retail branches under the name of St. Francis Bank, a division of Mid America Bank, fsb. Currently, the Bank plans to build four to five de novo
branches in the next twelve to eighteen months in its continued effort to expand its presence in the Chicago metropolitan area. Historically, the Bank has been principally engaged in the business of attracting deposits from the general public and
using such deposits, along with other borrowings, to make loans secured by real estate, primarily one-to four-family residential loans. To a lesser extent, the Bank also makes multi-family mortgage, commercial, residential construction, land
acquisition and development and a variety of consumer loans. In 2001, the Bank formed a commercial business lending unit to target lending and deposit relationships with small to medium sized businesses in its primary market areas. The 2003
acquisitions of Fidelity Bancorp and St. Francis Capital Corporation, in particular, have significantly changed the asset mix and expanded the lending focus of the Bank. These acquisitions added a large amount of multifamily, commercial real estate,
construction, land loans and commercial business loans, and a lesser amount of one- to four-family loans to the Banks portfolio. Through various wholly-owned subsidiaries, the Bank also provides general insurance services, investment services
and securities brokerage primarily to the Banks loan customers. In addition, the Bank operates an investment subsidiary and a subsidiary engaged in investment in affordable housing projects. The Bank also operates a captive reinsurance
company, which shares in a portion of mortgage insurance premiums received by certain mortgage insurance companies on the Banks mortgage loan originations in return for assuming some of the risk of loss.



As it has in recent years, the Company expects to continue to search for and
evaluate potential acquisition opportunities that could enhance franchise value and may periodically be presented with opportunities to acquire other institutions, branches or deposits in the Chicago or Milwaukee metropolitan areas or which allow
the Company to expand outside its current primary market areas. Management intends to review acquisition opportunities across a variety of parameters, including the potential impact on its financial condition as well as its financial performance in
the future. It is anticipated that future acquisitions, if any, will likely be valued at a premium to book value, and generally at a premium to current market value. As such, management anticipates that acquisitions made by the Company could involve
some short-term book value per share dilution and may involve earnings per share dilution depending on the Companys timing and success in integrating the operations of businesses acquired and the level of cost savings and revenue enhancements
that may be achieved.



Critical Accounting Policies and Estimates



Managements discussion and analysis of financial
condition and results of operations of the Company is based upon its consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America, and are more fully
described in Note 1 of the consolidated financial statements found in the Companys Form 10-K for the fiscal year ended December 31, 2003 in Item 8. Financial Statements and Supplementary Data. The preparation of these consolidated
financial statements requires that management make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expense, as well as related disclosures of contingencies. Managements judgment is based on
historical experience, terms of existing contracts, market trends, and other information available to management. The Company believes that of its significant accounting policies, the following involve a higher degree of judgment and complexity.



12



---

##### Table of Contents

Allowance for loan losses. The allowance for loan losses is established through a provision for
loan losses to provide a reserve against estimated losses in the Banks loans receivable portfolio. The allowance for loan losses reflects managements estimate of the reserves needed to cover probable losses inherent in the Banks
loan portfolio. In evaluating the adequacy of the allowance for loan losses and determining the related provision for loan losses, management considers: (1) subjective factors, including local and general economic business factors and trends,
portfolio concentrations and changes in the size and/or general terms of the loan portfolio, (2) historical loss experience and the change in the mix of the overall portfolio composition over the last five years, (3) specific allocations based upon
probable losses identified during the review of the portfolio, and (4) delinquency in the portfolio and the composition of non-performing loans including the percent of non-performing loans with supplemental mortgage insurance. An unallocated
reserve is maintained to recognize the imprecision on measuring and estimating loss when evaluating reserves for individual loans or categories of loans.



Valuation of mortgage servicing rights.The Bank capitalizes the estimated value of mortgage servicing rights upon the sale of loans. The
Banks estimated value takes into consideration contractually known amounts, such as loan balance, term, contract rate, and whether the customer escrows funds with the Bank for the payment of taxes and insurance. These estimates are impacted by
loan prepayment speeds, earnings on escrow funds, as well as the discount rate used to present value the cash flow stream. Subsequent to the establishment of this asset, management reviews the fair value of mortgage servicing rights on a quarterly
basis using current prepayment speed, cash flow and discount rate estimates. Changes in these estimates impact fair value, and could require the Bank to record a valuation allowance or recovery. A net recovery of $555,000 was recorded in the first
quarter of 2004; no valuation adjustment was recorded in the prior year period. Should estimates assumed by management regarding future prepayment speeds on the underlying loans supporting the mortgage servicing rights prove to be incorrect,
additional valuation allowances could occur, or contrarily, valuation allowances could be recovered if changing estimates increase the fair value of mortgage servicing rights.



Real estate held for development.Profits from lot sales in the Companys real estate developments are based on
cash received less the cost of sales per lot, including capitalized interest and an estimate of future costs to be incurred. The estimate of future costs is subject to change and is reviewed on a quarterly basis. Estimates are subject to change for
various reasons, including changes in the estimated duration of the project, changes in rules or requirements of the communities where the projects reside, soil and weather conditions, increased project budgets, as well as the general level of
inflation. Changes in future estimated costs are recognized in the period of change as either a charge or an addition to income from real estate operations. Additionally, management periodically evaluates the net realizable value from each project
by considering other factors, such as pace of lot absorption, sources of funding and timing of disbursements, in evaluating the net realizable value of a development at the end of a reporting period. A charge to current earnings would occur if this
evaluation indicated a projects net realizable value did not exceed its recorded cost. Currently, the net realizable value of each land development project the Company is engaged in exceeds the recorded cost of the project.



13



---

##### Table of Contents

Results of Operations for the Three Months Ended March 31, 2004 and 2003



Overview



The following table highlights significant results relating to the consolidated operations and financial condition of the
Company and its subsidiaries.



|                                   |  |                                               |            |   |      |           
|---------------------------------- |  | --------------------------------------------- | ---------- | - | ---- | ----------
|                                   |  | Three months ended March 31,                 
|                                   |  | 2004                                          |            |   | 2003
|                                   |  | (Dollars in thousands, except per share data)
|Net income                         |  | $                                             | 24,794     |   |      | 19,288    
|Diluted earnings per share         |  |                                               | .73        |   |      | .81       
|Average diluted shares outstanding |  |                                               | 33,931,769 |   |      | 23,852,184
|Interest rate spread               |  |                                               | 2.90       | % |      | 2.60      
|Net interest margin                |  |                                               | 3.10       |   |      | 2.94      
|Average assets                     |  | $                                             | 8,941,881  |   |      | 5,925,958 
|Average loans                      |  |                                               | 6,457,794  |   |      | 4,504,911 
|Average deposits                   |  |                                               | 5,154,067  |   |      | 3,476,363 
|Return on average assets(1)        |  |                                               | 1.11       | % |      | 1.30      
|Return on average equity(1)        |  |                                               | 10.83      |   |      | 15.10     
|                                   |  |                                               |            |   |      |           

---

|(1) | Annualized.
|--- | -----------



While net income in the current quarter increased, earnings per share was
impacted by the approximately 10.3 million of average additional shares outstanding as a result of the completion of the St. Francis Capital Corporation merger in December 2003 and the Fidelity Bancorp merger in July 2003.



| |  | Continuing low interest rates during the past 12 months and lower borrowing costs on liabilities assumed resulted in a 16 basis point increase in the net interest margin.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Current quarter non-interest income was $4.3 million higher than last years first quarter due to gains on the sale of investment securities, a valuation recovery on mortgage
servicing rights and increases in deposit service charges.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Non-interest expense increased $20.2 million compared to last year primarily due to the two acquisitions in 2003. The majority of cost savings from the St. Francis acquisition are
not expected to be realized until the second half of 2004 after the data processing conversion is completed.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net Interest Income and Net Interest Margin



Net interest income increased to $64.0 million for the three months ended March 31, 2004, from $41.1 million for the three months ended March 31, 2003.
The increase is largely due to increased net interest earning assets of $87.2 million, or 14.8%, due to the acquisitions of Fidelity and St. Francis. In addition, the Banks net interest spread and margin each increased during the 2004
three-month period to 2.90% and 3.10%, respectively, from 2.60% and 2.94% for the prior year three-month period. The expansion of the net interest spread and margin are attributable to the continued low interest rate environment, as well as the
positive slope of the U.S. Treasury yield curve. Lower short-term interest rates allowed the Bank to reduce its cost of interest-bearing liabilities more than the reduction in asset yields, which were reduced due to falling long-term interest rates
increasing the prepayment speeds on higher-yielding loans receivables.



14



---

##### Table of Contents

Average Balances/Rates



The following table sets forth certain information relating to the Companys consolidated statements of financial
condition and reflects the average yield on assets and average cost of liabilities for the periods indicated. Average yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the
periods shown. Average balances are derived from average daily balances. The yield/cost at March 31, 2004 includes fees which are considered adjustments to yield.



|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|---------------------------------------------------------------- |  | ---------------------------- | --------- | -------- | ----------------- | - | ----------------- | ---- | - | ---------------------- | - | --------- |  | ------ | ----------------- |  | ---- | ------- |  | - | ---------- | - |  | ---- | -
|                                                                 |  | Three Months Ended March 31, |           |          | At March 31, 2004 |  
|                                                                 |  | 2004                         |           |          | 2003              |   |                  
|                                                                 |  | AverageBalance               |           | Interest |                   |   | AverageYield/Cost |      |   | AverageBalance         |   | Interest  |  |        | AverageYield/Cost |  |      | Balance |  |   | Yield/Cost |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   | (Dollars in thousands) |   |           |  |        |                   |  |      |         |  |  
|Assets:                                                          |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Interest-earning assets:                                         |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Loans receivable                                                 |  | $                            | 6,457,794 |          | 82,908            |   |                   | 5.14 | % |                        | $ | 4,504,911 |  | 66,985 |                   |  | 5.95 | %       |  | $ | 6,488,647  |   |  | 5.10 | %
|Mortgage-backed securities                                       |  |                              | 963,384   |          | 9,012             |   |                   | 3.74 |   |                        |   | 325,744   |  | 3,523  |                   |  | 4.33 |         |  |   | 1,045,142  |   |  | 4.22 |  
|Interest-bearing deposits                                        |  |                              | 61,482    |          | 323               |   |                   | 2.11 |   |                        |   | 121,419   |  | 563    |                   |  | 1.88 |         |  |   | 58,452     |   |  | 1.19 |  
|Federal funds sold                                               |  |                              | 35,148    |          | 242               |   |                   | 2.76 |   |                        |   | 123,961   |  | 610    |                   |  | 2.00 |         |  |   | 15,502     |   |  | .99  |  
|Investment securities(1)                                         |  |                              | 747,078   |          | 9,522             |   |                   | 5.11 |   |                        |   | 510,289   |  | 5,345  |                   |  | 4.25 |         |  |   | 753,488    |   |  | 4.82 |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Total interest-earning assets                                    |  |                              | 8,264,886 |          | 102,007           |   |                   | 4.94 |   |                        |   | 5,586,324 |  | 77,026 |                   |  | 5.52 |         |  |   | 8,361,231  |   |  | 4.93 |  
|Non-interest earning assets                                      |  |                              | 676,995   |          |                   |   |                   |      |   |                        |   | 339,634   |  |        |                   |  |      |         |  |   | 716,522    |   |  |      |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Total assets                                                     |  | $                            | 8,941,881 |          |                   |   |                   |      |   |                        | $ | 5,925,958 |  |        |                   |  |      |         |  | $ | 9,077,753  |   |  |      |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Liabilities and stockholders equity:                            |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Interest-bearing liabilities:                                    |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Deposits                                                         |  |                              | 5,154,067 |          | 17,253            |   |                   | 1.34 |   |                        |   | 3,473,363 |  | 16,962 |                   |  | 1.98 |         |  |   | 5,169,251  |   |  | 1.40 |  
|Borrowed funds                                                   |  |                              | 2,318,900 |          | 20,725            |   |                   | 3.58 |   |                        |   | 1,523,944 |  | 19,009 |                   |  | 5.06 |         |  |   | 2,381,838  |   |  | 3.38 |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Total interest-bearing liabilities                               |  |                              | 7,472,967 |          | 37,978            |   |                   | 2.04 |   |                        |   | 4,997,307 |  | 35,971 |                   |  | 2.92 |         |  |   | 7,551,089  |   |  | 2.02 |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Non-interest bearing deposits                                    |  |                              | 426,831   |          |                   |   |                   |      |   |                        |   | 284,516   |  |        |                   |  |      |         |  |   | 448,876    |   |  |      |  
|Other liabilities                                                |  |                              | 126,403   |          |                   |   |                   |      |   |                        |   | 133,058   |  |        |                   |  |      |         |  |   | 162,924    |   |  |      |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Total liabilities                                                |  |                              | 8,026,201 |          |                   |   |                   |      |   |                        |   | 5,414,881 |  |        |                   |  |      |         |  |   | 8,162,889  |   |  |      |  
|Stockholders equity                                             |  |                              | 915,680   |          |                   |   |                   |      |   |                        |   | 511,077   |  |        |                   |  |      |         |  |   | 914,864    |   |  |      |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Liabilities and stockholders equity                             |  | $                            | 8,941,881 |          |                   |   |                   |      |   |                        | $ | 5,925,958 |  |        |                   |  |      |         |  | $ | 9,077,753  |   |  |      |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Net interest income/interest rate spread                         |  |                              |           |          | 64,029            |   |                   | 2.90 | % |                        |   |           |  | 41,055 |                   |  | 2.60 | %       |  |   |            |   |  | 2.91 | %
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Net earning assets/net yield on average interest-earning assets  |  | $                            | 791,919   |          |                   |   |                   | 3.10 | % |                        | $ | 589,017   |  |        |                   |  | 2.94 | %       |  | $ | 810,142    |   |  | N/A  |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  
|Ratio of interest-earning assets to interest-bearing liabilities |  |                              |           |          | 110.60            | % |                   |      |   |                        |   |           |  | 111.79 | %                 |  |      |         |  |   | 110.73     | % |  |      |  
|                                                                 |  |                              |           |          |                   |   |                   |      |   |                        |   |           |  |        |                   |  |      |         |  |   |            |   |  |      |  

---

|(1) | Includes average balances of $388 million and $268 million of stock in the Federal Home Loan Bank of Chicago for the three months ended March 31, 2004 and 2003,
respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



15



---

##### Table of Contents

Rate/Volume Analysis of Net Interest Income



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



|                                  |  |                                                                                  |        |   |      |         |   |     |        |  
|--------------------------------- |  | -------------------------------------------------------------------------------- | ------ | - | ---- | ------- | - | --- | ------ | -
|                                  |  | Three Months Ended March 31, 2004 Compared to March 31, 2003 Increase (Decrease) |       
|                                  |  | Volume                                                                           |        |   | Rate |         |   | Net |       
|                                  |  | (Dollars in thousands)                                                           |       
|Interest-earning assets:          |  |                                                                                  |        |   |      |         |   |     |        |  
|Loans receivable                  |  | $                                                                                | 26,058 |   |      | (10,135 | ) |     | 15,923 |  
|Mortgage-backed securities        |  |                                                                                  | 6,025  |   |      | (536    | ) |     | 5,489  |  
|Interest-bearing deposits         |  |                                                                                  | (304   | ) |      | 64      |   |     | (240   | )
|Federal funds sold                |  |                                                                                  | (549   | ) |      | 181     |   |     | (368   | )
|Investment securities             |  |                                                                                  | 2,904  |   |      | 1,273   |   |     | 4,177  |  
|                                  |  |                                                                                  |        |   |      |         |   |     |        |  
|Total                             |  |                                                                                  | 34,134 |   |      | (9,153  | ) |     | 24,981 |  
|                                  |  |                                                                                  |        |   |      |         |   |     |        |  
|Interest-bearing liabilities:     |  |                                                                                  |        |   |      |         |   |     |        |  
|Deposits                          |  |                                                                                  | 6,826  |   |      | (6,535  | ) |     | 291    |  
|Borrowed funds                    |  |                                                                                  | 8,307  |   |      | (6,591  | ) |     | 1,716  |  
|                                  |  |                                                                                  |        |   |      |         |   |     |        |  
|Total                             |  |                                                                                  | 15,133 |   |      | (13,126 | ) |     | 2,007  |  
|                                  |  |                                                                                  |        |   |      |         |   |     |        |  
|Net change in net interest income |  | $                                                                                | 19,001 |   |      | 3,973   |   |     | 22,974 |  
|                                  |  |                                                                                  |        |   |      |         |   |     |        |  



The average yield on
interest-earning assets declined to 4.94% for the three months ended March 31, 2004, from 5.52% for the three months ended March 31, 2003. This decline is primarily attributable to a decline in the yield on loans receivable as declining long-term
Treasury rates led to high levels of prepayments during most of 2003. The Bank reinvested many of these proceeds into lower-yielding hybrid ARM loans, as well as increased balances in home equity lines of credit and business lines tied to the prime
rate. The St. Francis merger also resulted in the addition of $2.0 billion of earning assets with an overall lower average yield. The Bank has approximately $1.17 billion of loans tied to the prime rate at March 31, 2004. The yield on
mortgage-backed securities was also impacted by higher prepayments of underlying higher-yielding loans as the average yield on mortgage-backed securities during the first quarter of 2004 declined to 3.74% from 4.33% in the year earlier period. The
yield on investment securities rose to 5.11% for the three months ended March 31, 2004 from 4.25% for the previous year period due primarily to increases in dividends paid on the Banks investment in the FHLB of Chicago. (6.5% during the first
quarter of 2004 compared to 5.0% for the first quarter of 2003.) At March 31, 2004, the Banks investment in the FHLB of Chicago was $390.9 million. The Bank plans to significantly reduce its investment in the FHLB of Chicago over the next 6-12
months.



The cost of interest-bearing liabilities dropped
dramatically to 2.04% for the three months ended March 31, 2004 from 2.92% for the three months ended March 31, 2003. Reductions in the cost were experienced in both deposits and borrowed funds, both of which were positively impacted by the lower
cost funding added in the St. Francis merger. The continued low short-term interest rate environment over the last 12 months allowed the Bank to reprice higher-cost maturing certificates of deposits, as well as led the Bank to reduce the amounts
paid on passbook, checking and money market accounts. The combined effects of these actions, along with an increase in the level of core deposits and the impact of the St. Francis merger was a 64 basis point reduction in the Banks cost of
deposits to an average of 1.34% for the three months ended March 31, 2004. Similarly, the 148 basis point reduction in the cost of borrowed funds was due to the impact of the St. Francis merger and maturities of higher cost FHLB of Chicago advances
being replaced with lower cost fixed rate borrowings, as well as adjustable rate borrowings indexed to LIBOR and prime. The Bank has increased it use of shorter-term borrowings in its funding mix due to the increase in floating rate assets
accumulated by the Bank primarily in the form of home equity lines of credit and business lines of credit.



16



---

##### Table of Contents

Provision for Loan Loss



The Bank provided $300,000 in provision for loan losses during the first quarter of 2004 compared to no provision in the prior year first quarter. Net
charge-offs for the three months ended March 31, 2004 were $418,000 compared to $12,000 for the three months ended March 31, 2003. At March 31, 2004, the Banks allowance for loan losses was $34.4 million, which equaled .53% of total loans
receivable, compared to $34.6 million, or .54% at December 31, 2003, and $19.5 million or .45% at March 31, 2003.



Non-Interest Income



Non-interest income increased $4.4 million, or 27.4% to $20.4 million in the first quarter of 2004, compared to $16.0 million for the quarter ended March
31, 2003. Last years results were highlighted by significant loan sale gains, higher loan servicing fee expense, some mortgage-backed security gains resulting from balance sheet restructuring and two investment security writedowns. In the
current quarter, loan sale gains were much lower, mortgage servicing-related income was higher and investment securities gains were realized on the sale of three securities previously written down.



Loan Sales and Servicing



|                                                |  |                              |         |    |      |         |  
|----------------------------------------------- |  | ---------------------------- | ------- | -- | ---- | ------- | -
|                                                |  | Three months ended March 31, |        
|                                                |  | 2004                         |         |    | 2003 |        
|                                                |  | (Dollars in thousands)       |        
|Loans sold                                      |  | $                            | 129,494 |    |      | 477,618 |  
|Loan sale gains                                 |  |                              | 1,780   |    |      | 7,548   |  
|Margin on loan sales                            |  |                              | 137     | bp |      | 158     |  
|Loan servicing fee income (expense)             |  | $                            | 241     |    |      | (1,376  | )
|Valuation recovery on mortgage servicing rights |  |                              | 555     |    |      |        |  



A decline in
fixed-rate loan refinancing activity and a consumer shift toward adjustable-rate mortgage loans led to reduced volume of loans sold and considerably lower loan sale gains for the three months ended March 31, 2004 compared to the three months ended
March 31, 2003. Although slower loan prepayments led to reduced loan sale gains, it also resulted in a decrease in amortization of mortgage servicing rights leading to loan servicing fee income of $241,000 for the current quarter compared to $1.4
million of loan servicing expense in the prior year quarter. Slower expected prepayments also led to a $555,000 recovery of valuation reserves on servicing rights during the three months ended March 31, 2004.



Deposit Account Service Charges



|                            |  |                              |         |      |   |        
|--------------------------- |  | ---------------------------- | ------- | ---- | - | -------
|                            |  | Three months ended March 31,
|                            |  | 2004                         |         | 2003
|                            |  | (Dollars in thousands)      
|Service charges             |  | $                            | 7,856   |      | $ | 5,439  
|Number of checking accounts |  |                              | 235,600 |      |   | 157,700



Deposit account
service fees are up considerably compared to the first quarter of 2003, due to the higher number of accounts from the St. Francis and Fidelity mergers. Considerable competition for checking accounts, particularly in the Chicago market, along with
trending higher average per account balances in the Banks checking accounts, has significantly slowed the rate of growth in deposit fees per account. In addition, debit card fee income has been negatively impacted by the 2003 VISA lawsuit
settlement that reduced debit card interchange revenue for all banks and the increased use of point of sale debit card transactions that generate lower interchange revenues. Management currently expects the growth rate to continue to be lower for
the remainder of the year than historical growth rates for this revenue source.



17



---

##### Table of Contents

Real Estate Development Operations



|                                 |  |                              |        |      |       
|-------------------------------- |  | ---------------------------- | ------ | ---- | ------
|                                 |  | Three months ended March 31,
|                                 |  | 2004                         |        | 2003
|                                 |  | (Dollars inthousands)       
|RE development income            |  | $                            | 1,102  |      | 1,635 
|Residential lot sales            |  |                              | 25     |      | 55    
|Pending lot sales at quarter end |  |                              | 58     |      | 72    
|Investment in real estate        |  | $                            | 32,557 |      | 20,451



A total of 21 of the
25 residential lot sales during the three months ended March 31, 2004 were in the Shenandoah development, where 109 lots remain as of March 31, 2004. Most of the residential lot sales in the first quarter of 2003 were also in this development. The
increase in the investment in real estate compared to a year ago relates primarily to the land purchases for the new Springbank joint venture development in Plainfield, Illinois. The company has been actively pursuing the required zoning and desired
plat for this project with the local planning commission and village board over the last eighteen months. Development is expected to begin during 2004 on this project where 1,600 residential lots, 300 multi-family lots and other commercial parcels
are planned while lot sale closings are currently expected to begin in Springbank in late 2004. Final approval for the zoning of this project, while expected shortly has taken longer than anticipated and any further delays may result in a
significant portion of the income for real estate being shifted into 2005 earnings. The Company currently expects income from the Springbank project to be $4.5$5.3 million in the fourth quarter of 2004.



Securities Sales/Writedowns



|                                     |  |                              |       |      |        |  
|------------------------------------ |  | ---------------------------- | ----- | ---- | ------ | -
|                                     |  | Three months ended March 31, |      
|                                     |  | 2004                         |       | 2003 |       
|                                     |  | (Dollars inthousands)        |      
|Investment securities:               |  |                              |       |      |        |  
|Net gains on sale/writedowns - total |  | $                            | 2,834 |      | (5,712 | )
|Writedowns (only)                    |  |                              |      |      | (8,132 | )
|Net gains on sale (only)             |  | $                            | 2,834 |      | 2,420  |  
|                                     |  |                             
|Mortgage-backed securities:          |  |                              |       |      |        |  
|Net gains on sale - total            |  | $                            | 489   |      | 5,352  |  



During the three
months ended March 31, 2004, the Company sold three investment securities on which it had previously taken other-than-temporary-impairment writedowns. The net gain from the sale of these three securities was $2.7 million. Two of these securities
were collateralized by leased aircraft and the other security was a collateralized bond obligation secured by various less than investment grade high yield securities. The market values of these securities had for some time been negatively impacted
by weak economic conditions and in the case of the airline-related securities, the widely reported difficulties in this industry. A recovery in the pricing on these securities during the current quarter led to the Companys decision to sell
them. In the first quarter of 2003, the Bank had written two of these securities down by $8.1 million.



Gain on the sale on mortgage-backed securities decreased $4.9 million for the three months ended March 31, 2004 compared to the three months ended March
31, 2003. During the prior year three-month period, the Company swapped into mortgage-backed securities a total of $85.3 million of prepayment-protected fixed-rate mortgages, which were subsequently sold along with an additional $60.9 million of
similar mortgage-backed securities resulting in the gain for that period. These sales were undertaken to improve the Companys interest rate risk position by lengthening its asset duration to better match the Companys increased liability
duration, as the average lives of these loans and related mortgage-backed securities had become very short due to high prepayment speeds.



18



---

##### Table of Contents

Non-Interest Expense



For the three months ended March 31, 2004, non-interest expense increased $20.2 million compared to the three months ended March 31, 2003. The increase is
primarily attributable to the growth from the acquisitions of Fidelity and St. Francis in July and December 2003, respectively. The majority of expected cost savings related to the St. Francis acquisition will not begin to be realized until after
May 31, 2004, when the data processing system conversion is completed. The table below indicates the composition of non-interest expense for the quarters indicated.



|                                                        |  |                              |        |                |        |                              |        |  |       |  
|------------------------------------------------------- |  | ---------------------------- | ------ | -------------- | ------ | ---------------------------- | ------ |  | ----- | -
|                                                        |  | Three Months Ended March 31, |        | AmountIncrease |        | PercentageIncrease(Decrease) |       
|                                                        |  | 2004                         |        | 2003           |        |                             
|                                                        |  | (Dollars in thousands)       |        |                |        |                              |       
|Compensation                                            |  | $                            | 19,648 |                | 11,700 |                              | 7,948  |  | 67.9  | %
|Employee benefits                                       |  |                              | 5,986  |                | 3,938  |                              | 2,048  |  | 52.0  |  
|                                                        |  |                              |        |                |        |                              |        |  |       |  
|Total compensation and benefits                         |  |                              | 25,634 |                | 15,638 |                              | 9,996  |  | 63.9  |  
|                                                        |  |                              |        |                |        |                              |        |  |       |  
|Occupancy expense                                       |  |                              | 4,561  |                | 2,503  |                              | 2,058  |  | 82.2  |  
|Furniture, fixture and equipment expense                |  |                              | 1,942  |                | 1,028  |                              | 914    |  | 88.9  |  
|Advertising and promotion                               |  |                              | 2,407  |                | 1,321  |                              | 1,086  |  | 82.2  |  
|Data processing                                         |  |                              | 2,118  |                | 973    |                              | 1,145  |  | 117.7 |  
|Amortization of core deposit intangibles                |  |                              | 740    |                | 379    |                              | 361    |  | 95.3  |  
|Other expenses:                                         |  |                              |        |                |        |                              |        |  |       |  
|Professional fees                                       |  |                              | 1,128  |                | 524    |                              | 604    |  | 115.3 |  
|Stationery, brochures and supplies                      |  |                              | 838    |                | 525    |                              | 313    |  | 59.7  |  
|Postage                                                 |  |                              | 780    |                | 523    |                              | 257    |  | 49.1  |  
|Telephone                                               |  |                              | 729    |                | 493    |                              | 236    |  | 47.8  |  
|Fraud and bad check write-offs                          |  |                              | 582    |                | 452    |                              | 130    |  | 28.8  |  
|Correspondent banking services                          |  |                              | 461    |                | 273    |                              | 188    |  | 69.0  |  
|Title fees, recording fees and credit report expense    |  |                              | 430    |                | 235    |                              | 195    |  | 82.8  |  
|OTS assessment fees                                     |  |                              | 327    |                | 224    |                              | 103    |  | 46.4  |  
|Security expense                                        |  |                              | 337    |                | 166    |                              | 171    |  | 102.9 |  
|Courier service                                         |  |                              | 175    |                | 61     |                              | 114    |  | 186.0 |  
|Insurance costs                                         |  |                              | 419    |                | 129    |                              | 290    |  | 224.5 |  
|Federal deposit insurance premiums                      |  |                              | 227    |                | 159    |                              | 68     |  | 42.6  |  
|SF Equities real estate held for investment expenses(1) |  |                              | 1,010  |                |       |                              | 1,010  |  | NM    |  
|Other                                                   |  |                              | 2,045  |                | 1,069  |                              | 976    |  | 91.3  |  
|                                                        |  |                              |        |                |        |                              |        |  |       |  
|Total other expenses                                    |  |                              | 9,488  |                | 4,833  |                              | 4,655  |  | 96.3  |  
|                                                        |  |                              |        |                |        |                              |        |  |       |  
|                                                        |  | $                            | 46,890 |                | 26,675 |                              | 20,215 |  | 75.8  |  
|                                                        |  |                              |        |                |        |                              |        |  |       |  



---

|(1) | Expenses from SF Equities, a subsidiary of the Bank that invests in affordable housing
properties throughout Wisconsin.
|--- | -----------------------------------------------------------------------------------------------------------------------



Also
contributing to the increase in non-interest expense:



| |  | The addition of management personnel to accommodate company growth, normal salary increases, higher payroll taxes and medical costs, and the additional staff at five other new
branches opened during the year.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Higher occupancy and furniture and fixture costs due to five additional branches opened during the year; and the consolidation of four loan operation centers into one location, that
will result in higher occupancy expense through the third quarter of 2004 before declining, but will improve efficiencies over the long term.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Higher advertising and promotion expense due to a more competitive retail banking market, costs related to new product advertising and the launch of advertising in the Milwaukee
area as well as higher public relations costs.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Installation of two new mainframe computers, a new disaster recovery system, increased data processing costs due to branch expansion as well as increased costs related to additional
data lines.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Higher professional fees due to costs related to consulting, recruiting and legal expense.
| | - | ------------------------------------------------------------------------------------------



19



---

##### Table of Contents

| |  | Higher insurance costs primarily due to the renewal at higher premiums of the Companys directors and officers policy that came off a three-year policy period. The increase
resulted from the hardening of the insurance market in the post-Enron and post September 11thenvironment and growth
in the Company.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Income Tax expense



Income tax expense totaled $12.4 million for the three months ended March
31, 2004, equal to an effective income tax rate of 33.4%, compared to $11.1 million or an effective income tax rate of 36.5% for the three months ended March 31, 2003. The decline in the effective income tax rate is primarily due to tax benefits
generated from St. Francis Equity Properties low income and senior housing projects and to a lesser extent, from the resolution of certain prior years income tax issues.



Changes in Financial Condition



Total assets of the Company were $9.08 billion at March 31, 2004, an increase of $144.2 million, or 1.6% from $8.93 billion at December 31, 2003. The
primary reason for the increase is the higher balances in loans receivable and mortgage-backed securities, which were funded primarily with an increase in borrowed funds, and to a lesser extent with deposits. A summary of significant changes is as
follows:



|                             |  |                        |           |                  |           |                           |         |   |                               |      |   
|---------------------------- |  | ---------------------- | --------- | ---------------- | --------- | ------------------------- | ------- | - | ----------------------------- | ---- | --
|                             |  | March 31,2004          |           | December 31,2003 |           | AmountIncrease/(decrease) |         |   | PercentageIncrease/(decrease) |     
|                             |  | (Dollars in thousands) |           |                  |           |                          
|Assets:                      |  |                        |           |                  |           |                           |         |   |                               |      |   
|Cash and cash equivalents    |  | $                      | 208,562   |                  | 221,962   |                           | (13,400 | ) |                               | (6.0 | )%
|Investment securities        |  |                        | 753,488   |                  | 749,977   |                           | 3,511   |   |                               | .5   |   
|Mortgage-backed securities   |  |                        | 1,045,142 |                  | 971,969   |                           | 73,173  |   |                               | 7.5  |   
|Loans receivable             |  |                        | 6,454,210 |                  | 6,369,107 |                           | 85,103  |   |                               | 1.3  |   
|Goodwill and intangibles     |  |                        | 299,346   |                  | 300,677   |                           | (1,331  | ) |                               | (0.4 | ) 
|Other                        |  |                        | 317,005   |                  | 319,893   |                           | (2,888  | ) |                               | (0.9 | ) 
|                             |  |                        |           |                  |           |                           |         |   |                               |      |   
|Total Assets                 |  | $                      | 9,077,753 |                  | 8,933,585 |                           | 144,168 |   |                               | 1.6  |   
|                             |  |                        |           |                  |           |                           |         |   |                               |      |   
|Liabilities and Equity:      |  |                        |           |                  |           |                           |         |   |                               |      |   
|Deposits                     |  | $                      | 5,618,127 |                  | 5,580,455 |                           | 37,672  |   |                               | 0.7  |   
|Borrowed Funds               |  |                        | 2,381,838 |                  | 2,299,427 |                           | 82,411  |   |                               | 3.6  |   
|Other liabilities            |  |                        | 162,924   |                  | 152,099   |                           | 10,825  |   |                               | 7.1  |   
|                             |  |                        |           |                  |           |                           |         |   |                               |      |   
|Total Liabilities            |  |                        | 8,162,889 |                  | 8,031,981 |                           | 130,908 |   |                               | 1.6  |   
|Stockholders equity         |  |                        | 914,864   |                  | 901,604   |                           | 13,260  |   |                               | 1.5  |   
|                             |  |                        |           |                  |           |                           |         |   |                               |      |   
|Total Liabilities and Equity |  | $                      | 9,077,753 |                  | 8,933,585 |                           | 144,168 |   |                               | 1.6  |   
|                             |  |                        |           |                  |           |                           |         |   |                               |      |   



The increase in total
assets for the three months ended March 31, 2004 of $144.2 million is due primarily to higher loans receivable and mortgage-backed securities balances. Loans receivable increased by $85.1 million during the quarter excluding $104.6 million of
15-year fixed-rate loans that were swapped into a mortgage-backed security classified as held to maturity. With continued growth in equity lines of credit and demand for single-family loans shifting toward adjustable-rate mortgage loans due to the
steep yield curve, the Bank has begun to grow its loan portfolio by retaining the adjustable mortgages. The Company currently expects overall asset growth in the 9-11% range for 2004 assuming the demand for ARM loans continues. Core deposits grew
$115.7 million during the three months ended March 31, 2004 due in part to the successful introduction of a new high-rate checking account product. Growth in core deposits was offset by a $78.0 million decrease in certificates of deposit.



20



---

##### Table of Contents

Loans Receivable.The following table sets forth the composition of the Banks loans receivable
portfolio in dollar amounts at the dates indicated.



|                                                                  |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|----------------------------------------------------------------- |  | ---------------------- | --------- | - | -------- | --------- | - | ------- | --------- | - | ------- | --------- | - | ------- | --------- | -
|                                                                  |  | 3/31/04                |           |   | 12/31/03 |           |   | 9/30/03 |           |   | 6/30/03 |           |   | 3/31/03 |          
|                                                                  |  | (Dollars in thousands) |          
|Real estate loans:                                                |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|One- to four-family:                                              |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|Held for investment                                               |  | $                      | 3,930,288 |   |          | 3,924,965 |   |         | 3,644,518 |   |         | 3,488,957 |   |         | 3,364,367 |  
|Held for sale                                                     |  |                        | 36,696    |   |          | 44,511    |   |         | 277,792   |   |         | 92,830    |   |         | 68,076    |  
|Multi-family                                                      |  |                        | 624,304   |   |          | 611,845   |   |         | 469,249   |   |         | 322,437   |   |         | 292,895   |  
|Commercial                                                        |  |                        | 517,392   |   |          | 522,669   |   |         | 170,585   |   |         | 150,381   |   |         | 147,955   |  
|Construction                                                      |  |                        | 135,272   |   |          | 135,704   |   |         | 51,377    |   |         | 51,268    |   |         | 51,688    |  
|Land                                                              |  |                        | 75,910    |   |          | 75,012    |   |         | 39,035    |   |         | 34,918    |   |         | 39,611    |  
|                                                                  |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|Total real estate loans                                           |  |                        | 5,319,862 |   |          | 5,314,706 |   |         | 4,652,556 |   |         | 4,140,791 |   |         | 3,964,592 |  
|                                                                  |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|Consumer loans:                                                   |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|Equity lines of credit                                            |  |                        | 977,574   |   |          | 898,452   |   |         | 508,690   |   |         | 467,942   |   |         | 420,533   |  
|Home equity loans                                                 |  |                        | 61,167    |   |          | 67,119    |   |         | 24,883    |   |         | 23,431    |   |         | 26,856    |  
|Other                                                             |  |                        | 27,028    |   |          | 38,238    |   |         | 4,439     |   |         | 5,041     |   |         | 6,436     |  
|                                                                  |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|Total consumer loans                                              |  |                        | 1,065,769 |   |          | 1,003,809 |   |         | 538,012   |   |         | 496,414   |   |         | 453,825   |  
|Commercial business loans                                         |  |                        | 138,122   |   |          | 128,266   |   |         | 31,915    |   |         | 22,279    |   |         | 22,813    |  
|                                                                  |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|Total loans receivable                                            |  |                        | 6,523,753 |   |          | 6,446,781 |   |         | 5,222,483 |   |         | 4,659,484 |   |         | 4,441,230 |  
|Unearned discounts, premiums and deferred loan fees, net          |  |                        | 14,944    |   |          | 16,614    |   |         | 8,652     |   |         | 2,810     |   |         | 2,586     |  
|Loans in process                                                  |  |                        | (50,050   | ) |          | (59,733   | ) |         | (28,398   | ) |         | (28,158   | ) |         | (28,771   | )
|Allowance for loan losses                                         |  |                        | (34,437   | ) |          | (34,555   | ) |         | (21,372   | ) |         | (19,379   | ) |         | (19,471   | )
|                                                                  |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|Loans receivable, net                                             |  | $                      | 6,454,210 |   |          | 6,369,107 |   |         | 5,181,365 |   |         | 4,614,757 |   |         | 4,395,574 |  
|                                                                  |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  
|One- to four-family mortgage loans as a percentage of total loans |  |                        | 60.8      | % |          | 61.6      |   |         | 75.1      |   |         | 76.9      |   |         | 77.3      |  
|                                                                  |  |                        |           |   |          |           |   |         |           |   |         |           |   |         |           |  



The above table
reflects the continuing shift in the loan portfolio mix resulting from the 2003 acquisitions. These acquisitions quickened the pace of loan diversification away from one- to-four family real estate loans that started in 2000 with an increased
emphasis on originating equity lines of credit and continued with the formation of a business banking department in 2001. Since December 31, 1999, the concentration in one- to-four family mortgage loans has been reduced from 89.4% to the current
60.8%.



Deposits. The following table sets forth the
composition of the deposit portfolio at March 31, 2004 and December 31, 2003. The percent of core deposits to total deposits has increased from 58.2% at December 31, 2003 to 59.9% at March 31, 2004.



|                              |  |                        |           |                      |                   |   |               |                    |   |        |   |                      |  |              |  |       |   |  |   |         |  
|----------------------------- |  | ---------------------- | --------- | -------------------- | ----------------- | - | ------------- | ------------------ | - | ------ | - | -------------------- |  | ------------ |  | ----- | - |  | - | ------- | -
|                              |  | March 31, 2004         |           |                      | December 31, 2003 |   |               | Increase(Decrease) |  
|                              |  | Amount                 |           | WeightedAverage Rate |                   |   | % of Deposits |                    |   | Amount |   | WeightedAverage Rate |  | % ofDeposits |  |      
|                              |  | (Dollars in thousands) |           |                      |                   |  
|Non-interest bearing checking |  | $                      | 448,876   |                      |                  |   |               | 8.0                | % |        | $ | 434,935              |  |             |  | 7.8   | % |  | $ | 13,941  |  
|NOW accounts                  |  |                        | 750,490   |                      | .83               |   |               | 13.4               |   |        |   | 555,675              |  | .42          |  | 10.0  |   |  |   | 194,815 |  
|Money market accounts         |  |                        | 809,028   |                      | .71               |   |               | 14.4               |   |        |   | 904,728              |  | .78          |  | 16.2  |   |  |   | (95,700 | )
|Passbook accounts             |  |                        | 1,356,525 |                      | .58               |   |               | 24.1               |   |        |   | 1,353,881            |  | .66          |  | 24.2  |   |  |   | 2,644   |  
|                              |  |                        |           |                      |                   |   |               |                    |   |        |   |                      |  |              |  |       |   |  |   |         |  
|Total core deposits           |  |                        | 3,364,919 |                      | .60               |   |               | 59.9               |   |        |   | 3,249,219            |  | .56          |  | 58.2  |   |  |   | 115,700 |  
|Certificate accounts          |  |                        | 2,253,208 |                      | 2.48              |   |               | 40.1               |   |        |   | 2,331,236            |  | 2.55         |  | 41.8  |   |  |   | (78,028 | )
|                              |  |                        |           |                      |                   |   |               |                    |   |        |   |                      |  |              |  |       |   |  |   |         |  
|Total deposits                |  | $                      | 5,618,127 |                      | 1.36              | % |               | 100.0              | % |        | $ | 5,580,455            |  | 1.39         |  | 100.0 | % |  | $ | 37,672  |  
|                              |  |                        |           |                      |                   |   |               |                    |   |        |   |                      |  |              |  |       |   |  |   |         |  



21



---

##### Table of Contents

Asset Quality



Non-Performing Assets. The Bank ceases the accrual of interest when, based on current information and events, it is probable that the Bank
will be unable to collect all amounts due according to the contractual terms of the loan. Generally, when a loan is 90 days or more past due, in the process of foreclosure, or in bankruptcy, the full amount of previously accrued but unpaid interest
is deducted from interest income. For commercial real estate, construction, large multi-family loans, and business loans, subsequent cash payments are applied first to principal until recovery of principal is assured and then to interest income. For
one-to four-family residential loans, consumer loans, smaller multi-family residential loans and land loans, income is subsequently recorded to the extent cash payments are received, or at the time when the loan is brought current in accordance with
its original terms. Additionally, the Bank considers the classification of investment securities, should they show signs of deteriorating quality.



The following table sets forth information regarding non-accrual loans, non-accrual investment securities, and foreclosed real estate of the Bank.



|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       
|----------------------------------------------------------------------------------------- |  | ---------------------- | ------ | - | -------- | ------ | ------- | ------ | ------- | ------ | ------- | ------
|                                                                                          |  | 3/31/04                |        |   | 12/31/03 |        | 9/30/03 |        | 6/30/03 |        | 3/31/03
|                                                                                          |  | (Dollars in thousands)
|Non-performing loans:                                                                     |  |                        |        |   |          |        |         |        |         |        |         |       
|Non-accrual loans:                                                                        |  |                        |        |   |          |        |         |        |         |        |         |       
|One-to four-family and multi-family loans                                                 |  | $                      | 24,604 |   |          | 27,107 |         | 24,198 |         | 19,725 |         | 22,219
|Multifamily                                                                               |  |                        | 1,338  |   |          | 477    |         | 493    |         | 25     |         | 215   
|Commercial real estate                                                                    |  |                        | 1,118  |   |          | 1,504  |         | 139    |         | 775    |         | 944   
|Consumer loans                                                                            |  |                        | 2,720  |   |          | 3,122  |         | 1,709  |         | 1,090  |         | 1,195 
|Commercial business loans                                                                 |  |                        | 479    |   |          | 577    |         | 1,079  |         | 776    |         | 670   
|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       
|Total non-performing loans:                                                               |  | $                      | 30,259 |   |          | 32,787 |         | 27,618 |         | 22,391 |         | 25,243
|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       
|Non-performing loans to total loans                                                       |  |                        | .46    | % |          | .51    |         | .56    |         | .49    |         | .58   
|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       
|Non-accrual investment securities                                                         |  | $                      |       |   |          | 7,697  |         | 8,544  |         | 9,066  |         | 9,571 
|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       
|Foreclosed real estate- (One- to four-family)                                             |  | $                      | 1,920  |   |          | 3,200  |         | 520    |         | 1,345  |         | 2,127 
|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       
|Non-performing loans and foreclosed real estate to total loans and foreclosed real estate |  |                        | .49    | % |          | .56    |         | .57    |         | .52    |         | .63   
|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       
|Total non-performing assets                                                               |  | $                      | 32,179 |   |          | 43,684 |         | 36,682 |         | 32,802 |         | 36,941
|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       
|Total non-performing assets to total assets                                               |  |                        | .35    | % |          | .49    |         | .55    |         | .55    |         | .62   
|                                                                                          |  |                        |        |   |          |        |         |        |         |        |         |       



Non-performing loans
decreased $2.5 million to $30.3 million, or .46% of total loans receivable at March 31, 2004, compared to $32.8 million, or .51% of loans receivable at December 31, 2003, and increased $5.0 million from $25.2 million, or .58% of total loans
receivable at March 31, 2003. The increase in non-performing loans year over year is primarily due to increases in one-to four-family, multi-family and consumer acquired in the St. Francis and Fidelity acquisitions and are not indicative of
deterioration in overall loan portfolio quality. Non-performing assets were $32.2 million or .35% of total assets at March 31, 2004, compared to $43.7 million or .49% of total assets at December 31, 2003, and $36.9 million or .62% of total assets at
March 31, 2003. The decrease in non-performing assets from December 31, 2003 to March 31, 2004 is primarily due to the sale of two non-accrual aircraft related investment securities in the first quarter of 2004.



For the quarter ended March 31, 2004, interest on non-accrual loans that
would have been recorded as income, had they been performing according to their original terms, amounted to $516,000, compared to $459,000 for the three months ended March 31, 2003.



22



---

##### Table of Contents

Non-Performing Residential Properties. Ratios for loans secured by one-to-four family residential
properties were as follows:



|                                                                                                                                        |  |               |   |  |                  |  |              
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | - |  | ---------------- |  | -------------
|                                                                                                                                        |  | March 31,2004 |   |  | December 31,2003 |  | March 31,2003
|Loan types secured by residential real estate:                                                                                          |  |               |   |  |                  |  |              
|One- to four-family loans                                                                                                               |  | 61            | % |  | 62               |  | 77           
|Consumer loans                                                                                                                          |  | 15            |   |  | 14               |  | 10           
|                                                                                                                                        |  |               |   |  |                  |  |              
|Total                                                                                                                                   |  | 76            |   |  | 76               |  | 87           
|                                                                                                                                        |  |               |   |  |                  |  |              
|Non-performing loans secured by residential real estate as a percentage of total non-performing loans                                   |  | 90            |   |  | 92               |  | 94           
|Non-performing loans secured by residential real estate with private mortgage insurance or other guarantees                             |  | 40            |   |  | 42               |  | 50           
|Average loan-to-value of non-performing loans secured by residential real estate without private mortgage insurance or other
guarantees |  | 70            |   |  | 65               |  | 71           



Classified
Assets. The federal regulators have adopted a classification system for problem assets of insured institutions which covers all problem assets and requires certain reserves. Under this classification system, problem assets of insured
institutions are classified as substandard, doubtful or loss. In addition, a special mention category consists of assets, which currently do not expose the Company to a sufficient degree of risk to
warrant classification, but do possess deficiencies deserving managements close attention.



In connection with the filing of its periodic reports with the OTS, the Bank regularly reviews the problem loans in its portfolio to determine whether any
loans require classification in accordance with applicable regulations. At March 31, 2004 and December 31, 2003, all of the Banks non-performing loans were classified as substandard. In addition, the Bank classified $16.1 million and $6.3
million of commercial real estate, land development and commercial business loans on accrual basis as substandard for regulatory purposes at March 31, 2004 and December 31, 2003, respectively. These loans are generally performing in accordance with
the terms of the loan agreement and are adequately secured based on the current value of the underlying collateral. The Bank also classified portions of other loans totaling $840,000 and $750,000 as doubtful at March 31, 2004 and December 31, 2003
respectively. Special mention loans at March 31, 2004 and December 31, 2003 totaled $21.3 million and $39.1 million, respectively.



23



---

##### Table of Contents

Allowance for Loan Losses



Activity in the allowance for loan losses is summarized in the following table for the three months ended March 31, 2004 and
2003.



|                                                  |  |                              |        |   |      |        |  
|------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | ------ | -
|                                                  |  | Three Months Ended March 31, |       
|                                                  |  | 2004                         |        |   | 2003 |       
|                                                  |  | (Dollars in thousands)       |       
|Balance at beginning of period                    |  | $                            | 34,555 |   |      | 19,483 |  
|Provision for loan losses                         |  |                              | 300    |   |      |       |  
|Charge-offs                                       |  |                              | (441   | ) |      | (30    | )
|Recoveries                                        |  |                              | 23     |   |      | 18     |  
|                                                  |  |                              |        |   |      |        |  
|Balance at end of period                          |  | $                            | 34,437 |   |      | 19,471 |  
|                                                  |  |                              |        |   |      |        |  
|Allowance for loan losses to total loans          |  |                              | .53    | % |      | .45    |  
|Allowance for loan losses to non-performing loans |  |                              | 113.80 |   |      | 77.13  |  



The allowance for loan
losses increased $15.0 million from March 31, 2003 to March 31, 2004 primarily due to balances acquired in the Fidelity and St. Francis acquisitions. The Bank made a provision for loan losses of $300,000 during the first quarter of 2004 compared to
no provision in the prior year first quarter. Net charge-offs for the three months ended March 31, 2004 were $418,000 compared to $12,000 for the three months ended March 31, 2003.



Liquidity and Capital Resources



At the holding company level, the Companys principal sources of funds during the three months ended March 31, 2004 were cash dividends paid by the
Bank of $20.0 million. The Companys principal uses of funds during the three months ended March 31, 2004 were cash dividends to shareholders and stock repurchases. During the three-month period ended March 31, 2004, the Company repurchased
265,500 shares of its common stock at an average price of $42.93 per share, for a total of $11.4 million. For the three-month period ended March 31, 2004, the Company declared common stock dividends of $.21 per share, or $7.0 million.



The Banks principal sources of funds are deposits, advances from the
FHLB of Chicago, principal repayments on loans and mortgage-backed securities, proceeds from the sale of loans, other borrowings, and funds provided by operations. While scheduled loan and mortgage-backed securities amortization and maturing
investment securities are a relatively predictable source of funds, deposit flows as well as loan and mortgage-backed securities prepayments are greatly influenced by economic conditions, the general level of interest rates and competition. The Bank
utilizes particular sources of funds based on comparative costs and availability. The Bank generally manages the pricing of its deposits to maintain a steady to increasing deposit portfolio in the aggregate, but has from time to time decided not to
pay rates on deposits as high as its competition, and when necessary, to supplement deposits with longer term and/or other alternative sources of funds such as FHLB advances and other borrowings. The Bank currently expects that due to increased
competition for deposits in its markets, that more of its growth is expected to be funded with higher cost wholesale borrowings.



During the three months ended March 31, 2004, the Bank originated loans totaling $900.9 million compared with $1.06 billion during the same period in
2003. Loan sales, for the three months ended March 31, 2004, were $129.5 million, compared to $477.6 million for the prior year period. The Bank had outstanding commitments to originate loans of $815.9 million and commitments to sell loans of $112.8
million at March 31, 2004. At March 31, 2004, the Company believes that it has sufficient cash to fund its outstanding commitments or will be able to obtain the necessary funds from outside sources to meet its cash requirements.



24



---

##### Table of Contents

The following table lists contractual obligations coming due in the periods indicated at March 31, 2004:



|                                                   |  |                        |           |                  |           |             |           |             |         |              |        
|-------------------------------------------------- |  | ---------------------- | --------- | ---------------- | --------- | ----------- | --------- | ----------- | ------- | ------------ | -------
|                                                   |  | Total                  |           | Less than 1 Year |           | 1 to 3Years |           | 4 to 5Years |         | After 5Years
|                                                   |  | (Dollars in thousands)
|Certificate of deposits                            |  | $                      | 2,253,208 |                  | 1,440,830 |             | 668,073   |             | 129,765 |              | 14,540 
|FHLB of Chicago advances                           |  |                        | 2,102,813 |                  | 410,000   |             | 1,137,813 |             | 400,000 |              | 155,000
|Unsecured bank term loan and line of credit        |  |                        | 55,000    |                  | 17,000    |             | 16,000    |             | 22,000  |              |       
|Other borrowings                                   |  |                        | 208,202   |                  | 58,202    |             | 100,000   |             | 50,000  |              |       
|Purchase obligations                               |  |                        | 5,226     |                  | 3,329     |             | 1,717     |             |        |              | 180    
|Real estate development land purchase contracts(1) |  |                        | 12,191    |                  | 5,609     |             | 6,082     |             | 500     |              |       
|Post retirement benefit plans                      |  |                        | 3,350     |                  | 33        |             | 190       |             | 397     |              | 2,730  
|Operating leases                                   |  |                        | 82,295    |                  | 7,029     |             | 12,305    |             | 11,429  |              | 51,532 
|                                                   |  |                        |           |                  |           |             |           |             |         |              |        
|Total                                              |  | $                      | 4,722,285 |                  | 1,942,032 |             | 1,942,180 |             | 614,091 |              | 223,982
|                                                   |  |                        |           |                  |           |             |           |             |         |              |        

---

|(1) | Reflects contractual obligations to purchase remaining land. It does not include the
approximately $58 million of estimated additional improvement costs not yet contracted for and expected to be expended over the next several years in the Springbank project.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





The Bank has historically been able to renew a
majority of its certificates upon maturity, and has not historically used more rate-sensitive brokered certificates for its funding, but rather, relies on retail oriented accounts. Additionally, its core deposits, which do not have a stated
contractual maturity, have generally been very stable over time, and are not expected to be redeemed in large amounts during the remainder of 2004. As such, the $1.44 billion of certificates of deposits maturing in 2004, as well as the balances of
core deposits are not expected to put a burden on the Banks cash needs. The Bank has the ability to refinance any advance coming due with the FHLB of Chicago, which it generally does in the normal course of business when the loan portfolio is
growing. Should its loan portfolio growth be slower, due to prepayments in its loan portfolio, the Bank will have adequate liquidity to repay its maturing advances. Net savings outflows, if any, as well as expected loan portfolio growth for the
remainder of 2004 could also be met by additional advances from the FHLB of Chicago and/or obtaining brokered certificates of deposit or other borrowings. The Companys unsecured bank term loan and line of credit amounts are repaid in the
normal course of business primarily through dividends from the Bank.



Since December 31, 2003, the Bank has experienced a $254.2 million increase in mortgage loan commitments which totaled $815.9 million at March 31, 2004, compared to $561.7 million at December 31, 2003. At March 31, 2004, the Bank had $11.2
million of credit risk related to loans sold to the MPF program with recourse provisions, $62.7 million of loans sold with recourse to other investors and approximately $20.2 million of credit risk related to loans with private mortgage insurance in
force.



The following table lists the commitments and
contingencies of the Company and the Bank as of March 31, 2004:



|                                          |  |                        |           |                  |           |             |         |             |         |              |        
|----------------------------------------- |  | ---------------------- | --------- | ---------------- | --------- | ----------- | ------- | ----------- | ------- | ------------ | -------
|                                          |  | Total                  |           | Less than 1 Year |           | 1 to 3Years |         | 4 to 5Years |         | After 5Years
|                                          |  | (Dollars in thousands)
|Mortgage loan commitments                 |  | $                      | 815,889   |                  | 815,889   |             |        |             |        |              |       
|Unused equity lines of credit balances(1) |  |                        | 866,580   |                  | 25,125    |             | 102,739 |             | 158,950 |              | 579,766
|Commercial business lines(1)              |  |                        | 128,854   |                  | 93,978    |             | 33,247  |             | 958     |              | 671    
|Letters of credit(2)                      |  |                        | 70,630    |                  | 22,125    |             | 15,029  |             | 10,281  |              | 23,195 
|Commercial business loan commitments      |  |                        | 18,614    |                  | 18,614    |             |        |             |        |              |       
|Recourse provisions                       |  |                        | 94,058    |                  | 94,058    |             |        |             |        |              |       
|                                          |  |                        |           |                  |           |             |         |             |         |              |        
|Total                                     |  | $                      | 1,994,625 |                  | 1,069,789 |             | 151,015 |             | 170,189 |              | 603,632
|                                          |  |                        |           |                  |           |             |         |             |         |              |        

---

|(1) | Balances shown are at the remaining maturity of the commitment.
|--- | ---------------------------------------------------------------

|(2) | Letters of credit include $5.0 million related to land development projects.
|--- | ----------------------------------------------------------------------------



25



---

##### Table of Contents

Asset/Liability Management



As part of its normal operations, the Bank is subject to interest-rate risk on the interest-sensitive assets it invests in
and the interest-sensitive liabilities it borrows. The Banks exposure to interest rate risk is reviewed at least quarterly by the Banks asset/liability management committee (ALCO) and the Board of Directors of the Company.
The ALCO, which includes certain members of the board of directors and senior management, monitors the rate and sensitivity repricing characteristics of the individual asset and liability portfolios the Bank maintains and determines risk management
strategies.



The Bank utilizes an interest rate sensitivity gap
analysis to monitor the relationship of maturing or repricing interest-earning assets and interest-bearing liabilities, while maintaining an acceptable interest rate spread. Interest rate sensitivity gap is defined as the difference between the
amount of interest-earning assets maturing or repricing within a specific period of time and the amount of interest-bearing liabilities maturing or repricing within that same period of time, and is usually analyzed at a period of one year.
Generally, a positive gap, where more interest-earning assets are repricing or maturing than interest-bearing liabilities, would tend to result in a reduction in net interest income in a period of falling interest rates. Conversely, during a period
of rising interest rates, a positive gap would likely result in an improvement in net interest income. Managements goal is to maintain its cumulative one-year gap within the range of (15)% to 15%. The gap ratio fluctuates as a result of market
conditions and managements decisions based on its expectation of future interest rate trends, as well as the impact of the interest rate risk position of acquired institutions. The Banks asset/liability management strategy emphasizes the
origination of one- to four-family adjustable-rate loans and other loans which have shorter terms to maturity or reprice more frequently than fixed-rate mortgage loans, yet provide a positive margin over the Banks cost of funds, for its own
portfolio. Historically, the Bank has generally sold its conforming long-term fixed-rate loan originations in the secondary market in order to improve and maintain its interest rate sensitivity levels.



The Bank, except as noted below, has not used derivative financial
instruments such as interest rate swaps, caps, floors, options or similar financial instruments to manage its interest rate risk. However, in conjunction with its origination and sale strategy discussed above, management does hedge the Banks
exposure to interest rate risk primarily by committing to sell fixed-rate mortgage loans for future delivery. Under these commitments, the Bank agrees to sell fixed-rate loans at a specified price and at a specified future date. The sale of
fixed-rate mortgage loans for future delivery has enabled the Bank to continue to originate new mortgage loans, and to generate gains on sale of these loans as well as loan servicing fee income, while maintaining its gap ratio within the parameters
discussed above. Most of these forward sale commitments are conducted with Fannie Mae, Freddie Mac and the MPF with respect to loans that conform to the requirements of these government agencies. The forward commitment of mortgage loans presents a
risk to the Bank if the Bank is not able to deliver the mortgage loans by the commitment expiration date. If this should occur, the Bank would be required to pay a fee to the buyer. The Bank attempts to mitigate this risk by charging potential
retail borrowers a 1% fee to fix the interest rate. The Bank also estimates a percentage of fallout when determining the amount of forward commitments to enter into. In addition, the Bank uses U.S. Treasury bond futures contracts to hedge some of
the mortgage pipeline exposure. These futures contracts are used to hedge mortgage loan production in those circumstances where loans are not sold forward as described above.



The table on the next page sets forth the scheduled repricing or maturity of the Banks assets and liabilities at March
31, 2004 and managements assumptions regarding prepayment percentages on loans and mortgage-backed securities, based on its current experience in these portfolios. The Bank uses the withdrawal assumptions used by the Office of Thrift
Supervision with respect to NOW, checking and passbook accounts, which are 17.0%, 17.0%, 17.0%, 16.0%, and 33.0%, respectively, although they are considered conservative by the ALCO. Investment securities and borrowings that contain call or put
provisions are generally shown in the category relating to their respective final maturities. However, a $400,000 investment with a final maturity of 46 months, but callable in six months or less is categorized in the six months or less category, in
anticipation of its call. At March 31, 2004, the Bank had $710.0 million of FHLB advances that contain various put positions exercisable at the option of the FHLB of Chicago. At March 31, 2004, $30 million are shown in the six-month to one-year
category and $125 million are shown in the one- to three-year category



26



---

##### Table of Contents

relating to their put option date based on the expected exercise of the put option by the FHLB of Chicago and the
remaining $555 million are shown in the category relating to their final maturities. At March 31, 2004, $150 million of the Banks reverse repurchase agreements with final maturities greater than one year were shown on the less than six months
category due to their expected call in the current interest rate environment.



The effect of these assumptions is to quantify the dollar amount of items that are interest-sensitive and may be repriced within each of the periods specified. Certain shortcomings are inherent in using gap analysis
to quantify exposure to interest rate risk. For example, although certain assets and liabilities may have similar maturities or repricings in the table, they may react differently to actual changes in market interest rates. The interest rates on
certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. This is especially true in circumstances where management has a certain
amount of control over interest rates, such as the pricing of deposits. Additionally, certain assets such as hybrid adjustable-rate mortgage loans have features that restrict changes in interest rates on a short-term basis and over the life of the
asset. Finally, as interest rates change, actual loan prepayment rates may differ significantly from those rates assumed by management for presentation purposes in the table.



27



---

##### Table of Contents

Though management believes that its asset/liability management strategies help to mitigate the potential
negative effects of changes in interest rates on the Banks operations, a decrease in long term interest rates in the near term may adversely affect the Banks operations because prepayments on higher-yielding mortgage-related assets would
likely accelerate and would be reinvested at lower rates. Conversely, increases in long-term interest rates could benefit the Banks operation primarily due to a slowing of prepayments on higher yielding loans receivable and mortgage-backed
securities and rates adjusting upward and new loans at higher rates.



|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|-------------------------------------------------------------------------------------- |  | ---------------------- | --------- | - | -------------------------- | -------- | - | -------------------------- | --------- | -------------------------- | --------- | ---------------- | ------- | - | ----- | ---------
|                                                                                       |  | At March 31, 2004     
|                                                                                       |  | 6 Months or Less       |           |   | More Than6 Monthsto 1 Year |          |   | More Than1 Year to 3 Years |           | More Than3 Years to5 Years |           | More Than5 Years |         |   | Total
|                                                                                       |  | (Dollars in thousands)
|Interest-earning assets:                                                               |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Real estate loans                                                                      |  | $                      | 812,918   |   |                            | 569,824  |   |                            | 2,085,301 |                            | 1,118,366 |                  | 695,097 |   |       | 5,281,506
|Consumer loans                                                                         |  |                        | 993,373   |   |                            | 12,682   |   |                            | 23,681    |                            | 22,601    |                  | 15,489  |   |       | 1,067,826
|Commercial business loans                                                              |  |                        | 50,358    |   |                            | 23,824   |   |                            | 33,958    |                            | 28,961    |                  | 2,214   |   |       | 139,315  
|Mortgage-backed securities                                                             |  |                        | 154,495   |   |                            | 131,761  |   |                            | 327,875   |                            | 175,700   |                  | 255,311 |   |       | 1,045,142
|Interest-bearing deposits                                                              |  |                        | 58,452    |   |                            |         |   |                            |          |                            |          |                  |        |   |       | 58,452   
|Federal funds sold                                                                     |  |                        | 15,502    |   |                            |         |   |                            |          |                            |          |                  |        |   |       | 15,502   
|Investment securities(1)                                                               |  |                        | 538,811   |   |                            | 9,737    |   |                            | 59,558    |                            | 130,153   |                  | 15,229  |   |       | 753,488  
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Total interest-earning assets                                                          |  |                        | 2,623,909 |   |                            | 747,828  |   |                            | 2,530,373 |                            | 1,475,781 |                  | 983,340 |   |       | 8,361,231
|Impact of hedging activity(2)                                                          |  |                        | 36,696    |   |                            |         |   |                            |          |                            |          |                  | (36,696 | ) |       |         
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Total net interest-earning assets adjusted for impact of hedging activities            |  |                        | 2,660,605 |   |                            | 747,828  |   |                            | 2,530,373 |                            | 1,475,781 |                  | 946,644 |   |       | 8,361,231
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Interest-bearing liabilities:                                                          |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|NOW and checking accounts                                                              |  |                        | 63,790    |   |                            | 58,369   |   |                            | 213,632   |                            | 132,704   |                  | 281,995 |   |       | 750,490  
|Money market accounts                                                                  |  |                        | 809,028   |   |                            |         |   |                            |          |                            |          |                  |        |   |       | 809,028  
|Passbook accounts                                                                      |  |                        | 115,590   |   |                            | 105,480  |   |                            | 386,055   |                            | 239,808   |                  | 509,592 |   |       | 1,356,525
|Certificate accounts                                                                   |  |                        | 949,495   |   |                            | 491,335  |   |                            | 668,073   |                            | 129,765   |                  | 14,540  |   |       | 2,253,208
|FHLB advances                                                                          |  |                        | 411,092   |   |                            | 290,705  |   |                            | 936,840   |                            | 400,000   |                  | 80,000  |   |       | 2,118,637
|Other borrowings                                                                       |  |                        | 232,523   |   |                            | 30,170   |   |                            | 218       |                            | 33        |                  | 257     |   |       | 263,201  
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Total interest-bearing liabilities                                                     |  |                        | 2,581,518 |   |                            | 976,059  |   |                            | 2,204,818 |                            | 902,310   |                  | 886,384 |   |       | 7,551,089
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Interest sensitivity gap                                                               |  | $                      | 79,087    |   |                            | (228,231 | ) |                            | 325,555   |                            | 573,471   |                  | 60,260  |   |       | 810,142  
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Cumulative gap                                                                         |  | $                      | 79,087    |   |                            | (149,144 | ) |                            | 176,411   |                            | 749,882   |                  | 810,142 |   |       |          
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Cumulative gap assets as a percentage of total assets                                  |  |                        | .87       | % |                            | (1.64    | ) |                            | 1.94      |                            | 8.26      |                  | 8.92    |   |       |          
|Cumulative net interest-earning assets as a percentage of interest-bearing liabilities |  |                        | 103.06    | % |                            | 95.81    |   |                            | 103.06    |                            | 111.25    |                  | 110.73  |   |       |          
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|At December 31, 2003                                                                   |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Cumulative gap                                                                         |  | $                      | 104,689   |   |                            | (142,378 | ) |                            | 173,705   |                            | 565,136   |                  | 756,617 |   |       |          
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          
|Cumulative gap assets as a percentage of total assets                                  |  |                        | 1.17      | % |                            | (1.59    | ) |                            | 1.94      |                            | 6.33      |                  | 8.47    |   |       |          
|Cumulative net interest-earning assets as a percentage of interest-bearing liabilities |  |                        | 104.26    | % |                            | 95.89    |   |                            | 103.07    |                            | 108.53    |                  | 110.16  |   |       |          
|                                                                                       |  |                        |           |   |                            |          |   |                            |           |                            |           |                  |         |   |       |          

---

|(1) | Includes $390.9 million of stock in FHLB of Chicago in 6 months or less.
|--- | ------------------------------------------------------------------------

|(2) | Represents forward commitments to sell long-term fixed-rate mortgage loans.
|--- | ---------------------------------------------------------------------------



28



---

##### Table of Contents

Regulatory Capital. Savings associations must satisfy three different measures of capital adequacy: core
and tangible capital to total assets ratios as well as a regulatory capital to total risk-weighted assets ratio. The minimum level required for each of these capital standards is established by regulation. The Company has managed its balance sheet
so as to reasonably exceed these minimums. The acquisitions of Fidelity and St. Francis did not have a significant impact on capital adequacy levels.



At March 31, 2004 and December 31, 2003, the Bank exceeded all of the minimum capital requirements as follows:



|                                    |  |                        |           |                  |                   |   |        |   |                  |  |       |  
|----------------------------------- |  | ---------------------- | --------- | ---------------- | ----------------- | - | ------ | - | ---------------- |  | ----- | -
|                                    |  | March 31, 2004         |           |                  | December 31, 2003 |  
|                                    |  | Amount                 |           | Percent ofAssets |                   |   | Amount |   | Percent ofAssets | 
|                                    |  | (Dollars in thousands) |          
|Stockholders equity of the Bank    |  | $                      | 906,344   |                  | 10.05             | % |        | $ | 896,783          |  | 10.10 | %
|                                    |  |                        |           |                  |                   |   |        |   |                  |  |       |  
|Tangible capital                    |  | $                      | 621,678   |                  | 7.11              | % |        | $ | 615,582          |  | 7.16  | %
|Tangible capital requirement        |  |                        | 131,129   |                  | 1.50              |   |        |   | 129,000          |  | 1.50  |  
|                                    |  |                        |           |                  |                   |   |        |   |                  |  |       |  
|Excess                              |  | $                      | 490,549   |                  | 5.61              | % |        | $ | 486,582          |  | 5.66  | %
|                                    |  |                        |           |                  |                   |   |        |   |                  |  |       |  
|Core capital                        |  | $                      | 621,678   |                  | 7.11              | % |        | $ | 615,582          |  | 7.16  | %
|Core capital requirement            |  |                        | 349,677   |                  | 4.00              |   |        |   | 343,999          |  | 4.00  |  
|                                    |  |                        |           |                  |                   |   |        |   |                  |  |       |  
|Excess                              |  | $                      | 272,001   |                  | 3.11              | % |        | $ | 271,583          |  | 3.16  | %
|                                    |  |                        |           |                  |                   |   |        |   |                  |  |       |  
|Core and supplementary capital      |  | $                      | 645,587   |                  | 11.43             | % |        | $ | 640,413          |  | 11.45 | %
|Risk-based capital requirement      |  |                        | 451,836   |                  | 8.00              |   |        |   | 443,732          |  | 8.00  |  
|                                    |  |                        |           |                  |                   |   |        |   |                  |  |       |  
|Excess                              |  | $                      | 193,751   |                  | 3.43              | % |        | $ | 196,681          |  | 3.45  | %
|                                    |  |                        |           |                  |                   |   |        |   |                  |  |       |  
|Total Bank assets                   |  | $                      | 9,028,071 |                  |                   |   |        | $ | 8,882,976        |  |       |  
|Adjusted total Bank assets          |  |                        | 8,741,935 |                  |                   |   |        |   | 8,599,968        |  |       |  
|Total risk-weighted assets          |  |                        | 5,935,081 |                  |                   |   |        |   | 5,875,087        |  |       |  
|Adjusted total risk-weighted assets |  |                        | 5,647,945 |                  |                   |   |        |   | 5,592,079        |  |       |  



A reconciliation of
consolidated stockholders equity of the Bank for financial reporting purposes to capital available to the Bank to meet regulatory capital requirements is as follows:



|                                                                |  |                |          |   |                  |          |  
|--------------------------------------------------------------- |  | -------------- | -------- | - | ---------------- | -------- | -
|                                                                |  | March 31,2004  |          |   | December 31,2003 |         
|                                                                |  | (In thousands) |         
|Stockholders equity of the Bank                                |  | $              | 906,344  |   |                  | 896,783  |  
|Goodwill and core deposit intangibles                           |  |                | (275,537 | ) |                  | (276,549 | )
|Non-permissible subsidiary deduction                            |  |                | (326     | ) |                  | (252     | )
|Non-includable mortgage servicing rights                        |  |                | (2,381   | ) |                  | (2,413   | )
|Regulatory capital adjustment for available for sale securities |  |                | (6,422   | ) |                  | (1,987   | )
|Recourse on loan sales                                          |  |                | (10,486  | ) |                  | (9,682   | )
|General loan loss reserves                                      |  |                | 34,395   |   |                  | 34,513   |  
|                                                                |  |                |          |   |                  |          |  
|Core and supplementary capital                                  |  | $              | 645,587  |   |                  | 640,413  |  
|                                                                |  |                |          |   |                  |          |  



Outlook for the Balance of 2004



The Company currently expects earnings for 2004 to be in
the range of $3.45 to $3.55 per diluted share, or an increase of 6-9% over 2003. The Companys projections for 2004 assume balance sheet growth in the 9-11% range with more growth coming in lower yielding adjustable-rate mortgage loans and
equity lines of credit than expected at the beginning of the year. In addition, the Company expects less deposit growth than expected at the beginning of the year. This will result in more of the earning asset growth being funded with higher cost
wholesale borrowings. Mortgage loan originations are expected to be significantly lower during the year because of reduced refinancing activity. Due to the market shifting



29



---

##### Table of Contents

toward adjustable rate loans, the Company expects lower loan sale volumes and reduced margins for 2004 compared to 2003.
Assuming modest Federal Reserve tightening in the second half of 2004 and in light of expected changes in loan and funding mix, management expects the net interest margin to be in a range of 3.00%-3.10%. The Company is experiencing slower growth in
deposit account service fee revenues than expected at the beginning of the year and is currently estimating income from real estate operations in the range of $9.0-$10.5 million for 2004, with the income heavily weighted in the fourth quarter of the
year and dependent on receiving final approval on the Springbank project in the next thirty days. The projections also assume a strong housing purchase market, continued good credit quality, completion of the Companys previously authorized
stock buyback program, and successful conversion and integration of St. Francis systems in late May 2004. The majority of expected cost savings related to the St. Francis merger will not begin to be realized until the second half of 2004.
Based on these timing expectations and projection of loan originations, loan sales and income from real estate development, management expects that earnings will be stronger in the second half of 2004. Due to the timing of the St. Francis data
processing conversion, and expenses relating to management personnel and infrastructure added to accommodate the Companys growth, it is expected that the Companys efficiency ratio will be near 51% for 2004 before trending back down in
2005.



Item 3. Quantitative and Qualitative Disclosures About Market Risk



A quantitative and qualitative analysis about market risk is included in the Companys December 31, 2003 Form 10-K. There have been no material
changes in the assumptions used or in the results of market risk analysis as of March 31, 2004 since December 31, 2003. See Asset/Liability Management in Item 2, for a further discussion of the Companys interest rate sensitivity
gap analysis.



Item 4. Controls and Procedures



As of the end of the period covered by this report, the Companys Chief Executive Officer and Chief Financial Officer carried out an evaluation under their supervision, with the participation of other members of management as they
deemed appropriate, of the effectiveness of the design and operation of the Companys disclosure controls and procedures as contemplated by Rule 13a-15 under the Securities Exchange Act of 1934. Based upon, and as of the date of that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective, in all material respects, in timely alerting them to material information relating to the Company
(and its consolidated subsidiaries) and in ensuring that information required to be included in the periodic reports the Company files or submits to the SEC under the Securities Exchange Act is recorded, processed, summarized and reported as
required.



Part II - Other Information



Item 1. Legal Proceedings. Not applicable.



Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.



The Companys current stock repurchase plan, announced in May 2003, authorizes the purchase of up to 1.6 million shares of common stock. At March 31,
2004, 529,500 shares remain to be repurchased under the plan. The following table sets forth information in connection with purchases made by, or on behalf of, the Company, or any affiliated purchaser of the Company, of shares of the Companys
common stock within the first quarter of the fiscal year ended December 31, 2004.(1)



30



---

##### Table of Contents

|                                           |  |                                         |  |                                     |       |                                                                                        |         |                                                                                                                    |        
|------------------------------------------ |  | --------------------------------------- |  | ----------------------------------- | ----- | -------------------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------------------------------------------ | -------
|Period                                     |  | TotalNumber ofShares (orUnits)Purchased |  | AveragePrice Paidper Share(or Unit) |       | Total Number ofShares (or Units)Purchased asPart of PubliclyAnnounced Plansor Programs |         | Maximum Number(or ApproximateDollar Value) of Shares (or Units)that May Yet bePurchased under thePlans or Programs
|January 1, 2004 through January 31, 2004   |  | 10,000                                  |  | $                                   | 41.85 |                                                                                        | 10,000  |                                                                                                                    | 785,000
|                                           |  |                                         |  |                                    
|February 1, 2004 through February 29, 2004 |  | 65,500                                  |  |                                     | 43.31 |                                                                                        | 65,500  |                                                                                                                    | 719,500
|                                           |  |                                         |  |                                    
|March 1, 2004 through March 31, 2004       |  | 190,000                                 |  |                                     | 42.85 |                                                                                        | 190,000 |                                                                                                                    | 529,500
|                                           |  |                                         |  |                                     |       |                                                                                        |         |                                                                                                                    |        
|Total                                      |  | 265,500                                 |  | $                                   | 42.93 |                                                                                        | 265,500 |                                                                                                                    | 529,500
|                                           |  |                                         |  |                                     |       |                                                                                        |         |                                                                                                                    |        

---

|(1) | The table does not reflect 28,584 shares purchased pursuant to surrender of shares in payment of option exercise price and withholding tax.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



Item 3. Defaults Upon Senior Securities. Not applicable.



Item 4. Submission of Matters to a Vote of Security Holders. Not applicable.



Item 5. Other Information. None.



Item 6. Exhibits and Reports on Form 8-K.



(a) Exhibits.



Exhibit No. 3. Certificate of Incorporation and By-laws.



| | (i) | Restated Certificate of Incorporation. (Incorporated herein by reference to Exhibit 3.1 to Registrants Form 8-K dated December 19, 2000.)
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Amended and Restated By-laws of Registrant. (Incorporated herein by reference to Exhibit No. 3 to Registrants September 30, 2003 Form 10-Q.)
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------



Exhibit No. 10. Material Contracts.



| | (i) | Amendment dated March 23, 2004 to the Agreement Regarding Post-Employment Restrictive Covenants between MAF Bancorp, Inc., Mid America Bank, fsb and David C. Burba.*+
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                  |  |                                                                                                                                                                                
|----------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. 31.1. |  | Certification of Chief Executive Officer.+                                                                                                                                     
|                  | 
|Exhibit No. 31.2. |  | Certification of Chief Financial Officer.+                                                                                                                                     
|                  | 
|Exhibit No. 32.1. |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.+

---

|* | Indicates management contracts or compensatory plans or arrangements required to be filed as an exhibit.
|- | --------------------------------------------------------------------------------------------------------

|+ | Filed herewith.
|- | ---------------



31



---

##### Table of Contents

(b) Reports on Form 8-K.



On January 27, 2004, MAF Bancorp, Inc. filed a Current Report on Form 8-K/A to amend the Form 8-K previously
filed to announce completion of the acquisition of St. Francis Capital Corporation. The amendment included the pro forma financial information relating to the acquisition of St. Francis Capital Corporation.



On January 28, 2004, MAF Bancorp, Inc. filed a Current
Report on Form 8-K (Item 12) announcing its 2003 fourth quarter earnings results, and a copy of the press release was included as an exhibit.



32



---

##### Table of Contents

SIGNATURES



Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                     |  |     |  |                             
|-------------------- |  | --- |  | ----------------------------
|                     |  |     |  | MAF Bancorp. Inc.           
|                     |  |     |  | (Registrant)                
|                     |  |    
|Date:    May 7, 2004 |  | By: |  | /s/ Allen H. Koranda        
|                     |  |     |  | Allen H. Koranda            
|                     |  |     |  | Chairman of the Board and   
|                     |  |     |  | Chief Executive Officer     
|                     |  |    
|Date:    May 7, 2004 |  | By: |  | /s/ Jerry A. Weberling      
|                     |  |     |  | Jerry A. Weberling          
|                     |  |     |  | Executive Vice President and
|                     |  |     |  | Chief Financial Officer     



33