EXHIBIT 13

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| | Chairman's Message                                | 1 
| | ------------------------------------------------- | --
| | Selected Consolidated Financial Information       | 3 
| | Management's Discussion and Analysis of Financial
| | Condition and Results of Operations               | 5 
| | Consolidated Financial Statements                 | 20
| | Stockholder Information                           | 52
| | Corporate Information                             | 53

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| | Net income for the year ended December 31, 2003 was $1.7 million, with basic
earnings per share of $1.86.            
| | ---------------------------------------------------------------------------------------------------------------------
|
| | Return on Equity was 7.61% for the past twelve months, while return on assets was
..52%.                             
|
| | Book value per share outstanding increased to $24.45 as of December 31, 2003, up
from $23.33 as of December 31, 2002.

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| | /s/ Maureen G. Partynski
Maureen G. Partynski 
Chairman and CEO/s/ Michael R. Stevens
Michael R. Stevens
President
| | ------------------------------------------------------------------------------------------------------------------

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|                                   | At December 31,       
|---------------------------------- | ----------------------
|                                   | 2003                  
|                                   | (Dollars in Thousands)
|Selected Financial Condition Data: |                       
|                                   |                       
|Total assets                       | $318,774              
|Cash and cash equivalents          | 13,980                
|Loans receivable, net(1)           | 135,655               
|Loans held for sale                | ---                   
|Mortgage-backed securities:        |                       
|Held-to-maturity                   | 61,514                
|Available-for-sale                 | 29,165                
|Securities:                        |                       
|Held-to-maturity                   | 18,472                
|Available-for-sale                 | 36,190                
|FHLB stock                         | 10,647                
|Notes payable                      | 6,500                 
|Deposits                           | 206,672               
|FHLB advances                      | 79,807                
|Stockholders' equity               | 22,343                

|                                                   | Year Ended

December 31,
|-------------------------------------------------- | ------------------------
|                                                   | 2003                    
|                                                   | (Dollars in Thousands)  
|Selected Operations Data:                          |                         
|                                                   |                         
|Total interest income                              | $13,933                 
|Total interest expense                             | 7,478                   
|Net interest income                                | 6,455                   
|Provision for loan losses                          | ---                     
|Net interest income after provision for loanlosses | 6,455                   
|Fees and service charges                           | 892                     
|Gain (loss) on sales of securities                 | 870                     
|Gain on sales of loans                             | ---                     
|Other non-interest income                          | 701                     
|Total non-interest income                          | 2,463                   
|Total non-interest expense                         | 6,508                   
|Income before taxes                                | 2,410                   
|Provision for income taxes                         | 731                     
|Net income                                         | $  1,679                

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|                                                                                 | Year Ended December 31,
|-------------------------------------------------------------------------------- | -----------------------
|                                                                                 | 2003                   
|Selected Financial Ratios and Other Data:                                        |                        
|                                                                                 |                        
|Performance Ratios:                                                              |                        
|Return on assets (ratio of net income to average total assets)                   | 0.52%                  
|Return on equity (ratio of net income to average equity)(1)                      | 7.61                   
|Interest rate spread information:                                                |                        
|Average during period                                                            | 2.00                   
|End of period                                                                    | 1.80                   
|Net interest margin(2)                                                           | 2.10                   
|Ratio of operating expense to average total assets                               | 2.02                   
|Ratio of average interest-earning assets to average
interest-bearing liabilities | 104.00                 
|                                                                                 |                        
|Asset Quality Ratios:                                                            |                        
|Non-performing assets to total assets at end of period                           | 0.09                   
|Allowance for loan losses to non-performing loans                                | 332.99                 
|Allowance for loan losses to gross loans receivable                              | 0.71                   
|                                                                                 |                        
|Capital Ratios:                                                                  |                        
|Stockholders' equity to total assets at end of period                            | 7.01                   
|Average stockholders' equity to average assets                                   | 6.84                   
|                                                                                 |                        
|Other data:                                                                      |                        
|Number of full service offices                                                   | 6                      

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|                                   | Year Ended December 31,  
|---------------------------------- | -------------------------
|                                   | 2003                     
|                                   | AverageOutstandingBalance
|                                   | (Dollars in Thousands)   
|                                   |                          
|Interest Earning Assets:           |                          
|Loans receivable(1)                | $140,246                 
|Mortgage-backed securities(2)      | 94,899                   
|Securities(2)                      | 8,150                    
|Interest-bearing deposits          | 24,976                   
|Other earning assets(3)            | 39,297                   
|Total earning assets(1)            | 307,568                  
|Non-interest earning assets        | 14,916                   
|Total assets                       | $322,484                 
|                                   |                          
|Interest-Earning Liabilities:      |                          
|Savings deposits                   | $  78,434                
|Demand and NOW                     | 31,197                   
|MMDA                               | 10,185                   
|Certificates of Deposit            | 87,505                   
|Borrowings                         | 88,408                   
|Total interest-bearing liabilities | 295,729                  
|                                   |                          
|Non-interest-bearing liabilities   | 4,694                    
|Total liabilities                  | 300,423                  
|                                   |                          
|Equity                             | 22,061                   
|Total liabilities and equity       | $322,484                 
|                                   |                          
|Net interest/spread                |                          
|Margin                             |                          
|Assets to liabilities              | 104.00%                  

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|                                                                    | At December 31,
|------------------------------------------------------------------- | ---------------
|                                                                    | 2003           
|                                                                    |                
|Weighted average yield on:                                          |                
|Loans receivable(1)                                                 | 6.00%          
|Mortgage-backed securities(2)                                       | 4.09           
|Securities(2)                                                       | 4.09           
|Other interest-earning assets                                       | 2.73           
|Combined weighted average yield
on interest-earning assets          | 4.69           
|                                                                    |                
|Weighted average rate paid on:                                      |                
|Passbook savings                                                    | .50            
|NOW                                                                 | .20            
|MMDA                                                                | .75            
|Certificates of deposit                                             | 1.21           
|Borrowings                                                          | 4.91           
|Combined weighted average rate
paid on interest-bearing liabilities | 2.89           
|                                                                    |                
|Spread                                                              | 1.80%          

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|                                   | Year Ended December 31,

2003 vs. 2002 | Year Ended December 31,2002 vs. 2001
|---------------------------------- | -------------------------------------- | ------------------------------------
|                                   | Increase(Decrease)Due to               | Total

Increase                     
|                                   | Volume                                 | Rate                                
|                                   |                                        |                                     
|Interest-earning assets:           |                                        |                                     
|Loans receivable(1)                | $(647)                                 | $(1,153)                            
|Mortgage-backed securities         | 186                                    | (1,066)                             
|Securities                         | 60                                     | (70)                                
|Interest-bearing deposits          | 64                                     | (113)                               
|Other earning assets               | 766                                    | (386)                               
|Total interest-earning assets      | 429                                    | (2,788)                             
|                                   |                                        |                                     
|Interest-bearing liabilities:      |                                        |                                     
|Passbook savings                   | 91                                     | (531)                               
|NOW                                | 8                                      | (28)                                
|MMDA                               | (1)                                    | (43)                                
|Certificates of deposit            | 65                                     | (669)                               
|Borrowings                         | 367                                    | (237)                               
|                                   |                                        |                                     
|Total interest-bearing liabilities | 530                                    | (1,508)                             
|                                   |                                        |                                     
|Net interest/spread                | $(101)                                 | $(1,280)                            

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|Change inInterest Rates | Net Portfolio Value    | NPV as % of PV of Assets
|----------------------- | ---------------------- | ------------------------
|(Basis Points)          | $ Amount               | $ Change                
|                        | (Dollars in Thousands)
|                        |                        |                         
|+300                    | $17,146                | (12,443)                
|+200                    | 21,956                 | (7,634)                 
|+100                    | 26,332                 | (3,258)                 
|---                     | 29,590                 | ---                     
|-100                    | 30,088                 | 498                     
|-200                    | ---                    | ---                     
|-300                    | ---                    | ---                     

|Change inInterest Rates | Net Portfolio Value    | NPV as % of PV of Assets
|----------------------- | ---------------------- | ------------------------
|(Basis Points)          | $ Amount               | $ Change                
|                        | (Dollars in Thousands)
|                        |                        |                         
|+300                    | $23,394                | (6,371)                 
|+200                    | 27,202                 | (2,563)                 
|+100                    | 29,878                 | 113                     
|---                     | 29,765                 | ---                     
|-100                    | 27,672                 | (2,093)                 
|-200                    | ---                    | ---                     
|-300                    | ---                    | ---                     

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|                                  | In thousands  
|--------------------------------- | --------------
|                                  | Note
Reference
|Long-Term Debt                    |               
|FHLB Borrowings                   | 7             
|                                  |               
|Total                             |               
|                                  |               
|**Other Contractual Obligations** |               
|Non-Cancelable Operating Leases   | 4             

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| | Crowe Chizek and Company LLC
| | ----------------------------

20.

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|                                                          | 2003       | 2002      
|--------------------------------------------------------- | ---------- | ----------
|ASSETS                                                    |            |           
|Cash and due from banks                                   | $    4,210 | $    6,037
|Interest-bearing deposits in financial institutions       | 9,770      | 22,167    
|Cash and cash equivalents                                 | 13,980     | 28,204    
|Securities available-for-sale                             | 65,355     | 39,885    
|Securities held-to-maturity (fair value:  2003 - $81,510; |            |           
|2002 - $80,473)                                           | 79,986     | 77,444    
|Loans receivable, net                                     | 135,655    | 147,436   
|Federal Home Loan Bank stock, at cost                     | 10,647     | 10,136    
|Accrued interest receivable                               | 1,254      | 1,234     
|Goodwill                                                  | 903        | 903       
|Other intangible assets                                   | 411        | 501       
|Premises and equipment, net                               | 4,921      | 4,964     
|Bank-owned life insurance                                 | 5,294      | 5,068     
|Prepaid expenses and other assets                         | 368        | 386       
|Total assets                                              | $318,774   | $316,161  
|                                                         
|LIABILITIES AND STOCKHOLDERS' EQUITY                      |            |           
|Deposits                                                  | $206,672   | $201,725  
|Advances from Federal Home Loan Bank                      | 79,807     | 82,710    
|Note payable                                              | 6,500      | 6,350     
|Advance payments by borrowers for taxes and insurance     | 1,097      | 1,323     
|Accrued interest payable and other liabilities            | 2,355      | 2,569     
|Total liabilities                                         | 296,431    | 294,677   
|Stockholders' equity                                      |            |           
|Common stock                                              | 21         | 21        
|Additional paid-in capital                                | 21,221     | 20,838    
|Unearned ESOP shares                                      | (498)      | (665)     
|Unearned stock awards                                     | (74)       | (109)     
|Treasury stock, at cost                                   | (17,958)   | (17,788)  
|Retained earnings                                         | 19,431     | 18,384    
|Accumulated other comprehensive income                    | 200        | 803       
|Total equity                                              | 22,343     | 21,484    
|Total liabilities and stockholders' equity                | $318,774   | $316,161  

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21.

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|                                                    | 2003     | 2002    | 2001   
|--------------------------------------------------- | -------- | ------- | -------
|Interest income                                     |          |        
|Loans                                               | $  8,528 | $10,328 | $11,704
|Mortgage-backed and collateralized mortgage         |          |        
|obligation securities                               | 3,332    | 4,212   | 4,171  
|Securities                                          | 360      | 370     | 814    
|Other interest-earning assets                       | 1,713    | 1,382   | 1,292  
|Total interest income                               | 13,933   | 16,292  | 17,981 
|                                                   
|Interest expense                                    |          |        
|Deposits                                            | 2,885    | 3,993   | 6,461  
|Federal Home Loan Bank advances                     | 4,378    | 4,203   | 3,648  
|Note payable                                        | 215      | 260     | 384    
|Total interest expense                              | 7,478    | 8,456   | 10,493 
|                                                   
|Net interest income                                 | 6,455    | 7,836   | 7,488  
|                                                   
|Provision for loan losses                           | -        | -       | -      
|                                                   
|Net interest income after provision for loan losses | 6,455    | 7,836   | 7,488  
|                                                   
|Noninterest income                                  |          |        
|Fees and service charges                            | 892      | 736     | 842    
|Gain on sale of loans                               | -        | -       | 172    
|Gain on sale of securities                          | 870      | 571     | 280    
|Income from life insurance                          | 226      | 68      | -      
|Other                                               | 475      | 333     | 298    
|Total noninterest income                            | 2,463    | 1,708   | 1,592  
|                                                   
|Noninterest expense                                 |          |        
|Compensation and employee benefits                  | 3,665    | 3,557   | 3,299  
|Occupancy and equipment expenses                    | 1,084    | 1,043   | 1,015  
|Data processing                                     | 437      | 398     | 426    
|Federal insurance premiums                          | 32       | 34      | 34     
|Advertising and promotion                           | 203      | 255     | 225    
|Other                                               | 1,087    | 1,171   | 1,105  
|Total noninterest expense                           | 6,508    | 6,458   | 6,104  
|                                                   
|Income before provision for income taxes            | 2,410    | 3,086   | 2,976  
|                                                   
|Provision for income taxes                          | 731      | 1,031   | 1,006  
|                                                   
|Net income                                          | $1,679   | $2,055  | $1,970 
|                                                   
|Basic earnings per share                            | $1.86    | $2.31   | $2.18  
|                                                   
|Diluted earnings per share                          | $1.72    | $2.16   | $2.11  

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22.

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|                                | Common Stock | Additional Paid-inCapital | UnearnedESOPShares | UnearnedStockAwards | TreasuryStock | RetainedEarnings | AccumulatedOtherComprehensive Income | TotalStockholders'Equity | ComprehensiveIncome
|------------------------------- | ------------ | ------------------------- | ------------------ | ------------------- | ------------- | ---------------- | ------------------------------------ | ------------------------ | -------------------
|Balance at January 1, 2001      | $   21       | $20,353                   | $(997)             | $(590)              | $(16,083)     | $15,507          | $ 892                                | $19,103                 
|                               
|ESOP shares earned              | -            | 199                       | 166                | -                   | -             | -                | -                                    | 365                      |                    
|Stock awards earned             | -            | (8)                       | -                  | 247                 | -             | -                | -                                    | 239                      |                    
|Cash dividends ($.54 per share) | -            | -                         | -                  | -                   | -             | (558)            | -                                    | (558)                    |                    
|Purchase of treasury stock      | -            | -                         | -                  | -                   | (551)         | -                | -                                    | (551)                    |                    
|Comprehensive income:           |             
|Net income                      | -            | -                         | -                  | -                   | -             | 1,970            | -                                    | 1,970                    | $1,970             
|Change in unrealized gain on    |             
|securities available-for-sale,  |             
|net of reclassification and     |             
|tax effects                     | -            | -                         | -                  | -                   | -             | -                | 306                                  | 306                      | 306                
|                                |             
|Total comprehensive             |             
|income                          |              |                           |                    |                     |               |                  |                                      |                          | $2,276             
|                                |             
|Balance at December 31, 2001    | 21           | 20,544                    | (831)              | (343)               | (16,634)      | 16,919           | 1,198                                | 20,874                   |                    

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|                                 | Common Stock | Additional Paid-inCapital | UnearnedESOPShares | UnearnedStockAwards | TreasuryStock | RetainedEarnings | AccumulatedOtherComprehensive Income | TotalStockholders'Equity | ComprehensiveIncome
|-------------------------------- | ------------ | ------------------------- | ------------------ | ------------------- | ------------- | ---------------- | ------------------------------------ | ------------------------ | -------------------
|                                
|Balance at January 1, 2002       | $   21       | $20,544                   | $(831)             | $(343)              | $(16,634)     | $16,919          | $1,198                               | $20,874                  |                    
|                                
|ESOP shares earned               | -            | 274                       | 166                | -                   | -             | -                | -                                    | 440                      |                    
|Stock awards earned              | -            | -                         | -                  | 234                 | -             | -                | -                                    | 234                      |                    
|Cash dividends ($.60 per share)  | -            | -                         | -                  | -                   | -             | (590)            | -                                    | (590)                    |                    
|Exercise of 4,000 options        | -            | 20                        | -                  | -                   | 64            | -                | -                                    | 84                       |                    
|Purchase of treasury stock       | -            | -                         | -                  | -                   | (1,218)       | -                | -                                    | (1,218)                  |                    
|Comprehensive income:            |             
|Net income                       | -            | -                         | -                  | -                   | -             | 2,055            | -                                    | 2,055                    | $2,055             
|Change in unrealized gain on     |             
|securities available-for-sale,   |             
|net of reclassification and      |             
|tax effects                      | -            | -                         | -                  | -                   | -             | -                | (395)                                | (395)                    | (395)              
|Total comprehensive              |             
|income                           |              |                           |                    |                     |               |                  |                                      |                          | $1,660             
|                                
|Balance at December 31, 2002     | 21           | 20,838                    | (665)              | (109)               | (17,788)      | 18,384           | 803                                  | 21,484                   |                    
|                                
|ESOP shares earned               | -            | 318                       | 167                | -                   | -             | -                | -                                    | 485                      |                    
|Stock awards earned              | -            | -                         | -                  | 35                  | -             | -                | -                                    | 35                       |                    
|Cash dividends ($. 65 per share) | -            | -                         | -                  | -                   | (632)         | -                | (632)                                |                         
|Exercise of 11,050 options       | -            | 65                        | -                  | -                   | 178           | -                | -                                    | 243                      |                    
|Purchase of treasury stock       | -            | -                         | -                  | -                   | (348)         | -                | -                                    | (348)                    |                    
|Comprehensive income:            |             
|Net income                       | -            | -                         | -                  | -                   | -             | 1,679            | -                                    | 1,679                    | $1,679             
|Change in unrealized gain on     |             
|securities available-for-sale,   |             
|net of reclassification and      |             
|tax effects                      | -            | -                         | -                  | -                   | -             | -                | (603)                                | (603)                    | (603)              
|Total comprehensive              |             
|income                           |              |                           |                    |                     |               |                  |                                      |                          | $	1,076            
|                                
|Balance at December 31, 2003     | $   21       | $21,221                   | $(498)             | $(74)               | $(17,958)     | $19,431          | $200                                 | $22,343                  |                    

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|                                                             | 2003      | 2002      | 2001     
|------------------------------------------------------------ | --------- | --------- | ---------
|Cash flows from operating activities                         |          
|Net income                                                   | $   1,679 | $   2,055 | $   1,970
|Adjustments to reconcile net income to net cash provided     |          
|by operating activities                                      |          
|Depreciation and amortization                                | 339       | 435       | 511      
|Amortization of premiums and discounts on securities, net    | 1,709     | (312)     | 366      
|Net gain on sale of securities                               | (870)     | (571)     | (280)    
|Deferred income taxes expense                                | 214       | 433       | 343      
|ESOP compensation expense                                    | 485       | 440       | 365      
|Stock awards expense                                         | 35        | 234       | 239      
|Change in loans held for sale                                | -         | -         | (8,067)  
|Net gain on sale of loans                                    | -         | -         | (172)    
|FHLB stock dividends                                         | (511)     | (200)     | (248)    
|Increase in value of bank-owned life insurance               | (226)     | (68)      | -        
|Net change in accrued interest receivable                    | 20        | (18)      | 279      
|Net change in accrued interest payable and other liabilities | 8         | (175)     | 233      
|Amortization of deferred loan costs                          | 243       | (91)      | (28)     
|Net change in other assets                                   | (18)      | 334       | (2)      
|Net cash provided by (used in) operating activities          | 3,105     | 2,496     | (4,491)  
|                                                            
|Cash flows from investing activities                         |          
|Purchase of securities available-for-sale                    | (66,004)  | (15,909)  | (9,208)  
|Proceeds from sales of securities available-for-sale         | 8,087     | 2,196     | 2,347    
|Principal payments on mortgage-backed securities and         |          
|collateralized mortgage obligations                          | 80,057    | 31,144    | 28,103   
|Purchase of securities held-to-maturity                      | (52,980)  | (51,224)  | (28,801) 
|Proceeds from maturities and calls of securities             | 1,000     | 9,875     | 7,000    
|Purchase of FHLB stock                                       | -         | (6,191)   | -        
|Purchase of bank-owned life insurance                        | -         | (5,000)   | -        
|Net change in loans                                          | 11,538    | 9,128     | 6,615    
|Property and equipment expenditures                          | (206)     | (1,603)   | (284)    
|Net cash provided by (used in) investing activities          | (18,508)  | (27,584)  | 5,772    
|                                                            
|Cash flows from financing activities                         |          
|Net change in deposits                                       | 4,947     | 12,269    | 10,032   
|Increase in advance payments by borrowers for taxes          |          
|and insurance                                                | (226)     | (228)     | (78)     
|Notes payable                                                | 150       | 550       | 550      
|Borrowings from FHLB                                         | 4,097     | 13,725    | 30,985   
|Repayments of FHLB advances                                  | (7,000)   | -         | (31,450) 
|Purchase of treasury stock                                   | (348)     | (1,218)   | (551)    
|Exercise of stock options                                    | 191       | 69        | -        
|Dividends paid                                               | (632)     | (590)     | (558)    
|Net cash provided by financing activities                    | 1,179     | 24,577    | 8,930    
|                                                             |          
|Net change in cash and cash equivalents                      | (14,224)  | (511)     | 10,211   
|                                                            
|Cash and cash equivalents at beginning of year               | 28,204    | 28,715    | 18,504   
|                                                            
|Cash and cash equivalents at end of year                     | $13,980   | $28,204   | $28,715  

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25.

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|                                                                      | 2003   | 2002   | 2001   
|--------------------------------------------------------------------- | ------ | ------ | -------
|                                                                     
|Supplemental disclosures of cash flow information                     |       
|Cash paid during the year for                                         |       
|Interest                                                              | $7,550 | $8,500 | $10,610
|Income taxes                                                          | 261    | 585    | 701    
|                                                                     
|Supplemental disclosure of noncash investing and financing activities |       
|Transfer of loans held for sale to loans                              | -      | 8,595  | -      

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26.

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28.

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29.

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|                               | 2003   | 2002   | 2001  
|------------------------------ | ------ | ------ | ------
|                              
|Net income as reported         | $1,679 | $2,055 | $1,970
|Pro forma net income           | 1,669  | 1,747  | 1,762 
|                              
|Earnings per share as reported |       
|Basic                          | $1.86  | $2.31  | $2.18 
|Diluted                        | 1.72   | 2.16   | 2.11  
|                              
|Pro forma earnings per share   |       
|Basic                          | $1.84  | $2.08  | $1.95 
|Diluted                        | 1.71   | 1.83   | 1.89  

|Date of grant                                 | May 1, 2002
|--------------------------------------------- | -----------
|Options granted                               | 57,500     
|Estimated fair value of stock options granted | $3.04      
|Assumptions used                              |            
|Risk-free interest rate                       | 4.52%      
|Expected option life                          | 10 years   
|Expected stock price volatility               | .02        
|Expected dividend yield                       | 2.75%      

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30.

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|                                    | December 31, 2003
|----------------------------------- | -----------------
|                                    | AmortizedCost    
|                                   
|Securities available-for-sale       |                  
|FHLMC stock                         | $	7,517          
|FNMA stock                          | 5,495            
|Mortgage-backed securities          | 24,004           
|Collateralized mortgage obligations | 4,898            
|Other equity securities             | 23,113           
|                                    | $	65,027         
|                                   
|Securities held-to-maturity         |                  
|U.S. government agencies            | $	18,472         
|Mortgage-backed securities          | 56,212           
|Collateralized mortgage obligations | 5,302            
|                                    | $	79,986         

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31.

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|                                    | December 31, 2002
|----------------------------------- | -----------------
|                                    | AmortizedCost    
|                                   
|Securities available-for-sale       |                  
|FHLMC stock                         | $	7,519          
|FNMA stock                          | 5,495            
|Mortgage-backed securities          | 14,670           
|Collateralized mortgage obligations | 8,541            
|Other equity securities             | 2,344            
|                                    | $	38,569         
|                                   
|Securities held-to-maturity         |                  
|U.S. government agencies            | $	5,147          
|Mortgage-backed securities          | 52,043           
|Collateralized mortgage obligations | 20,254           
|                                    | $	77,444         

|                                              | Held-to-Maturity | Available-for-Sale
|--------------------------------------------- | ---------------- | ------------------
|                                              | AmortizedCost    | FairValue         
|                                             
|Due after five years through ten years        | $11,415          | $11,679           
|Due over ten years                            | 7,057            | 7,068             
|                                              | 18,472           | 18,747            
|                                             
|FHLMC stock                                   | -                | -                 
|FNMA stock                                    | -                | -                 
|Mortgage-backed securities and collateralized |                 
|mortgage obligations                          | 61,514           | 62,763            
|Other equity securities                       | -                | -                 
|                                             
|                                              | $79,986          | $81,510           

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32.

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|                      | For the Year Ended December 31,
|--------------------- | -------------------------------
|                      | 2003                           
|Proceeds              | $8,087                         
|Gross realized gains  | 888                            
|Gross realized losses | (18)                           

|                          | Less than 12 Months | 12 Months or More | Total    
|------------------------- | ------------------- | ----------------- | ---------
|Description of Securities | FairValue           | UnrealizedLoss    | FairValue
|                         
|FHLMC stock               | $   -               | $   -             | $4,400   
|FNMA stock                | -                   | -                 | 4,696    
|Mortgage-backed           |                    
|securities                | 22,637              | 201               | -        
|U.S. government           |                    
|agencies                  | 1,998               | 2                 | -        
|Other equity securities   | 10,507              | 142               | -        
|                         
|Total temporarily         |                    
|impaired                  | $35,142             | $345              | $9,096   

---

33.

---

---

|                                         | December 31,
|---------------------------------------- | ------------
|                                         | 2003        
|                                        
|First mortgage loans                     |             
|Secured by one-to-four-family residences | $108,091    
|Secured by multi-family                  | 18,748      
|Secured by commercial real estate        | 151         
|                                         | 126,990     
|Net deferred loan origination costs      | 525         
|Total first mortgage loans               | 127,515     
|                                        
|Consumer and other loans                 |             
|Home equity loans                        | 8,945       
|Loans on deposits                        | 103         
|Automobile loans                         | 61          
|Total consumer and other loans           | 9,109       
|Less allowance for loan losses           | 969         
|                                        
|                                         | $135,655    

---

34.

---

---

|Balance at December 31, 2002             | $1,257
|---------------------------------------- | ------
|New loans, extensions, and modifications | 460   
|Repayments                               | (482) 
|                                         |       
|Balance at December 31, 2003             | $1,235

|                             | Year Ended December 31,
|---------------------------- | -----------------------
|                             | 2003                   
|Balance at beginning of year | $969                   
|Provision charged to income  | -                      
|Charge-offs                  | -                      
|                             | $969                   

---

35.

---

---

|                                   | December 31,
|---------------------------------- | ------------
|                                   | 2003        
|Land                               | $1,592      
|Building and landscaping           | 4,160       
|Leasehold improvements             | 102         
|Furniture, fixtures, and equipment | 949         
|Total cost                         | 6,803       
|                                   |             
|Accumulated depreciation           | (1,882)     
|                                   | $4,921      

|                                | 2003   | 2002   | 2001  
|------------------------------- | ------ | ------ | ------
|                               
|Reported net income             | $1,679 | $2,055 | $1,970
|Addback:  Goodwill amortization | -      | -      | 67    
|                               
|Adjusted net income             | $1,679 | $2,055 | $2,037
|                               
|Basic earnings per share        |       
|Reported net income             | $1.86  | $2.31  | $2.18 
|Goodwill amortization           | -      | -      | .07   
|                               
|Adjusted net income             | $1.86  | $2.31  | $2.25 
|                               
|Diluted earnings per share      |       
|Reported net income             | $1.72  | $2.16  | $2.11 
|Goodwill amortization           | -      | -      | .07   
|                               
|Adjusted net income             | $1.72  | $2.16  | $2.18 

---

36.

---

---

|2004 | $91
|---- | ---
|2005 | 91 
|2006 | 91 
|2007 | 91 
|2008 | 47 

|2004 | $56,745
|---- | -------
|2005 | 12,666 
|2006 | 5,040  
|2007 | 7,064  
|2008 | 2,292  
|     |        
|     | $83,807

---

37.

---

---

|                           | December 31,       
|-------------------------- | -------------------
|                           | 2003               
|                           | WeightedAverageRate
|                          
|Advances from the FHLB due |                    
|2003                       |                    
|2004                       | 5.54%              
|2005                       | 4.79               
|2006                       | 5.36               
|2007                       | 3.76               
|2008                       | 4.96               
|2009                       | 5.07               
|2010                       | 6.37               
|                          
|Total                      | 5.10%              

|                                                                                                                                                                                                  | 2003   | 2002  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------ | ------
|$6,500,000 revolving line of credit; one-year term maturing March 5; variable rate at three-month LIBOR plus 1.75%, 2.63% - 2003 and 4.00% - 2002; interest due quarterly, principal at maturity. | $6,500 | $6,350

---

38.

---

---

|         | For the Year Ended December 31,
|-------- | -------------------------------
|         | 2003                           
|Current  |                                
|Federal  | $459                           
|State    | 58                             
|Deferred | 214                            
|        
|         | $731                           

|                         | For the Year Ended December 31,
|------------------------ | -------------------------------
|                         | 2003                           
|                        
|Provision for federal    |                                
|income taxes computed    |                                
|at statutory rate of 34% | $819                           
|State income taxes,      |                                
|net of federal tax       |                                
|effect and other         | (88)                           
|                        
|                         | $731                           

|                                                    | December 31,
|--------------------------------------------------- | ------------
|                                                    | 2003        
|                                                   
|Contributions                                       | $30         
|Loans, principally due to allowance for loan losses | 376         
|Net operating loss carryforwards acquired           | 94          
|Total deferred tax assets                           | 500         

---

39.

---

---

|                                                 | December 31,
|------------------------------------------------ | ------------
|                                                 | 2003        
|                                                
|Unrealized gain on securities available-for-sale | $(128)      
|Purchase accounting adjustments                  | (178)       
|Depreciation                                     | (257)       
|FHLB stock dividends                             | (545)       
|Deferred loan fees                               | (213)       
|Other                                            | (116)       
|Total deferred tax liabilities                   | (1,437)     
|                                                
|Net deferred tax liabilities                     | $(937)      

|                                            | 2003    | 2002    | 2001   
|------------------------------------------- | ------- | ------- | -------
|                                           
|Basic earnings per share                    |        
|Net income available to common stockholders | $1,679  | $2,055  | $1,970 
|                                           
|Weighted average common shares outstanding  | 904,990 | 889,875 | 903,450
|                                           
|Basic earnings per share                    | $1.86   | $2.31   | $2.18  
|                                           
|Earnings per share assuming dilution        |        
|Net income available to common stockholders | $1,679  | $2,055  | $1,970 

---

40.

---

---

|                                           | 2003    | 2002    | 2001   
|------------------------------------------ | ------- | ------- | -------
|                                          
|Weighted average common shares outstanding | 904,990 | 889,875 | 903,450
|Add dilutive effect of assumed exercises:  |        
|Incentive stock options                    | 1,264   | 2,681   | 2,622  
|Stock awards                               | 68,770  | 60,360  | 27,527 
|Weighted average common and dilutive       |        
|potential common shares outstanding        | 975,024 | 952,916 | 933,599
|
|
|Diluted earnings per share                 | $1.72   | $2.16   | $2.11  

---

41.

---

---

|                                 | 2003    | 2002    | 2001   
|-------------------------------- | ------- | ------- | -------
|                                
|Allocated shares                 | 116,276 | 99,665  | 83,054 
|Unallocated shares               | 49,830  | 66,441  | 83,052 
|                                
|Total ESOP shares                | 166,106 | 166,106 | 166,106
|                                
|Fair value of unallocated shares | $1,434  | $1,794  | $2,139 

|                     | 2003     | 2002                          | 2001   
|-------------------- | -------- | ----------------------------- | -------
|                     | Shares   | Weighted-AverageExercisePrice | Shares 
|                    
|Outstanding          |         
|at beginning of year | 240,216  | $18.95                        | 186,716
|Granted              | -        | -                             | 57,500 
|Exercised            | (11,050) | 17.25                         | (4,000)
|Forfeited            | -        | -                             | -      
|                    
|Outstanding          |         
|at end of year       | 229,166  | $19.03                        | 240,216

---

42.

---

---

|                        | Outstanding | Exercisable                            
|----------------------- | ----------- | ---------------------------------------
|Range ofExercisePrices  | Number      | WeightedAverageRemainingContractualLife
|                        |            
|                       
|$13.88 - $14.88         | 12,305      | 6.3                                    
|$17.13 - $17.25         | 159,361     | 3.8                                    
|$24.60                  | 57,500      | 8.5                                    
|                       
|Outstanding at year end | 229,166     |                                        

|                                   | 2003       | 2002      | 2001     
|---------------------------------- | ---------- | --------- | ---------
|Options exercisable at end of year | 212,404    | 222,816   | 147,776  
|Weighted-average fair value of     |           
|options granted during year        | $   -      | $3.04     | $   -    
|Average remaining option term      | 5.27 years | 5.9 years | 5.9 years

|                                             | 2003      | 2002      | 2001     
|-------------------------------------------- | --------- | --------- | ---------
|                                            
|Balance at January 1                         | 1,107,139 | 1,063,139 | 1,036,639
|Reissue shares for exercise of stock options | (11,050)  | (4,000)   | -        
|Treasury stock purchases                     | 11,900    | 48,000    | 26,500   
|                                            
|Balance at December 31                       | 1,107,989 | 1,107,139 | 1,063,139

---

43.

---

---

|                                      | Actual  | Minimum Requiredfor CapitalAdequacy Purposes | Minimum Requiredto Be WellCapitalizedUnder Prompt CorrectiveAction Regulations
|------------------------------------- | ------- | -------------------------------------------- | ------------------------------------------------------------------------------
|                                      | Amount  | Ratio                                        | Amount                                                                        
|2003                                  |        
|Total capital (to risk-               |        
|weighted assets)                      | $21,886 | 15.1%                                        | $11,572                                                                       
|Tier 1 (core) capital (to risk--      |        
|weighted assets)                      | 20,917  | 14.5                                         | 5,786                                                                         
|Tier 1 (core) capital (to adjusted -  |        
|total assets)                         | 20,917  | 6.7                                          | 12,457                                                                        
|Tangible capital (to tangible assets) | 20,917  | 6.7                                          | 4,671                                                                         
|2002                                  |        
|Total capital (to risk--              |        
|weighted assets)                      | $23,201 | 16.7%                                        | $11,095                                                                       
|Tier 1 (core) capital (to risk--      |        
|weighted assets)                      | 22,150  | 16.0                                         | 5,548                                                                         
|Tier 1 (core) capital (to adjusted -  |        
|total assets)                         | 22,150  | 7.1                                          | 12,432                                                                        
|Tangible capital (to tangible assets) | 22,150  | 7.1                                          | 4,662                                                                         

---

44.

---

---

|                                         | 2003   | 2002   | 2001 
|---------------------------------------- | ------ | ------ | -----
|                                        
|Unrealized holding gains and losses on   |       
|securities available-for-sale            | $(118) | $(76)  | $781 
|Reclassification adjustments for (gains) |       
|and losses recognized in income          | (870)  | (571)  | (280)
|Net unrealized gains and (losses)        | (988)  | (647)  | 501  
|Tax effect                               | (385)  | (252)  | 195  
|                                        
|Other comprehensive income               | $(603) | $(395) | $306 

---

45.

---

---

|                                                         | Contract AmountDecember 31,
|-------------------------------------------------------- | ---------------------------
|                                                         | 2003                       
|Financial instruments whose contract amounts represent   |                            
|credit risk                                              |                            
|Commitments to extend credit, including loans in process | $1,098                     
|Unused lines of credit                                   | 6,592                      

|2004  | $88,284 
|----- | --------
|2005  | 77,371  
|2006  | 55,545  
|2007  | 13,886  
|     
|Total | $235,086

---

46.

---

---

|                                        | December 31, 2003         | December 31, 2002  
|--------------------------------------- | ------------------------- | -------------------
|                                        | ApproximateCarryingAmount | EstimatedFair Value
|                                       
|Financial assets                        |                          
|Cash and cash equivalents               | $13,980                   | $13,980            
|Securities                              | 145,341                   | 146,865            
|Loans receivable, net                   | 135,655                   | 138,306            
|FHLB stock                              | 10,647                    | 10,647             
|Accrued interest receivable             | 1,254                     | 1,254              
|                                       
|Financial liabilities                   |                          
|Deposits                                | (206,672)                 | (208,043)          
|Advances from FHLB                      | (79,807)                  | (81,451)           
|Note payable                            | (6,500)                   | (6,500)            
|Advance payments by borrowers for taxes |                          
|and insurance                           | (1,097)                   | (1,097)            
|Accrued interest payable                | (399)                     | (399)              

---

47.

---

---

|                                       | 2003      | 2002     
|-------------------------------------- | --------- | ---------
|                                      
|ASSETS                                 |          
|Cash and cash equivalents              | $     884 | $     296
|Securities available-for-sale          | 5,422     | 2,901    
|ESOP loan                              | 498       | 665      
|Investment in bank subsidiary          | 22,071    | 24,018   
|                                      
|                                       | $28,875   | $27,880  
|                                      
|LIABILITIES AND STOCKHOLDERS' EQUITY   |          
|Note payable                           | $  6,500  | $  6,350 
|Accrued expenses and other liabilities | 32        | 46       
|Stockholders' equity                   | 22,343    | 21,484   
|                                      
|                                       | $28,875   | $27,880  

---

48.

---

---

|                                          | 2003    | 2002   | 2001  
|----------------------------------------- | ------- | ------ | ------
|                                         
|Income                                    |        
|Dividends from bank subsidiary            | $3,000  | $1,000 | $2,000
|Interest and dividend income              | 393     | 222    | 132   
|Net gain on sale of securities            | 734     | 432    | 265   
|Total income                              | 4,127   | 1,654  | 2,397 
|                                         
|Expense                                   |        
|Interest expense                          | 224     | 260    | 384   
|Other expenses                            | 153     | 135    | 124   
|                                          | 377     | 395    | 508   
|                                         
|Income before income taxes and equity in  |        
|undistributed earnings of bank subsidiary | 3,750   | 1,259  | 1,889 
|                                         
|Income tax expense (benefit)              | 227     | 57     | (57)  
|                                         
|Income before equity in undistributed     |        
|earnings of bank subsidiary               | 3,523   | 1,202  | 1,946 
|                                         
|Equity in undistributed (overdistributed) |        
|earnings of bank subsidiary               | (1,844) | 853    | 24    
|                                         
|Net income                                | $1,679  | $2,055 | $1,970

---

49.

---

---

|                                                         | 2003    | 2002    | 2001   
|-------------------------------------------------------- | ------- | ------- | -------
|                                                        
|Operating activities                                     |        
|Net income                                               | $1,679  | $2,055  | $1,970 
|Adjustments to reconcile net income to net cash provided |        
|by operating activities                                  |        
|Equity in overdistributed (undistributed) earnings of    |        
|bank subsidiary                                          | 1,844   | (853)   | (24)   
|Net gain on sale of securities                           | (734)   | (432)   | (265)  
|Change in                                                |        
|Other assets                                             | -       | 76      | 268    
|Other liabilities                                        | 25      | (113)   | 34     
|                                                         | 2,814   | 733     | 1,983  
|                                                        
|Investing activities                                     |        
|Purchase of securities available-for-sale                | (9,703) | (1,917) | (3,200)
|Proceeds from sales of securities                        | 7,949   | 2,055   | 1,807  
|Payment received on loan to ESOP                         | 167     | 166     | 166    
|Net cash from investing activities                       | (1,587) | 304     | (1,227)
|                                                        
|Financing activities                                     |        
|Proceeds from note payable                               | 150     | 550     | 550    
|Purchase of treasury stock                               | (348)   | (1,218) | (551)  
|Exercise of stock options                                | 191     | 69      | -      
|Dividends paid                                           | (632)   | (590)   | (558)  
|Net cash from financing activities                       | (639)   | (1,189) | (559)  
|                                                        
|Net change in cash and cash equivalents                  | 588     | (152)   | 197    
|                                                        
|Cash and cash equivalents at beginning of year           | 296     | 448     | 251    
|                                                        
|Cash and cash equivalents at end of year                 | $884    | $296    | $448   

---

50.

---

---

|               | InterestIncome | NetInterestIncome | NetIncome | EarningsPer ShareBasic (a) | EarningsPer ShareDiluted (a)
|-------------- | -------------- | ----------------- | --------- | -------------------------- | ----------------------------
|              
|2003           |               
|First quarter  | $3,728         | $1,729            | $446      | $.50                       | $.46                        
|Second quarter | 3,482          | 1,551             | 415       | .46                        | .43                         
|Third quarter  | 3,336          | 1,494             | 395       | .43                        | .40                         
|Fourth quarter | 3,387          | 1,681             | 423       | .46                        | .43                         
|              
|2002           |               
|First quarter  | $4,108         | $1,923            | $529      | $.58                       | $.55                        
|Second quarter | 4,098          | 1,965             | 520       | .59                        | .56                         
|Third quarter  | 4,066          | 1,986             | 516       | .58                        | .54                         
|Fourth quarter | 4,020          | 1,962             | 490       | .55                        | .51                         

|(a) | Earnings per share for the quarters and full years have each been calculated separately.  Accordingly, quarterly amounts may not add to the annual amounts because of differences in the average common shares outstanding during each period.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

51.

---

|               | HIGH    | LOW     | DIVIDENDS
|-------------- | ------- | ------- | ---------
|               |         |         |          
|FISCAL 2001    |         |         |          
|First Quarter  | $19.625 | $16.500 | $.13     
|Second Quarter | $21.125 | $18.250 | $.13     
|Third Quarter  | $23.170 | $20.700 | $.14     
|Fourth Quarter | $25.750 | $22.000 | $.14     
|               |         |         |          
|FISCAL 2002    |         |         |          
|First Quarter  | $26.000 | $23.750 | $.15     
|Second Quarter | $28.650 | $24.170 | $.15     
|Third Quarter  | $28.000 | $26.200 | $.15     
|Fourth Quarter | $27.540 | $26.000 | $.15     
|               |         |         |          
|FISCAL 2003    |         |         |          
|First Quarter  | $27.800 | $27.030 | $.16     
|Second Quarter | $29.500 | $27.360 | $.16     
|Third Quarter  | $31.750 | $29.250 | $.16     
|Fourth Quarter | $31.100 | $28.780 | $.17     

|Rosanne M. Belczak                    |  |  |                   |                  | Registrar and Transfer Co.
|------------------------------------- |  |  | ----------------- | ---------------- | --------------------------
|Hemlock Federal Financial Corporation |  |  | 10 Commerce Drive
|5700 West 159th Street                |  |  |                   |                  | Cranford, NJ  07016       
|Oak Forest, Illinois 60422            |  |  |                   | 1-(800) 368-5948
|(708) 687-9400                       
|www.hemlockbank.com                  

---

|**Hemlock Federal Financial Corporation**

**Board of Directors**                                                                                                                | **** | **Hemlock Federal Bank****Officers**                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Maureen G. Partynski, ChairmanMichael R. StevensRosanne M. Pastorek-Belczak, SecretaryKenneth J. BazarnikFrank A. BuczG. Gerald SchieraDonald L. Manprisio                       |      | Maureen G. PartynskiChairman and CEOMichael R. StevensPresidentJean ThorntonVice-President, ControllerNeil ChristensenVice-President, LendingRosanne M. BelczakVice-President, SecretaryRhonda NisbetVice-President, Operations
|                                                                                                                                                                                
|**Hemlock Federal Bank for Savings Locations:**                                                                                                                                  |      |                                                                                                                                                                                                                                
|Main Office:5700 W. 159th St.Oak Forest, Illinois 60452   708-687-94008855 S. Ridgeland Ave.Oak Lawn, Illinois 604534636 S. Damen Ave.Chicago, Illinois 60609www.hemlockbank.com |      | 15730 W. 127th St.

Lemont, Illinois 60439234 Bolingbrook DriveBolingbrook, Illinois  604403030 W. Cermak Ave.Chicago, Illinois  60623                                                                                         
|**Independent Auditors**                                                                                                                                                         |      | **Special Counsel**                                                                                                                                                                                                            
|Crowe, Chizek and Company LLPOne Mid America PlazaOak Brook, Illinois  60552                                                                                                     |      | Silver, Freedman & Taff, L.L.P.1700 Wisconsin Avenue, N.W.Washington, D.C.  20007                                                                                                                                              

---