EXHIBIT 13

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2003 ANNUAL REPORT
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                        FIRST SECURITYFED FINANCIAL, INC.






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TABLE OF CONTENTS
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      President's Message.........................................  1
      Selected Consolidated Financial Information.................  2
      Management's Discussion and Analysis of Financial
        Condition and Results of Operations.......................  4
      Consolidated Financial Statements........................... 21
      Shareholder Information..................................... 51
      Corporate Information....................................... 52





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FROM YOUR PRESIDENT
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To Our Stockholders, Depositors and Friends,

     I am very proud to bring you this annual financial report of First
SecurityFed Financial, Inc. and its subsidiary 1st Security Federal Savings Bank
for the period ending December 31, 2003.

     We have entered the new year with the presidential race getting an early
vigorous start. It is only March, but it feels like September on the campaign
trail. The economy, particularly employment, Iraq and the ever increasing global
terrorist threat appear to be the major issues. We live in a period of
uncertainty, insecurity, and some degree of apprehension. Recently our economy
has made some significant gains; however, the unemployment rate remains a major
concern.

     You will be pleased to learn that First SecurityFed Financial, Inc. had
another successful year with record earnings. Our consolidated net income for
2003 was a record $8.2 million or $2.29 per share as compared to $8.0 million or
$2.20 per share in year 2002. The increase in the earnings was attributable
primarily to an increase in net interest income. The Company's efficiency ratio
was at a record low of 36% for 2003 as compared to 37% in the prior year. This
places us among the most efficient financial institutions in the country.

     Our total assets as of December 31, 2003 increased to $494.4 million
compared to $464.3 million at December 31, 2002, an increase of $30.1 million or
6.48%. Our total liabilities at December 31,2003 were $408.5 million, compared
to $388.4 million at December 31, 2002, an increase of $20.1 million.

     Our loans receivable increased only by $2.4 million from $301.6 million at
December 31,2002 to $304.0 million at December 31,2003. The nominal increase was
due to increased residential loan refinancing in our market area. However,
during the last year our construction loans jumped from $32.5 million at
December 31, 2002 to $65.5 million at December 31, 2003 as we assisted in the
revitalization of the housing and commercial real estate in our community.

     We face difficult challenges including the demographic changes in the
Ukrainian Village area, the continued invasion into the Chicago market area by
mega-banks, the new regulatory and technological challenges facing community
financial institutions like the Bank and the possible future retirement of
several of our senior officers. Your Board of Directors and Management has
recognized these challenges and undertaken intensive strategic planning and
analysis to determine the future course of the Company. After careful
consideration, lengthy deliberations, and advice of financial experts, the Board
of Directors unanimously concluded that it is in the best interests of the
shareholders, our customers, our employees and our communities to seek a merger
partner with a larger commercial bank like MB Financial. After conducting our
due diligence, a merger agreement was entered into on January 9, 2004 with MB
Financial. The terms and details of the agreement are in the enclosed Proxy
Statement for your review.

     We are joining a Bank that will have 40 local offices and almost $5.0
billion in assets after completion of our transaction. MB Financial, like First
SecurityFed Financial, Inc., serves important ethnic and immigrant markets and
understands the importance of cultural sensitivity. We both serve consumers and
small businesses by placing a heavy emphasis on exemplary personal service. I am
also pleased to report that all our offices will not only continue to be served
by the same employees but will also offer additional bank products and services
that are available in a commercial bank. Our communities will not be ignored;
they will be better served.

     In closing, I wish to reiterate that 2003 was a very successful year for
First SecurityFed Financial, Inc. a year in which we significantly increased
shareholders' value. I want to thank our employees, Directors, and Officers for
their efforts and above all I want to thank you, our shareholders, customers,
and community members for your support and confidence.



                                        Sincerely,



                                        Julian E. Kulas
                                        President and Chief Executive Officer



                                        1

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                   SELECTED CONSOLIDATED FINANCIAL INFORMATION

     Set forth below are selected financial and other data of First SecurityFed
Financial, Inc. The financial data is derived in part from, and should be read
in conjunction with, the Consolidated Financial Statements and Notes to the
Consolidated Financial Statements presented elsewhere in this Annual Report.


<TABLE>
<CAPTION>
                                                                 At December 31,
                                               ----------------------------------------------------------
                                                 2003        2002        2001        2000         1999
                                               ---------   ---------   ---------   ---------    ---------
                                                         (In Thousands Except Per Share Data)

Selected Financial Condition Data:
----------------------------------
<S>                                            <C>         <C>         <C>         <C>          <C>
Total assets ...............................   $ 494,411   $ 464,301   $ 431,275   $ 403,663    $ 372,292
Cash and cash equivalents ..................      13,861      27,817       9,421       6,102        6,257
Loans receivable, net(1) ...................     303,977     301,642     287,450     275,454      241,168
Mortgage-backed securities:
  Held-to-maturity .........................       5,055      11,880      17,880       5,424        7,577
  Available-for-sale .......................      34,487      12,780       5,996       7,602        9,410
Investment securities:
  Held-to-maturity .........................      37,563      57,246      74,336      72,882       85,331
  Available-for-sale .......................      71,185      29,848      15,745      24,292       11,212
Deposits ...................................     309,842     290,612     268,857     252,662      238,123
Total borrowings ...........................      93,644      92,105      83,600      64,600       46,300
Shareholders equity ........................      85,884      75,932      72,038      80,249       83,156

</TABLE>

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(1)      The allowance for loan losses at December 31, 2003, 2002, 2001, 2000,
         and 1999, was $3,032,000, $2,937,000, $2,806,000, $2,561,000, and
         $2,315,000.


<TABLE>
<CAPTION>
                                                                 At December 31,
                                               ----------------------------------------------------------
                                                 2003        2002        2001        2000         1999
                                               ---------   ---------   ---------   ---------    ---------
                                                         (In Thousands Except Per Share Data)
Selected Operations Data:
-------------------------
<S>                                            <C>         <C>         <C>         <C>          <C>
Total interest income ......................   $  29,787   $  30,900   $  30,437   $  29,000    $  25,285
Total interest expense .....................      10,836      12,646      14,716      14,312       11,037
                                               ---------   ---------   ---------   ---------    ---------
  Net interest income ......................      18,951      18,254      15,721      14,688       14,248
Provision for loan losses ..................         120         127         144         246          246
                                               ---------   ---------   ---------   ---------    ---------
Net interest income after provision for loan
  losses ...................................      18,831      18,127      15,577      14,442       14,002
Deposit service charges ....................         484         491         364         372          368
Gain (loss) on sales of  securities ........        --            53          81         (46)          12
Other non interest income ..................         574         405         690         311          430
                                               ---------   ---------   ---------   ---------    ---------
Total non interest income ..................       1,058         949       1,135         637          810
Total non interest expense .................       7,358       7,100       6,554       6,087        6,102
                                               ---------   ---------   ---------   ---------    ---------
Income before taxes ........................      12,531      11,976      10,158       8,992        8,710
Income tax provision .......................       4,313       3,958       3,396       2,989        3,028
                                               ---------   ---------   ---------   ---------    ---------
Net income .................................       8,218       8,018       6,762       6,003        5,682
                                               =========   =========   =========   =========    =========

Basic earnings per share ...................        2.29        2.20        1.68        1.28         1.14
Diluted earnings per share .................        2.19        2.15        1.67        1.28         1.14

</TABLE>



                                       2

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<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                    ---------------------------------------------------
                                                      2003       2002       2001       2000       1999
                                                    -------    -------    -------    -------    -------
<S>                                                    <C>        <C>        <C>        <C>        <C>
Selected Financial Ratios and Other Data:
-----------------------------------------
Performance Ratios:
     Return on assets (ratio of net income to ...      1.71%      1.79%      1.62%      1.54%      1.61%
      average total assets)
     Return on equity (ratio of net income to
      average equity) ...........................     10.16      10.84       8.88       7.34       6.82
    Dividend payout ratio .......................     27.06      25.52      36.51      42.16      35.08
     Interest rate spread information:
     Average during period ......................      3.90       3.81       3.25       2.94       3.31
      Net interest margin(1) ....................      4.36       4.48       4.13       4.04       4.36
     Ratio of operating expense to average total
      assets ....................................      1.52       1.58       1.58       1.56       1.73
    Efficiency ratio(2) .........................       .36        .37        .39        .40        .40
     Ratio of average interest-earning assets to
       average interest-bearing liabilities .....    119.61     122.81     123.91     129.24     132.19

Quality Ratios:
     Non-performing assets to total assets at end
      of period .................................       .56        .44        .42        .39        .37
     Allowance for loan losses to non-performing
     loans at end of period .....................    110.29     142.71     153.25     164.38     166.19
     Allowance for loan losses to gross loans
     receivable at end of period ................       .98        .96        .96        .93

Capital Ratios:
     Equity to total assets at end of period ....     17.37      16.35      16.70      19.88      22.34
     Average equity to average assets ...........     16.68      16.57      18.47      20.96      23.57

</TABLE>

----------------------
(1)      Net interest income divided by average interest-earning assets.

(2)      The efficiency ratio represents non interest expense divided by the sum
         of net interest income and non interest income.




                                        3

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

GENERAL

     First SecurityFed Financial, Inc. (the Company) became the holding company
for First Security Federal Savings Bank (the Bank or First Security) upon the
completion of the conversion of the Bank from a federally chartered mutual
savings bank to a federally chartered stock savings bank (the Conversion) on
October 30, 1997. The financial condition and operating results of the Company
are primarily dependent upon the financial condition and operating results of
the Bank. The Company's primary business activity to date has been limited to
its ownership of the Bank and a portfolio of investment securities.

     The Bank is a financial intermediary engaged primarily in attracting
deposits from the general public and using such deposits to originate
one-to-four-family residential mortgages and, to a lesser extent, construction,
commercial real estate, multi-family, home equity, consumer, and other loans
primarily in its market area. The Bank also uses these deposits to acquire
mortgage backed and other securities. The Bank's revenues are derived
principally from interest earned on loans and securities. The operations of the
Bank are influenced significantly by general economic conditions and by policies
of financial institution regulatory agencies, including the Office of Thrift
Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC). The
Bank's cost of funds is influenced by interest rates on competing investments
and general market interest rates. Lending activities are affected by the demand
for financing of real estate and other types of loans, which in turn is affected
by the interest rates at which such financings may be offered.

     Our main office is located in Chicago, Illinois and our branch offices are
located in Chicago, Illinois, Philadelphia, Pennsylvania and Palatine, Illinois.
Our Western Avenue office is located on the near northwest side of Chicago in
the "Ukrainian Village" community, a middle-income community where the Bank has
focused its operations since 1964. Our Milwaukee Avenue office was opened in
1993 and is located in the "Norwood Park" neighborhood of Chicago. Our northwest
suburban Chicago branch was opened in 1977 in Rolling Meadows, Illinois, and in
December 2002 relocated to a new facility in nearby Palatine, Illinois. Our
Philadelphia branch was acquired in 1994 through a purchase from the Resolution
Trust Corporation. The branch is located in a moderate income neighborhood of
Philadelphia known as "Rhawnhurst."

     The Bank's net interest income is dependent primarily upon the difference
or spread between the average yield earned on loans receivable and securities
and the average rate paid on deposits and Federal Home Loan Bank (FHLB)
advances, as well as the relative amounts of such assets and liabilities. The
Bank, like other thrift institutions, is subject to interest rate risk to the
degree that its interest-bearing liabilities mature or reprice at different
times or on a different basis than its interest-earning assets.

     On January 12, 2004, the Company jointly announced with MB Financial, Inc.,
the parent of MB Financial Bank, that we agreed to merge. MB Financial, Inc.
will be the surviving corporation in the transaction valued at $139.2 million,
which will be paid through a combination of MB Financial, Inc. common stock and
cash. Completion of the transaction is expected in the second quarter of 2004,
pending shareholder, regulatory and other necessary approvals.


                                        4

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BUSINESS STRATEGY

     The Bank seeks to obtain a competitive advantage in its deposit gathering
and lending operations by maintaining a high level of community involvement and
by offering a high level of personal service. In particular, the Bank targets a
significant portion of its community outreach and service at discreet ethnic
minority and immigrant communities located within its market areas.

     In its deposit gathering operations, the Bank uses community outreach and
customer service in an attempt to build and maintain passbook and other
non-certificate accounts. These accounts generally carry lower costs than
certificate accounts and are believed to represent primarily "core" deposits
that are less vulnerable to interest rate changes (and competition from other
financial products) than certificate accounts.

     In its lending operations, the Bank seeks to obtain high-quality
residential and, to a lesser extent, construction, commercial real estate and
other loans by maintaining a high level of local visibility, offering a high
level of customer service and limiting its secondary market activities. In
recent years, the portion of non-residential real estate loans in our portfolio
has increased somewhat. These loans carry somewhat higher interest rates and
lower interest rate risk than residential loans. However, asset quality has
remained high.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2003 AND DECEMBER 31, 2002

     Total assets at December 31, 2003 were $494.4 million compared to $464.3
million at December 31, 2002, an increase of $30.1 million, or 6.48%. The
increase in total assets was due primarily to increases of $36.5 million in
securities, $5.3 million in Federal Home Loan Bank (FHLB) stock, and $2.4
million in loans receivable, partially offset by a decrease of $14.0 million in
cash and cash equivalents.

     Securities increased by $36.5 million from $111.8 million at December 31,
2002 to $148.3 million at December 31, 2003. The increase was primarily due to
the purchases of $49.7 million in government agency securities, $7.5 million in
municipal securities and $38.8 million in mortgage- backed securities, partially
offset by paydowns of $23.3 million on mortgage-backed securities and calls and
maturities of $36.2 million in government agency securities.

     Federal Home Loan Bank stock increased by $5.3 million primarily due to
stock purchases by the Bank. Also contributing to this increase in stock were
stock dividends received from the Federal Home Loan Bank. Additional FHLB stock
was purchased primarily because the stock issued by the FHLB of Chicago pays a
competitive quarterly dividend.

     Net loans receivable increased by $2.4 million from $301.6 million at
December 31,2002 to $304.0 million at December 31, 2003. The increase was
primarily due to the disbursement of $50.7 million to fund construction loans,
as well as the disbursement of $81.4 million to fund mortgage loans and net
increases in equity line of credit loans of $9.5 million and share loans of $1.0
million partially offset by $26.2 million in paydowns on construction loans and
$114.0 million in paydowns and payoffs on mortgage loans. The increase in
construction loans is attributable to a strong real estate market, management's
aggressive marketing efforts and the Board's attempt to limit somewhat interest
rate risk in the loan portfolio.



                                        5

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Management believes that, due to the low interest rate environment during the
past year, $29.0 million of the Bank's mortgage loans were refinanced during the
year. These refinancings contributed to the decrease of 47 basis points in the
average rate earned on loans receivable.

     Cash and cash equivalents decreased by $14.0 million due to the
redeployment of these funds into securities and FHLB stock.

     Total liabilities at December 31, 2003 were $408.5 million compared to
$388.4 million at December 31, 2002, an increase of $20.1 million. The increase
in liabilities was due primarily to increases of $19.2 million in deposits and
$1.5 million in Federal Home Loan Bank advances partially offset by decreases of
$441,000 in accrued interest payable and other liabilities and $170,000 in
advance payments by borrowers for taxes and insurance.

     Deposits increased due to increased marketing efforts, competitive rates
paid by the Bank on its deposit products, and a nine-month certificate of
deposit special offered by the Bank in August and September 2003. FHLB advance
levels remained fairly stable as the Bank utilized Federal Home Loan Bank
advances due to the attractive rates charged on these types of borrowings
relative to their duration.

     Accrued interest payable and other liabilities decreased by $441,000
primarily due to an increase of $1.2 million in income taxes payable and a net
increase of $179,000 in dividends payable partially offset by the payment of a
$900,000 account payable to the Heritage Foundation, a non- profit organization
originally formed by the Bank that makes grants to community organizations. The
Bank's correspondent financial institution mistakenly deposited the proceeds of
a matured security to an account belonging to the Bank instead of to the
Foundation's account. The error was subsequently rectified in early 2003.

     Shareholders' equity at December 31, 2003 was $85.9 million compared to
$75.9 million at December 31, 2002, an increase of $10.0 million. The increase
in equity was due primarily to net income of $8.2 million, an increase in
additional paid-in capital of $1.5 million, and a decrease in Treasury stock of
$2.0 million. Also contributing to the increase in equity was the allocation of
ESOP shares and the vesting of stock awards. Additional paid-in capital
increased primarily due to the exercise of stock options by the Bank's Chief
Executive Officer. This exercise of stock options also resulted in a decrease in
Treasury stock. Equity at December 31, 2003 was also impacted by dividends on
the Company's common stock. Four cash dividends totaling $2.5 million were
declared during the year ended December 31, 2003. The dividends were paid to
shareholders in April, July, and October 2003 and January 2004.


COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND
DECEMBER 31, 2002

     GENERAL. Net income for the year ended December 31, 2003 was $8.2 million
compared to net income of $8.0 million for the year ended December 31, 2002, an
increase of $200,000. The increase in net income was attributable primarily to
an increase in net interest income and noninterest income partially offset by
increases in noninterest expense and income tax expense. Basic earnings per
share for the year


                                        6

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ended December 31, 2003 increased to $2.29 as compared to basic earnings per
share of $2.20 for the year ended December 31, 2002, an increase of 4.09%.
Diluted earnings per share for the year ended December 31, 2003 increased to
$2.19 as compared to diluted earnings per share of $2.15 for the year ended
December 31, 2002, an increase of 1.86%. The increases in basic and diluted
earnings per share were attributable primarily to higher net income.

     INTEREST INCOME. Interest income for the year ended December 31, 2003 was
$29.8 million compared to $30.9 million for the year ended December 31, 2002, a
decrease of $1.1 million. Interest income on loans decreased by $1.2 million due
to a decrease in the average rate earned on loans receivable from 8.00% for the
year ended December 31, 2002 to 7.53% for the year ended December 31, 2003. The
decrease in the average rate earned on loans receivable was due to an
acceleration of refinance activity attributable to the lower interest rate
environment. The rate decline was ameliorated by an increase in non residential
loans in the portfolio. Interest income on mortgage-backed securities decreased
by $62,000 due to the lower interest rate environment, which caused a
significant increase in principal prepayments on these securities. Interest
income on taxable securities decreased by $433,000 due to decreases in the
average interest rates paid by the issuers on these securities resulting in a 41
basis point decrease in the average rate earned on federal agency securities and
a 62 basis point decrease in the average rate earned on mutual funds. Also
contributing to the decrease in interest income on taxable securities was a
decrease in the average outstanding balances of the Company's taxable securities
portfolio resulting from calls of these securities by the issuing agencies.
Interest income on tax-exempt securities increased by $106,000 primarily due to
increases in the average balances of these securities. The relatively high tax
equivalent yield of these securities also helped limit the reduction in yield of
the Company's assets. Interest income from Federal Home Loan Bank dividends
increased by $423,000 due primarily to increases in the average balances of
Federal Home Loan Bank stock. Also contributing to the increase in interest
income from FHLB dividends was an increase of 49 basis points in the average
dividend rate paid on FHLB stock.

     INTEREST EXPENSE. Interest expense for the year ended December 31, 2003 was
$10.8 million compared to $12.6 million for the year ended December 31, 2002, a
decrease of $1.8 million. The decrease in interest expense was due primarily to
a decrease in the average interest rate paid on interest-bearing liabilities.
Contributing to the decrease in interest expense was the maturity of customer's
certificates of deposit during the year and the reinvestment of those funds into
certificates paying lower rates of interest. Further contributing to the
decrease in interest expense were decreases in the average interest rates paid
on money market accounts, NOW accounts and passbook savings accounts. The
decrease in interest expense due to lower rates of interest was partially offset
by a $32.8 million increase in the average balance of interest-bearing
liabilities from $349.5 for the year ended December 31, 2002 to $382.3 million
for the year ended December 31, 2003.

     Interest expense on deposits decreased by $1.8 million due to a decrease in
the weighted average cost of deposits, reflecting lower market rates of
interest. Interest expense on Federal Home Loan Bank advances increased by
$23,000 due to increases in the balances of Federal Home Loan Bank advances,
which were used to fund loan growth. Even though the balances of both deposits
and Federal Home Loan Bank advances increased, the impact on interest expense
was moderated by the low interest rate environment during 2003 resulting in a
lower cost of funds for the Bank. The average cost of funds


                                        7

<PAGE>



decreased 79 basis points from 3.62% for the year ended December 31, 2002 to
2.83% for the year ended December 31, 2003.

     NET INTEREST INCOME. Net interest income for the year ended December 31,
2003 was $19.0 million, which represented an increase of $697,000 from net
interest income of $18.3 million for the year ended December 31, 2002. The ratio
of average interest earning assets to average interest- bearing liabilities
decreased to 119.71% in 2003 from 122.81% in 2002. However, this was offset by
an increase in the interest spread to 3.90% in 2003 from 3.81% in 2002.

     PROVISION FOR LOAN LOSSES. The provision for loan losses for the year ended
December 31, 2003 was $120,000 compared to $127,000 for the year ended December
31, 2002, a decrease of $7,000. Non-performing assets at December 31, 2003
totaled $2.7 million, or 0.56% of assets compared to $2.1 million or 0.44% of
assets at December 31, 2002. The loan loss allowance as of December 31, 2003 was
$3.0 million, or 0.98% of gross loans, compared with $2.9 million, or 0.96% of
gross loans at December 31, 2002.

     On a quarterly basis, management of the Bank meets to review the adequacy
of the allowance for loan losses. Management classifies commercial real estate
and construction loans in compliance with regulatory classifications. Classified
loans are individually reviewed to arrive at specific reserves for those loans.
Once the specific portion of the allowance is calculated, management calculates
a general portion for each loan category based on loan loss history, peer data,
current economic conditions, and trends in the portfolio, including
delinquencies and impairments and real estate values in the Bank's market area
as well as changes in the composition of the loan portfolio. In addition,
various regulatory agencies, as an integral part of their examination processes,
periodically review the Bank's allowance for losses on loans. Such agencies may
require the Bank to provide additions to the allowance based upon judgements
that differ from those of management. Additions were made in 2003 to the loan
loss provision due to increases in nonperforming assets and in the outstanding
balances of commercial real estate and construction loans. The outstanding
balance of commercial real estate loans increased by $3.2 million and the
outstanding balance of construction loans increased by $24.9 million. Since
these types of loans expose the Bank to a higher degree of risk, additional loan
loss provisions were made. Although management believes that the allowance for
loan losses reflected probable incurred losses on existing loans at December 31,
2003, there can be no assurance that such losses will not exceed estimated
amounts.

     NONINTEREST INCOME. Noninterest income for the year ended December 31, 2003
was $1,058,000 compared to $949,000 for the year ended December 31, 2002, an
increase of $109,000. Other income for the year ended December 31, 2003 was
$410,000 compared to $319,000 for the year ended December 31, 2002, an increase
of $91,000. The increase is due primarily to $55,000 in interest received on
State of Illinois Income Tax refunds. Also contributing to the increase in other
income were increases in release fees charged on mortgage loans that were paid
off due to an acceleration of refinance activity. Noninterest income was also
affected by a $65,000 net gain on the sale of real estate owned in 2003 that was
partially offset by a $53,000 net gain on sales and calls of securities that was
recorded in 2002.



                                        8

<PAGE>



     NONINTEREST EXPENSE. Noninterest expense for the year ended December 31,
2003 was $7.4 million compared to noninterest expense of $7.1 million for the
year ended December 31, 2002, an increase of $258,000. Compensation and benefits
expense increased by $51,000 partially due to an increase in ESOP expense
resulting from an increase in the Company's stock price and normal annual salary
adjustments for existing Bank personnel partially offset by a decrease in stock
award expense. Occupancy and equipment expense increased by $44,000 due to
increased utility prices for the Bank's northwest suburban branch which was
remodeled in late 2002 and additional depreciation expense for the new furniture
and fixtures at the remodeled branch and new computers installed at all of the
Bank's offices. Data processing expense increased by $83,000 due to normal
adjustments in the Bank's data processing contract with an outside service
bureau and increases in the number of accounts maintained by the service bureau.
Also contributing to the increase in data processing expense was the expiration
in July of a $2,500 monthly data processing service bureau credit. Other expense
increased by $74,000 primarily due to increases in ATM expense, professional
fees, and bank service charges. Also contributing to the increase in other
expense were expenses incurred in connection with real estate owned that was
sold during the year.

     INCOME TAXES. Income tax expense was $4.3 million for the year ended
December 31, 2003 compared to $4.0 million for the year ended December 31, 2002,
an increase of $355,000. The increase in the provision for income taxes was due
primarily to an increase of $555,000 in pretax earnings. The effective tax rate
on income for the year ended December 31, 2003 was 34.42% compared to an
effective tax rate of 33.05% for the year ended December 31, 2002.


COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2002 AND DECEMBER 31, 2001

     Total assets at December 31, 2002 were $464.3 million compared to $431.3
million at December 31, 2001, an increase of $33.0 million, or 7.65%. The
increase in total assets was due primarily to increases of $18.4 million in cash
and cash equivalents, $14.1 million in loans receivable, and $2.6 million in
FHLB stock, partially offset by a decrease of $2.2 million in securities.

     Net loans receivable increased by $14.1 million from $287.5 million at
December 31, 2001 to $301.6 million at December 31, 2002. The increase was
primarily due to the disbursement of $24.8 million to fund construction loans,
as well as the disbursement of $92.7 million to fund mortgage loans and a net
increase in equity line of credit loans of $9.5 million partially offset by
$16.4 million in paydowns on construction loans and $96.6 million in paydowns on
mortgage loans. The net increase in loans receivable was largely a result of a
low interest rate environment and a strong local real estate market. Due to this
low interest rate environment, $23.4 million of the Bank's mortgage loans were
refinanced during the past year. The refinancings contributed to the decrease of
30 basis points in the average rate earned on loans receivable.

     Cash and cash equivalents increased by $18.4 million due to the inflow of
funds from the calls of securities, increased paydowns on mortgage-backed
securities, and the net increase in deposits accounts



                                        9

<PAGE>



and Federal Home Loan Bank advances. The funds were deposited in overnight
federal funds and interest-bearing accounts with other financial institutions
awaiting redeployment into mortgage loans and agency, municipal and mortgage
backed-securities.

     Federal Home Loan Bank stock increased by $2.6 million primarily due to
stock purchases by the Bank. Also contributing to this increase in stock were
stock dividends received from the Federal Home Loan Bank. The stock issued by
the Federal Home Loan Bank is liquid and pays a competitive quarterly dividend.

     Premises and equipment increased by $1.1 million primarily due to the
purchase and remodeling of a building in Palatine, Illinois for the Bank's
relocated northwest suburban office. The remodeled office is located in very
close proximity to the Bank's current Rolling Meadows branch, but is a much
larger, free-standing facility.

     Securities decreased by $2.2 million from $114.0 million at December 31,
2001 to $111.8 million at December 31, 2002. The decrease was primarily due to
the maturity and call of $28.1 million in agency securities, the sale of $3.2
million in municipal and mortgage-backed securities, and paydowns of $9.6
million on mortgage-backed securities, partially offset by the purchase of $23.1
million in agency securities, $8.9 million in mortgage-backed securities, and
$5.4 million in municipal securities and an increase of $913,000 in the fair
market value of securities available-for- sale.

     Total liabilities at December 31, 2002 were $388.4 million compared to
$359.2 million at December 31, 2001, an increase of $29.2 million. The increase
in liabilities was due primarily to increases of $21.7 million in deposits and
$8.5 million in Federal Home Loan Bank advances partially offset by a decrease
of $1.1 million in accrued interest payable and other liabilities.

     Accrued interest payable and other liabilities decreased primarily due to
the lower rates being paid on the various types of deposit products offered by
the Bank. The lower rates resulted in lower interest expense resulting in lower
accrued interest payable.

     Deposits increased due to a special 13-month certificate being offered by
the Bank, increased marketing efforts, and the less volatile and less risky
nature of deposit accounts in comparison to other types of consumer investment
vehicles. The Bank utilized additional FHLB advances due to low rates being
charged on these types of borrowings. The proceeds were then used to fund a
portion of the loan growth described above.

     Shareholders' equity at December 31, 2002 was $75.9 million compared to
$72.0 million at December 31, 2001, an increase of $3.9 million. The increase in
equity was due primarily to net income of $8.0 million for the period partially
offset by the Company's repurchase of outstanding common stock of $4.1 million.
Equity at December 31, 2002 was also impacted by dividends on the Company's
common stock. Four cash dividends totaling $2.0 million were declared during the
year ended December 31, 2002. The dividends were paid to shareholders in April,
July, and October 2002 and January 2003.




                                       10

<PAGE>



COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND
DECEMBER 31, 2001

     GENERAL. Net income for the year ended December 31, 2002 was $8.0 million
compared to net income of $6.8 million for the year ended December 31, 2001, an
increase of $1.2 million. The increase in net income was attributable primarily
to an increase in net interest income partially offset by a decrease in
noninterest income and increases in noninterest expense and income tax expense.
Basic earnings per share for the year ended December 31, 2002 increased to $2.20
as compared to basic earnings per share of $1.68 for the year ended December 31,
2001, an increase of 30.95%. Diluted earnings per share for the year ended
December 31, 2002 increased to $2.15 as compared to diluted earnings per share
of $1.67 for the year ended December 31, 2001, an increase of 28.74%. The
increase in basic and diluted earnings per share was attributable to higher net
income and a decrease in the average shares outstanding as a result of the
Company's repurchasing 185,936 shares of its common stock in the open market
during 2002.

     INTEREST INCOME. Interest income for the year ended December 31, 2002 was
$30.9 million compared to $30.4 million for the year ended December 31, 2001, an
increase of $500,000. The increase in interest income was primarily due to an
increase in the average balance of interest earning assets from $399.5 million
for the year ended December 31, 2001 to $429.2 million for the year ended
December 31, 2002 due to the investment of funds in loans, mortgage-backed,
municipal and agency securities and FHLB stock. Interest income on loans
increased by $465,000 primarily due to an increase in the volume of loans
receivable. Even though there was an increase of 5.9% in the average balance of
outstanding loans receivable for the year ended December 31, 2002, as compared
to the year ended December 31, 2001, the increase in interest income on loans
was significantly offset by the declining interest rate environment existing
during the past year resulting in a 30 basis point decrease in the average rate
earned on loans receivable. Interest income on mortgage-backed securities
increased by $244,000 due to increases in the outstanding balances of
mortgage-backed securities. Interest income on taxable securities decreased by
$691,000 due primarily to decreases in the average interest rates paid by the
issuers on these securities, resulting in a 71 basis point decrease in the
average rate earned on federal agency securities and a 129 basis point decrease
in the average rate earned on mutual funds. Also contributing to the decrease in
interest income on securities was a decrease in the average outstanding balances
of the Company's taxable securities portfolio resulting from calls of these
securities by the issuing agencies. Interest income on tax- exempt securities
increased by $374,000 primarily due to increases in the average balances of
these securities. Interest income from FHLB dividends increased by $294,000 due
primarily to increases in the average balances of FHLB stock. Interest income on
federal funds sold and other interest- earning assets decreased by $223,000 due
to decreases in the average balances of federal funds sold and interest-bearing
deposits with other financial institutions. Also contributing to the decrease in
interest income on federal funds sold and other interest earning assets were
decreases in the average interest rates paid on these deposits resulting in a
209 basis point decrease in the average rate earned on interest-bearing deposit
accounts in other financial institutions and a 193 basis point decrease in
federal funds sold.

     INTEREST EXPENSE. Interest expense for the year ended December 31, 2002 was
$12.6 million compared to $14.7 million for the year ended December 31, 2001, a
decrease of $2.1 million. The decrease in interest expense was due primarily to
a decrease in the average interest rate paid on interest-



                                       11

<PAGE>



bearing liabilities. Contributing to the decrease in interest expense was the
maturity of customer's certificates of deposit during the year and the
reinvestment of those funds into certificates paying lower rates of interest.
This decrease in interest expense due to lower rates of interest was partially
offset by a $27.1 million increase in the average balance of interest-bearing
liabilities from $322.4 for the year ended December 31, 2001 to $349.5 million
for the year ended December 31, 2002.

     Interest expense on deposits decreased by $3.0 million due to a decrease in
the weighted average cost of deposits, reflecting lower market rates of
interest. Interest expense on FHLB advances increased by $912,000 due to
increases in the balances of FHLB advances, which were used to fund loan growth.
Even though the balances of both deposits and FHLB advances increased, the
impact on interest expense was moderated by the falling interest rate
environment during 2002 resulting in a lower cost of funds for the Bank. The
average cost of funds decreased 94 basis points from 4.56% for the year ended
December 31, 2001 to 3.62% for the year ended December 31, 2002.

     Net Interest Income. Net interest income for the year ended December 31,
2002 was $18.3 million, which represented an increase of $2.6 million from net
interest income of $15.7 million for the year ended December 31, 2001. The ratio
of average interest-earning assets to average interest- bearing liabilities
decreased slightly to 122.81% in 2002 from 123.91% in 2001. However, the
interest spread increased to 3.81% in 2002 from 3.25% in 2001.

     Provision for Loan Losses. The provision for loan losses for the year ended
December 31, 2002 was $127,000 compared to $144,000 for the year ended December
31, 2001, a decrease of $17,000. Non-performing assets at December 31, 2002
totaled $2.1 million, or 0.44% of assets. The loan loss allowance as of December
31, 2002 was $2.9 million, or 0.96% of gross loans, compared with $2.8 million
at December 31, 2001, or 0.96% of gross loans.

     On a quarterly basis, management of the Bank meets to review the adequacy
of the allowance for loan losses. Management classifies commercial real estate
and construction loans in compliance with regulatory classifications. Classified
loans are individually reviewed to arrive at specific reserves for those loans.
Once the specific portion of the allowance is calculated, management calculates
a historical portion for each loan category based on loan loss history, peer
data, current economic conditions, and trends in the portfolio, including
delinquencies and impairments and real estate values in the Bank's market area
as well as changes in the composition of the loan portfolio. In addition,
various regulatory agencies, as an integral part of their examination processes,
periodically review the Bank's allowance for losses on loans. Such agencies may
require the Bank to provide additions to the allowance based upon judgements
which differ from those of management. Additions were made to the loan loss
provision due to increases in nonperforming assets and in the outstanding
balances of commercial real estate and construction loans. The outstanding
balance of commercial real estate loans increased by $19.7 million, and the
outstanding balance of construction loans increased by $9.1 million. Since these
types of loans expose the Bank to a higher degree of risk, additional loan loss
provisions were made. Although management believes the allowance for loan losses
reflected probable incurred losses on existing loans at December 31, 2002, there
can be no assurance that such losses will not exceed estimated amounts.



                                       12

<PAGE>



     NONINTEREST INCOME. Noninterest income for the year ended December 31, 2002
was $949,000 compared to $1,135,000 for the year ended December 31, 2001, a
decrease of $186,000. The decrease in noninterest income was due primarily to a
$286,000 net gain on the sale of real estate held for expansion that had been
recorded in 2001 partially offset by an increase of $127,000 in deposit service
charges in 2002. The increase in deposit service charges is due primarily to
changes made effective in January 2002 relative to non-sufficient fund,
research, account maintenance, and other service fees charges by the Bank. Also
contributing to the decrease in noninterest income was a $28,000 decrease in the
net gain on sales and calls of securities.

     NONINTEREST EXPENSE. Noninterest expense for the year ended December 31,
2002 was $7.1 million compared to noninterest expense of $6.6 million for the
year ended December 31, 2001, an increase of $546,000. Compensation and benefits
expense increased by $410,000 partially due to an increase in ESOP expense
resulting from an increase in the Company's stock price, the hiring of
additional bank personnel as a result of the continuing growth of the Bank and
normal annual salary adjustments for existing Bank personnel. Other expense
increased by $113,000 partially due to a $78,000 write-off of obsolete computer
equipment made necessary by a company-wide replacement of all computers.

     INCOME TAXES. Income taxes were $4.0 million for the year ended December
31, 2002 compared to $3.4 million for the year ended December 31, 2001, an
increase of $562,000. The increase in provision for income taxes was due
primarily to an increase of $1.8 million in pretax earnings. The effective tax
rate on income for the year ended December 31, 2002 was 33.1% compared to an
effective tax rate of 33.4% for the year ended December 31, 2001.



                                       13

<PAGE>



     The following table presents, for the periods indicated, the total dollar
amount of interest income from average interest-earning assets and the resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates. A tax equivalent of 34% was used to compute
the yield on municipal securities. No other tax equivalent adjustments were
made. All average balances are daily average balances. Non-accruing loans have
been included in the table as loans carrying a zero yield.

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                 -----------------------------------------------------------------------------
                                                                     2003                                 2002
                                                 ---------------------------------------  ------------------------------------

                                                   Average         Interest                               Average   Interest
                                                 Outstanding        Earned/       Yield/  Outstanding     Earned/    Yield/
                                                   Balance           Paid          Rate      Balance       Paid       Rate
                                                 ----------------------------------------------------------------------------
                                                                                (Dollars in Thousands)
<S>                                                <C>              <C>            <C>      <C>           <C>         <C>
Interest-Earning Assets:
 Loans receivable(1)..........................     $303,016         $22,818        7.53%    $299,693      $23,974     8.00%
 Mortgage-backed securities &
     CMOs(2)..................................       35,203           1,192        3.39       22,801        1,254     5.50
 Mutual funds(2)..............................        3,553             127        3.58        3,172          133     4.19
 Agencies/other(2)............................       44,324           2,419        5.46       48,473        2,846     5.87
 Municipal securities(2)......................       41,576           3,014        7.25       36,974        2,853     7.72
 Federal funds sold...........................        8,112              83        1.03        3,781           62     1.64
 Deposits with other institutions.............        3,395              30         .89        1,740           42     2.41
 FHLB stock...................................       18,462           1,128        6.11       12,534          705     5.62
                                                 ----------           -----               ----------          ---
    Total interest-earning assets.............      457,641          30,811        6.73      429,168       31,869     7.43
Non-interest-earning assets...................       22,831                                   20,013
                                                 ----------                               ----------
    Total assets..............................     $480,472                                 $449,181
                                                   ========                                 ========

Interest-Bearing Liabilities:
 Money market.................................        6,197              82        1.32        5,132          118     2.30
 NOW..........................................       17,469              99         .57       14,401          147     1.02
 Passbook savings.............................      102,711           1,400        1.36       88,448        2,500     2.83
 Certificates of deposit......................      162,830           4,600        2.82      154,585        5,249     3.40
FHLB advances.................................       93,084           4,655        5.00       86,904        4,632     5.33
                                                  ---------           -----                ---------        -----
     Total interest-bearing liabilities.......      382,291          10,836        2.83      349,470       12,646     3.62
                                                                     ------                                ------
Non-interest-bearing liabilities..............       17,914                                   25,262
                                                  ---------                                ---------
     Total liabilities                              400,205                                  374,732

Equity........................................       80,267                                   74,449
                                                  ---------                                ---------
   Total liabilities and equity...............     $480,472                                 $449,181
                                                  =========                                =========

Net interest-earning spread...................                                     3.90%                              3.81%
                                                                                   =====                              =====
Margin........................................                     $ 19,975        4.36%                 $ 19,223     4.48%
                                                                   ========        =====                 ========     =====
Assets to liabilities.........................      119.71%                                  122.81%
                                                   =======                                  =======

</TABLE>


[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                 ------------------------------------
                                                                 2001
                                                 ------------------------------------
                                                   Average     Interest
                                                 Outstanding    Earned/        Yield/
                                                   Balance       Paid           Rate
                                                 -------------------------------------
                                                          (Dollars in Thousands)
<S>                                                <C>         <C>             <C>
Interest-Earning Assets:
 Loans receivable(1)..........................     $283,072    $ 23,509        8.30%
 Mortgage-backed securities &
     CMOs(2)..................................       15,598       1,010        6.48
 Mutual funds(2)..............................        3,172         174        5.49
 Agencies/other(2)............................       53,098       3,496        6.58
 Municipal securities(2)......................       29,713       2,288        7.70
 Federal funds sold...........................        5,799         207        3.57
 Deposits with other institutions.............        2,687         120        4.48
 FHLB stock...................................        6,321         411        6.50
                                                   --------    -------
    Total interest-earning assets.............      399,460      31,215        7.81
Non-interest-earning assets...................       15,183
                                                   --------
    Total assets..............................     $414,643
                                                   ========

Interest-Bearing Liabilities:
 Money market.................................        4,269         125        2.94
 NOW..........................................       13,920         194        1.39
 Passbook savings.............................       79,004       2,152        2.72
 Certificates of deposit......................      157,174       8,525        5.42
FHLB advances.................................       68,003       3,720        5.47
                                                   --------    -------
     Total interest-bearing liabilities.......      322,370      14,716        4.56
                                                               -------
Non-interest-bearing liabilities..............       15,700
                                                   --------
     Total liabilities                              338,070

Equity........................................       76,573
                                                   --------
   Total liabilities and equity...............     $414,643
                                                   ========

Net interest-earning spread...................                                 3.25%
                                                                               =====
Margin........................................                  $ 16,499       4.13%
                                                                ========       =====
Assets to liabilities.........................      123.91%
                                                    =======

</TABLE>

(1)      Calculated net of deferred loan fees, loans in process, and the
         allowance for loan losses.

(2)      Calculated based on amortized cost.


                                       14

<PAGE>



     The following schedule presents the dollar amount of changes in interest
income and interest expense for major components of interest-earning assets and
interest-bearing liabilities. It distinguishes between the changes related to
outstanding balances and those due to the changes in interest rates. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume (i.e.,
changes in volume multiplied by old rate) and (ii) changes in rate (i.e.,
changes in rate multiplied by old volume). For purposes of this table, changes
attributable to both rate and volume, which cannot be segregated, have been
allocated proportionately to the change due to volume and the change due to
rate.

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                        ---------------------------------------------------------------
                                                2002 vs. 2003                     2001 vs. 2002
                                        ------------------------------   ------------------------------
                                             Increase                          Increase
                                            (Decrease)                        (Decrease)
                                              Due to           Total            Due to          Total
                                        ------------------    Increase   -------------------   Increase
                                        Volume       Rate    (Decrease)   Volume      Rate    (Decrease)
                                        ------       ----    ----------   ------      ----    ----------
                                                              (Dollars in Thousands)
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>
Interest-earning assets:
 Loans receivable ...................   $   263    $(1,419)   $(1,156)   $ 1,349    $  (884)   $   465
 Mortgage-backed securities & CMO's .       528       (590)       (62)       413       (169)       244
 Mutual funds .......................        15        (21)        (6)        --        (41)       (41)
 Agencies and other .................      (234)      (193)      (427)      (290)      (360)      (650)
 Municipal securities ...............       341       (180)       161        560          5        565
 Federal funds sold .................        51        (30)        21        (57)       (88)      (145)
 Deposits with other institutions ...        25        (37)       (12)       (34)       (44)       (78)
 FHLB stock .........................       358         65        423        356        (62)       294
                                        -------    -------    -------    -------    -------    -------
       Total interest-earning assets      1,347     (2,405)    (1,058)     2,297     (1,643)       654

Interest-bearing liabilities:
 Money market .......................        21        (57)       (36)        23        (30)        (7)
 NOW ................................        27        (74)       (47)         6        (53)       (47)
 Passbook Savings ...................       354     (1,454)    (1,100)       265         83        348
 Certificates of deposit ............       269       (918)      (649)      (138)    (3,138)    (3,276)
 Advances ...........................       318       (295)        23      1,010        (98)       912
                                        -------    -------    -------    -------    -------    -------
   Total interest-bearing liabilities       989     (2,798)    (1,809)     1,166     (3,236)    (2,070)
                                        -------    -------    -------    -------    -------    -------

Net interest/spread .................   $   358    $   393    $   751    $ 1,131    $ 1,593    $ 2,724
                                        =======    =======    =======    =======    =======    =======
</TABLE>

[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                        -------------------------------------
                                                     2000 vs. 2001
                                        -------------------------------------
                                                Increase
                                               (Decrease)
                                                 Due to            Total
                                            ------------------    Increase
                                            Volume      Rate      (Decrease)
                                            ------      ----      ----------
                                               (Dollars in Thousands)
<S>                                         <C>        <C>        <C>
Interest-earning assets:
 Loans receivable ...................       $ 1,813    $    99    $ 1,912
 Mortgage-backed securities & CMO's .            16        (52)       (36)
 Mutual funds .......................            --          4          4
 Agencies and other .................        (1,165)        57     (1,108)
 Municipal securities ...............           360        (25)       335
 Federal funds sold .................           206         --        206
 Deposits with other institutions ...            62        (17)        45
 FHLB stock .........................           228        (35)       193
                                            -------    -------    -------
       Total interest-earning assets          1,520         31      1,551

Interest-bearing liabilities:
 Money market .......................            18         (3)        15
 NOW ................................            20        (79)       (59)
 Passbook Savings ...................            72       (239)      (167)
 Certificates of deposit ............           713       (403)       310
 Advances ...........................           644       (339)       305
                                            -------    -------    -------
   Total interest-bearing liabilities         1,467     (1,063)       404
                                            -------    -------    -------

Net interest/spread .................       $    53    $ 1,094    $ 1,147
                                            =======    =======    =======

</TABLE>


                                       15

<PAGE>



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     In an attempt to manage its exposure to changes in interest rates,
management monitors the Company's interest rate risk. The Board of Directors
reviews at least quarterly the Company's interest rate risk position and
profitability. The Board of Directors also reviews the Company's portfolio,
formulates investment strategies, and oversees the timing and implementation of
transactions to ensure attainment of the Company's objectives in the most
effective manner. In addition, the Board reviews on a quarterly basis the
Company's asset/liability position, including simulations of the effect of
various interest rate scenarios on the Company's capital and earnings.

     In managing its asset/liability mix, the Company, depending on the
relationship between long- and short-term interest rates, market conditions, and
consumer preference, often places more emphasis on managing short-term net
interest margin than on more closely matching the interest rate sensitivity of
its assets and liabilities in an effort to enhance net interest income.
Management believes that the increased net interest income resulting from a
mismatch in the maturity of its asset and liability portfolios can, during
periods of declining or stable interest rates, provide high enough returns to
justify the increased exposure to sudden and unexpected increases in interest
rates.

     The Board has taken a number of steps to manage the Company's vulnerability
to changes in interest rates. First, the Company has long used community
outreach, customer service, and marketing efforts to increase the Company's
passbook and other non-certificate accounts. At December 31, 2003, $139.7
million, or 45.08%, of the Company's deposits consisted of passbook, NOW, and
money market accounts. The Company believes that these accounts represent "core"
deposits, which are generally somewhat less interest rate sensitive than other
types of deposit accounts. Second, while the Company continues to originate
30-year fixed-rate residential loans for portfolio as a result of consumer
demand, an increasing proportion of the Company's residential loans have terms
of 15 years or less or carry adjustable interest rates. Therefore, the Company
may consider selling loans into the secondary market and retaining the servicing
rights. Third, the Company continues to use FHLB advances, to extend the term to
repricing of its liabilities. At December 31, 2003, the Company had $44.3
million of fixed rate advances with a remaining term to maturity of three years
or more. The average term to maturity or call of the Company's fixed rate
advances was 2.0 years at December 31, 2003. Finally, the Company has recently
increased its holdings of construction, commercial real estate, multi-family,
and consumer loans. These loans generally have shorter terms to maturity than
one-to-four-family residential loans.

     Management utilizes the net portfolio value (NPV) analysis to quantify
interest rate risk. In essence, this approach calculates the difference between
the present value of liabilities, expected cash flows from, assets and cash
flows from off-balance sheet contracts under different interest rate scenarios.
The analysis estimates how the Bank's net portfolio value responds to an
instantaneous and sustained parallel shift in the Treasury yield curve of plus
and minus 100, 200, and 300 basis points in 100 basis point increments.

     At December 31, 2003 and 2002, the yield on the three-month Treasury bill
was below 2.00%. As a result, the net portfolio value analysis was unable to
produce results for the minus 200 and minus 300 basis point scenarios for the
quarters ended December 31, 2003 and 2002.


                                       16
<PAGE>



     Presented below, as of December 31, 2003 and December 31, 2002, is an
analysis of the Bank's estimated interest rate risk as measured by changes in
NPV for instantaneous and sustained parallel shifts in interest rates as
indicated.

                                      2003

         Assumed Change                   $ Change in      % Change
       in Interest Rates       $ Amount       NPV           in NPV
       ----------------        --------   -----------      --------
         (Basis Points)              (Dollars in Thousands)

             +300              $67,378     $(23,531)        (26)%
             +200               77,680      (13,229)         (15)
             +100               86,536       (4,373)          (5)
               --               90,909           --           --
             -100               91,326          417            0


                                      2002


         Assumed Change                   $ Change in      % Change
       in Interest Rates       $ Amount       NPV           in NPV
       ----------------        --------   -----------      --------
         (Basis Points)              (Dollars in Thousands)

             +300              $66,597     $(15,159)        (19)%
             +200               73,833       (7,923)         (10)
             +100               79,531       (2,225)          (3)
               --               81,756           --           --
             -100               82,521          765            1

     Certain assumptions utilized in assessing the interest rate risk of thrift
institutions were employed in preparing the preceding table. These assumptions
relate to interest rates, loan prepayment rates, deposit decay rates, and the
market values of certain assets under the various interest rate scenarios. It
was also assumed that delinquency rates will not change as a result of changes
in interest rates although there can be no assurance that this will be the case.
Even if interest rates change in the designated amounts, there can be no
assurance that the Company's assets and liabilities would perform as set forth
above. In addition, a change in U.S. Treasury rates in the designated amounts
accompanied by a change in the shape of the Treasury yield curve would cause
significantly different changes to the NPV than indicated above.


                                       17

<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary sources of funds are deposits and proceeds from
principal and interest payments on loans and mortgage-backed securities. While
maturities and scheduled amortization of loans and securities are predictable
sources of funds, deposit flows and mortgage prepayments are greatly influenced
by general interest rates, economic conditions, and competition. First Security
generally manages the pricing of its deposits to be competitive and to increase
core deposit relationships.

     Liquidity management is both a daily and long-term responsibility of
management. First Security adjusts its investments in liquid assets based upon
management's assessment of (i) expected loan demand, (ii) expected deposit
flows, (iii) yields available on liquid and other assets, (iv) management's
analysis of current economic conditions, and (v) the objectives of its
asset/liability management program. Excess liquid assets are invested generally
in interest-earning overnight deposits and short- and intermediate-term U.S.
government and agency obligations and mortgage-backed securities of short
duration. If First Security requires funds beyond its ability to generate them
internally, it has additional borrowing capacity with the FHLB of Chicago.
Additional borrowings with the FHLB may require additional collateral to be
pledged to the FHLB.

     The Company's cash flows are comprised of three primary classifications:
cash flows from operating activities, investing activities, and financing
activities. Cash flows provided by operating activities were $10.7 million, $8.7
million, and $9.0 million for the years ended December 31, 2003, 2002, and 2001.
Net cash used in investing activities consisted primarily of disbursements for
loan originations, the purchase of investments and mortgage-backed securities,
and the purchase of FHLB stock. The cash used in investing activities was offset
by principal collections on loans, proceeds from maturation and sales of
securities, and paydowns on mortgage-backed securities. Net cash from financing
activities consisted primarily from increases in net deposits and advances from
FHLB of Chicago partially offset by repurchases of the Company's common stock
and the payment of dividends.

     The Company's most liquid assets are cash and cash equivalents. The levels
of these assets are dependent on the Company's operating, financing, lending,
and investing activities during any given period. At December 31, 2003, cash and
short-term investments totaled $13.9 million. The Company has other sources of
liquidity if a need for additional funds arises, including securities maturing
within one year and the repayment of loans. The Company may also utilize the
sale of securities available-for-sale and FHLB advances as sources of funds.

CRITICAL ACCOUNTING POLICIES

     ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is a valuation
allowance for probable incurred credit losses, increased by the provision for
loan losses and deceased by charge- offs, net of recoveries. Management
estimates the allowance balance required using past loss experience, economic
conditions, information about specific borrower situations including their
financial position and collateral values, and other factors. Allocations of the
allowance may be made for specific loans, but the entire allowance is available
for any loan that, in management's judgment, should be charged off. Loan


                                       18

<PAGE>



losses are charged off against the allowance when management believes that the
uncollectibility of a loan balance is confirmed.

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

     Management recognizes a certain level of imprecision exists in the manner
in which the allowance for loan losses is calculated, owing to intangible
factors which cannot be quantified for inclusion in a formula.

COMMITMENTS

     At December 31, 2003, the Company had outstanding commitments to originate
mortgage loans of $5.4 million, $5.3 million of which had fixed interest rates.
As of the same date, the Company also had construction loans in process of $18.4
million, all of which had floating interest rates based on prime rate and $17.7
million in unused lines of credit for home equity loans. Finally, as of December
31, 2003, the Company had $4.3 million in commitments to fund construction
loans. These loans are to be secured by properties located in its market area.
The Company anticipates that it will have sufficient funds available to meet its
current loan commitments. Loan commitments have, in recent periods, been funded
primarily through liquidity or through FHLB advances.

     Certificates of deposit that are scheduled to mature in one year or less
from December 31, 2003 totaled $124.1 million. Management believes, based on
past experience, that a significant portion of such deposits will remain with
the Company. Based on the foregoing, in addition to the Company's high level of
core deposits and capital, the Company considers its liquidity and capital
resources sufficient to meet its outstanding short-term and long-term needs.

The following tables disclose contractual obligations and commercial commitments
of the Company as of December 31, 2003:


<TABLE>
<CAPTION>
                                                                            Less Than                       After
                                                      Total      1 Year     1 - 3 Years     4 - 5 Years    5 Years
                                                      -----      ------     -----------     -----------    -------
                                                                          (In Thousands)
<S>                                                  <C>        <C>           <C>              <C>         <C>
                             FHLB advances           $93,644    $10,000       $39,300          $33,344     $11,000
                                                     -------    -------       -------          -------     -------
Total contractual obligations                        $93,644    $10,000       $39,300          $39,344     $11,000


</TABLE>


                                       19

<PAGE>

<TABLE>
<CAPTION>
                                           Total
                                          Amounts       Less Than                      After
                                         Committed        1 Year      1 - 3 Years    4 - 5 Years     5 Years
                                        ------------   ------------   ------------   ------------   ------------
                                                                     (In Thousands)

<S>                                     <C>            <C>            <C>            <C>                    <C>
Lines of credit                         $     17,733   $        801   $      5,440   $     11,492           --

Mortgage loans                                 5,369          5,369           --             --             --

Construction loans in process                 18,380         18,380           --             --             --

Letters of credit                                173            173           --             --             --

Commitments to fund construction
Loans                                          4,265          4,265           --             --             --
                                        ------------   ------------   ------------   ------------   ------------

         Total commercial commitments   $     45,920   $     28,988   $      5,440   $     11,492           --

</TABLE>

     First Security is subject to various regulatory capital requirements
imposed by the OTS. At December 31, 2003, First Security was in compliance with
all applicable capital requirements. See Note 10 of the Notes to Consolidated
Financial Statements.

IMPACT OF INFLATION AND CHANGING PRICES

     The consolidated financial statements and related data herein have been
prepared in accordance with accounting principles generally accepted in the
United States of America, which require the measurement of financial position
and results of operations in terms of historical dollars, without considering
changes in the relative purchasing power of money over time due to inflation.
Unlike most industrial companies, virtually all of the assets and liabilities of
the Company are monetary in nature. Therefore, interest rates have a more
significant impact on a financial institution's performance than the effects of
general levels of inflation. Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services. In the
current interest rate environment, the liquidity and maturity structure and
quality of the Company's assets and liabilities are critical to the maintenance
of acceptable performance levels.

SAFE HARBOR STATEMENT

     This report contains 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.


                                       20

<PAGE>


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 these safe harbor provisions. 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" or similar expressions.
The Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors that could have a material adverse
effect on the operations and future prospects of the Company and the
subsidiaries include, but are not limited to, changes in: interest rates;
general economic conditions; the legislative/regulatory situation; 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 loan or
investment portfolios; demand for loan products; prevailing real estate values;
the possibility that some of the Company's senior officers may retire in the
near term; demographic changes; deposit flows; competition; demand for financial
services in the Company's market area and 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. Further information concerning the Company and its business,
including additional factors that could materially affect the Company's
financial results, is included in the Company's filings with the Securities and
Exchange Commission.


NEW ACCOUNTING PRONOUNCEMENTS

     During 2003, the Company adopted FASB Statement No. 149, AMENDMENT OF
STATEMENT ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES; FASB Statement
No.150, ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF
BOTH LIABILITIES AND EQUITIES; FASB Statement No.132 (revised 2003), EMPLOYERS'
DISCLOSURE ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS; FASB Interpretation
No. 45, GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES; and
FASB Interpretation No. 46, CONSOLIDATION OF VARIABLE INTEREST ENTITIES.

Adoption of these new standards did not materially affect the Company's
operating results or financial condition.



                                       21

<PAGE>






                         REPORT OF INDEPENDENT AUDITORS


Board of Directors
First SecurityFed Financial, Inc.
Chicago, Illinois

We have audited the accompanying consolidated balance sheets of First
SecurityFed Financial, Inc. as of December 31, 2003 and 2002, and the related
consolidated statements of income, comprehensive income, shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
2003. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First SecurityFed
Financial, Inc. at December 31, 2003 and 2002, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2003, in conformity with accounting principles generally accepted in the United
States of America.


                                          Crowe Chizek and Company LLC

Oak Brook, Illinois
January 30, 2004, except for Note 13 as to which
  the date is March 30, 2004


                                       22


<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2003 and 2002
                    (Dollars in thousands, except share data)

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

<TABLE>
<CAPTION>
                                                                       2003         2002
                                                                    ---------    ---------
ASSETS
<S>                                                                 <C>          <C>
Cash and due from banks                                             $   7,652    $  16,557
Interest-bearing deposit accounts in other financial institutions       3,909        5,631
Federal funds sold                                                      2,300        5,629
                                                                    ---------    ---------
         Total cash and cash equivalents                               13,861       27,817

Securities available-for-sale                                         105,672       42,628
Securities held-to-maturity (fair value: $45,238 in 2003
  and $72,362 in 2002)                                                 42,618       69,126
Loans receivable, net of allowance of $3,032 and $2,937               303,977      301,642
Federal Home Loan Bank stock, at cost                                  20,139       14,788
Premises and equipment, net                                             4,518        4,349
Accrued interest receivable                                             3,164        3,319
Other assets                                                              462          632
                                                                    ---------    ---------

         Total assets                                               $ 494,411    $ 464,301
                                                                    =========    =========

LIABILITIES
Deposits
         Non-interest-bearing                                       $  12,803    $   9,601
         Interest-bearing                                             297,039      281,011
                                                                    ---------    ---------
                  Total deposits                                      309,842      290,612
Advance payments by borrowers for taxes and insurance                   2,662        2,832
Advances from Federal Home Loan Bank                                   93,644       92,105
Accrued interest payable and other liabilities                          2,379        2,820
                                                                    ---------    ---------
         Total liabilities                                            408,527      388,369

SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value per share, 500,000 shares
  authorized, no shares issued and outstanding                              -            -
Common stock, $0.01 par value per share, 8,000,000 shares
  authorized, 6,408,000 shares issued                                      64           64
Additional paid-in capital                                             64,813       63,269
Unearned ESOP shares                                                   (2,967)      (3,269)
Unearned stock awards                                                    (739)      (1,007)
Treasury stock, at cost 2,368,937 shares in 2003 and
  2,499,262 shares in 2002                                            (35,752)     (37,750)
Retained earnings                                                      59,645       53,896
Accumulated other comprehensive income                                    820          729
                                                                    ---------    ---------
         Total shareholders' equity                                    85,884       75,932
                                                                    ---------    ---------

                  Total liabilities and shareholders' equity        $ 494,411    $ 464,301
                                                                    =========    =========
</TABLE>

--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.

                                       23


<PAGE>


                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 2003, 2002, and 2001
                  (Dollars in thousands, except per share data)

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


<TABLE>
<CAPTION>
                                                                2003      2002      2001
                                                              -------   -------   -------
<S>                                                           <C>       <C>       <C>
Interest and dividend income
       Loans                                                  $22,818   $23,974   $23,509
       Securities
              Taxable                                           2,546     2,979     3,670
              Tax-exempt                                        1,990     1,884     1,510
       Mortgage-backed securities                               1,192     1,254     1,010
       Federal Home Loan Bank dividends                         1,128       705       411
       Federal funds sold and other interest earning assets       113       104       327
                                                              -------   -------   -------
                                                               29,787    30,900    30,437
Interest expense
       NOW and money market                                       181       265       319
       Passbook savings                                         1,400     2,500     2,152
       Certificates of deposit                                  4,600     5,249     8,525
       Federal Home Loan Bank advances                          4,655     4,632     3,720
                                                              -------   -------   -------
                                                               10,836    12,646    14,716
                                                              -------   -------   -------

NET INTEREST INCOME                                            18,951    18,254    15,721

Provision for loan losses                                         120       127       144
                                                              -------   -------   -------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES            18,831    18,127    15,577
Noninterest income
       Deposit service charges                                    484       491       364
       Insurance commissions                                       99        86        44
       Net gain (loss) on sales and calls of securities             -        53        81
       Gain on sale of real estate held for expansion               -         -       286
       Net gain on sale of real estate owned                       65         -         -
       Other income                                               410       319       360
                                                              -------   -------   -------
                                                                1,058       949     1,135
Noninterest expense
       Compensation and benefits                                4,524     4,471     4,061
       Occupancy and equipment                                    787       743       731
       Data processing                                            480       397       396
       Federal insurance premiums                                 148       144       134
       Other expense                                            1,419     1,345     1,232
                                                              -------   -------   -------
                                                                7,358     7,100     6,554
                                                              -------   -------   -------

INCOME BEFORE INCOME TAXES                                     12,531    11,976    10,158

Income tax expense                                              4,313     3,958     3,396
                                                              -------   -------   -------


NET INCOME                                                    $ 8,218   $ 8,018   $ 6,762
                                                              =======   =======   =======

Earnings per share
       Basic                                                  $  2.29   $  2.20   $  1.68
                                                              =======   =======   =======
       Diluted                                                $  2.19   $  2.15   $  1.67
                                                              =======   =======   =======
</TABLE>


--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


                                       24

<PAGE>

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                  Years ended December 31, 2003, 2002, and 2001
                  (Dollars in thousands, except per share data)

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

<TABLE>
<CAPTION>
                                                                 2003       2002       2001
                                                               -------    -------    -------
<S>                                                            <C>        <C>        <C>
Net income                                                     $ 8,218    $ 8,018    $ 6,762

Other comprehensive income
         Unrealized holding gains on securities
           available-for-sale                                      150        966        281
         Reclassification adjustments for (gains) and losses
           recognized in income                                      -        (53)       (81)
                                                               -------    -------    -------
         Net unrealized gains and losses                           150        913        200
         Tax effect                                                (59)      (356)       (78)
                                                               -------    -------    -------
                  Total other comprehensive income                  91        557        122
                                                               -------    -------    -------

Comprehensive income                                           $ 8,309    $ 8,575    $ 6,884
                                                               =======    =======    =======

</TABLE>


















--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


                                       25

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years ended December 31, 2003, 2002, and 2001
                    (Dollars in thousands, except share data)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                    Accumulated   Total
                                                                 Additional  Unearned     Unearned   Other Com-   Share-
                                 Common     Paid-in     ESOP       Stock     Treasury     Retained   prehensive  holders'
                                  Stock     Capital    Shares      Awards      Stock      Earnings     Income     Equity
                                --------   --------   --------    --------    --------    --------    --------   --------
<S>                             <C>        <C>        <C>         <C>         <C>         <C>         <C>        <C>
Balance at
  January 1, 2001               $     64   $ 62,645   $ (3,906)   $ (2,353)   $(19,637)   $ 43,386    $     50   $ 80,249

ESOP shares earned                     -        246        325           -           -           -           -        571

Issuance of stock awards               -         31          -        (142)        111           -           -          -

Stock awards earned                    -          -          -         721           -           -           -        721

Net income                             -          -          -           -           -       6,762           -      6,762

Purchase of 790,945 shares of
  treasury stock                       -          -          -           -     (14,163)          -           -    (14,163)

Dividends declared
  ($.52 per share)                     -          -          -           -           -      (2,224)          -     (2,224)

Change in fair value of
  securities, net of
  income taxes and
  reclassification
  effects                              -          -          -           -           -           -         122        122
                                --------   --------   --------    --------    --------    --------    --------   --------

Balance at
  December 31, 2001                   64     62,922     (3,581)     (1,774)    (33,689)     47,924         172     72,038

ESOP shares earned                     -        347        312           -           -           -           -        659

Stock awards earned                    -          -          -         767           -           -           -        767

Net income                             -          -          -           -           -       8,018           -      8,018

Purchase of 185,936 shares
  of treasury stock                    -          -          -           -      (4,061)          -           -     (4,061)

Dividends declared
  ($.52 per share)                     -          -          -           -           -      (2,046)          -     (2,046)

Change in fair value of
  securities, net of
  income taxes and
  reclassification
  effects                              -          -          -           -           -           -         557        557
                                --------   --------   --------    --------    --------    --------    --------   --------


Balance at
  December 31, 2002             $     64   $ 63,269   $ (3,269)   $ (1,007)   $(37,750)   $ 53,896    $    729   $ 75,932
                                ========   ========   ========    ========    ========    ========    ========   ========
                                                                                                                 --------
</TABLE>

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

                                  (Continued)

                                       26

<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years ended December 31, 2003, 2002, and 2001
                    (Dollars in thousands, except share data)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                Accumulated   Total
                                                             Additional  Unearned     Unearned   Other Com-   Share-
                             Common     Paid-in     ESOP       Stock     Treasury     Retained   prehensive  holders'
                              Stock     Capital    Shares      Awards      Stock      Earnings     Income     Equity
                            --------   --------   --------    --------    --------    --------    --------   --------
<S>                         <C>        <C>        <C>         <C>         <C>         <C>         <C>        <C>
Balance at
  January 1, 2003           $     64   $ 63,269   $ (3,269)   $ (1,007)   $(37,750)   $ 53,896    $    729   $ 75,932

ESOP shares earned                 -        534        302           -           -           -           -        836

Stock awards earned                -        121          -         268           -           -           -        389

Net income                         -          -          -           -           -       8,218           -      8,218

Exercise of 130,325 stock
   options, including
   tax benefit                     -        889          -           -       1,998           -           -      2,887

Dividends declared
  ($.63 per share)                 -          -          -           -           -      (2,469)          -     (2,469)

Change in fair value of
  securities, net of
  income taxes and
  reclassification
  effects                          -          -          -           -           -           -          91         91
                            --------   --------   --------    --------    --------    --------    --------   --------

Balance at
  December 31, 2003         $     64   $ 64,813   $ (2,967)   $   (739)   $(35,752)   $ 59,645    $    820   $ 85,884
                            ========   ========   ========    ========    ========    ========    ========   ========

</TABLE>





--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


                                       27

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2003, 2002, and 2001
                             (Dollars in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                        2003        2002        2001
                                                                      --------    --------    --------
<S>                                                                   <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
       Net income                                                     $  8,218    $  8,018    $  6,762
       Adjustments to reconcile net income to net cash from
         operating activities
              Depreciation and amortization of intangibles                 390         349         320
              Net amortization of securities                               997        (286)        (32)
              Net (gain) loss on sales and calls of securities               -         (53)        (81)
              Provision for loan losses                                    120         127         144
              Net gain on real estate owned                                (65)          -           -
              Net gain on sale of real estate held for expansion             -           -        (286)
              Deferred loan origination fees                               114         131         188
              Provision for deferred income taxes                          838         405          90
              Federal Home Loan Bank stock dividend                     (1,351)       (705)       (332)
              ESOP compensation expense                                    836         659         571
              Stock award compensation expense                             268         767         721
              Net change in
                     Accrued interest receivable                           155        (142)        169
                     Other assets                                          107         480        (391)
                     Accrued interest payable and other liabilities       (598)     (1,065)      1,110
                                                                      --------    --------    --------
                           Net cash from operating activities           10,029       8,685       8,953

CASH FLOWS FROM INVESTING ACTIVITIES
       Purchase of securities available-for-sale                       (95,581)    (32,377)     (2,759)
       Purchase of securities held-to-maturity                               -      (5,025)    (60,143)
       Proceeds from sales of securities available-for-sale                  -       3,189       3,558
       Proceeds from calls and maturities of securities                 36,225      28,115      50,065
       Proceeds from sale of real estate owned                             284           -           -
       Net loan originations                                            (1,257)    (14,450)    (12,328)
       Principal payments on mortgage-backed and related securities     21,972       9,553       5,835
       Purchase of Federal Home Loan Bank stock                         (4,000)     (1,921)     (8,500)
       Proceeds from sale of real estate held for expansion                  -           -         415
       Property and equipment expenditures                                (559)     (1,463)       (103)
                                                                      --------    --------    --------
              Net cash from investing activities                       (42,916)    (14,379)    (23,960)

CASH FLOWS FROM FINANCING ACTIVITIES
       Net change in deposits                                           19,230      21,755      16,195
       Net change in advance payments by borrowers for taxes
         and insurance                                                    (170)        (48)       (375)
       Change in advances from Federal Home Loan Bank                    1,539       8,505      19,000
       Stock options exercised                                             644           -           -
       Dividends paid                                                   (2,312)     (2,061)     (2,331)
       Purchase of treasury stock                                            -      (4,061)    (14,163)
                                                                      --------    --------    --------
              Net cash from financing activities                        18,931      24,090      18,326
                                                                      --------    --------    --------
</TABLE>


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

                                  (Continued)

                                       28

<PAGE>


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2003, 2002, and 2001
                             (Dollars in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                     2003        2002       2001
                                                                   --------    --------   --------
<S>                                                                <C>         <C>        <C>
Net change in cash and cash equivalents                            $(13,956)   $ 18,396   $  3,319

Cash and cash equivalents at beginning of year                       27,817       9,421      6,102
                                                                   --------    --------   --------

CASH AND CASH EQUIVALENTS AT END OF YEAR                           $ 13,861    $ 27,817   $  9,421
                                                                   ========    ========   ========

Supplemental disclosures of cash flow information:
       Cash paid during the year for
              Interest                                             $ 10,850    $ 12,814   $ 14,741
              Income taxes                                            3,381       3,703      3,095

Supplemental noncash disclosures:
       Exercise of stock options in exchange for note receivable
       (See Note 13)                                                  1,531           -          -

</TABLE>













--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.



                                       29
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND NATURE OF BUSINESS: The consolidated financial
statements include the accounts of First SecurityFed Financial, Inc. (the
Company) and its wholly owned subsidiary, First Security Federal Savings Bank
(the Bank), and the Bank's wholly owned subsidiary, Western Security Service
Corporation. Significant intercompany accounts and transactions have been
eliminated, including a gain recognized by the Bank on the transfer of real
estate to the Company at fair value. The only business of the Company is the
ownership of the Bank. The Bank's revenues primarily arise from interest income
from real estate loans and securities, with operations conducted through its
main office and three branches located in Cook County, Illinois and one branch
located in Philadelphia, Pennsylvania. Other financial instruments, which
potentially represent concentrations of credit risk, include deposit accounts in
other financial institutions and federal funds sold.

USE OF ESTIMATES: In preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
management must make estimates and assumptions. These estimates and assumptions
affect the amounts reported for assets, liabilities, income, and expenses, as
well as affecting the disclosures provided. Actual results could differ from the
current estimates. The collectibility of loans, allowance for loan losses, fair
values of financial instruments, and status of contingencies are particularly
subject to change.

SECURITIES: Securities are classified as held-to-maturity when the Company has
the positive intent and ability to hold those securities to maturity.
Accordingly, they are stated at cost, adjusted for amortization of premiums and
accretion of discounts. All other securities are classified as
available-for-sale since the Company may decide to sell those securities in
response to changes in market interest rates, liquidity needs, changes in yields
or alternative investments, and for other reasons. These securities are carried
at fair value with unrealized holding gains and losses, net of tax, reported as
other comprehensive income. Realized gains and losses on disposition are based
on the net proceeds and the adjusted carrying amounts of the securities sold,
using the specific identification method.

LOANS: Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at the principal
balance outstanding, net of unearned interest, deferred loan fees and costs, and
an allowance for loan losses. Loans held for sale are reported at the lower of
cost or market, on an aggregate basis.

Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over the loan term. Interest income is not
reported when full loan repayment is in doubt, typically when the loan is
impaired or payments are over 90 days past due unless the credit is well-secured
and in process of collection. In all cases, loans are placed on nonaccrual or
charged off at an earlier date if collection of principal or interest is
considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed
against interest income. Interest received on such loans is accounted for on the
cash-basis or cost-recovery method, until qualifying for return to accrual.
Loans are returned to accrual status when all the principal and interest amounts
contractually due are brought current and future payments are reasonably
assured.

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

                                  (Continued)

                                       30
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is a valuation
allowance for probable incurred credit losses, increased by the provision for
loan losses and decreased by charge-offs less recoveries. Management estimates
the allowance balance required using past loan loss experience, the nature and
volume of the portfolio, information about specific borrower situations and
estimated collateral values, economic conditions, and other factors. Allocations
of the allowance may be made for specific loans, but the entire allowance is
available for any loan that, in management's judgment, should be charged off.
Loan losses are charged against the allowance when management believes that the
uncollectibility of a loan balance is confirmed.

A loan is impaired when full payment under the loan terms is not expected.
Construction and commercial real estate loans are individually evaluated for
impairment. If a loan is impaired, a portion of the allowance is allocated so
that the loan is reported, net, at the present value of estimated future cash
flows using the loan's existing rate or at the fair value of collateral if
repayment is expected solely from the collateral. Large groups of smaller
balance homogeneous loans, such as consumer and residential real estate loans,
are collectively evaluated for impairment, and accordingly, they are not
separately identified for impairment disclosures.

REAL ESTATE OWNED: Real estate owned represents property obtained through
foreclosure or in settlement of debt obligations and is carried at the lower of
cost (fair value at date of foreclosure) or fair value less estimated selling
expenses. Valuation allowances are recognized when the fair value less selling
expenses is less than the cost of the asset. Changes in the valuation allowance
are charged or credited to income.

PREMISES AND EQUIPMENT: Land is carried at cost. Premises and equipment are
stated at cost less accumulated depreciation. Buildings and related components
are depreciated using the straight-line method with useful lives ranging from 30
to 50 years. Furniture, fixtures and equipment are depreciated using the
straight-line (or accelerated) method with useful lives ranging from 3 to 20
years.

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

INCOME TAXES: The provision for income taxes is based on an asset and liability
approach, which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. A valuation
allowance, if necessary, reduces deferred tax assets to the amount expected to
be realized.

EMPLOYEE STOCK OWNERSHIP PLAN: The cost of shares issued to the ESOP but not yet
allocated to participants is presented in the consolidated balance sheet as a
reduction of shareholders' equity. Compensation expense is recorded based on the
market price of the shares as they are committed to be released for allocation
to participant accounts. The difference between the market price and the costs
of shares committed to be released is recorded as an adjustment to paid-in
capital.


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

                                  (Continued)

                                       31
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Shares are considered outstanding for earnings per share calculations as they
are committed to be released; unallocated shares are not considered outstanding.

STOCK COMPENSATION: Employee compensation expense under stock options is
reported using the intrinsic value method. No stock-based compensation cost is
reflected in net income, as all options granted had an exercise price equal to
or greater than the market price of the underlying common stock at date of
grant. The following table illustrates the effect on net income and earnings per
share if expense was measured using the fair value recognition provisions of
FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION.

<TABLE>
<CAPTION>
                                                         2003        2002        2001
                                                      ---------   ---------   ---------

<S>                                                   <C>         <C>         <C>
         Net income as reported                       $   8,218   $   8,018   $   6,762
         Deduct:  Stock-based compensation expense
           determined under fair value based method         152         427         419
                                                      ---------   ---------   ---------
         Pro forma net income                             8,066       7,591       6,343

         Basic earnings per share as reported              2.29        2.20        1.68
         Pro forma basic earnings per share                2.24        2.08        1.57

         Diluted earnings per share as reported            2.19        2.15        1.67
         Pro forma diluted earning per share               2.15        2.04        1.56
</TABLE>

The fair value of options granted in 2001 was estimated at the date of grant
using the Black-Scholes option pricing model using the following assumptions:
expected volatility factor of the expected market price of the Company's common
stock of 20.32%, risk-free interest rate of 5.22%, expected option term of ten
years, and a dividend yield of 2.90%.

The Black-Scholes option pricing valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its stock
options.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS: Financial instruments include
off-balance-sheet credit instruments, such as commitments to make loans and
standby letters of credit, issued to meet customer financing needs. The face
amount for these items represents the exposure to loss, before considering
customer collateral or ability to repay. Such financial instruments are recorded
when they are funded.

STATEMENT OF CASH FLOWS: Cash and cash equivalents include cash on hand, amounts
due from banks, and daily federal funds sold. The Company reports net cash flows
for customer loan transactions, deposit transactions, and time deposits in other
financial institutions.


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

                                  (Continued)

                                       32
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

EARNINGS PER SHARE: Basic earnings per share is computed by dividing net income
available to common shareholders by the weighted average number of shares
outstanding during the period. ESOP shares are considered outstanding for this
calculation unless unearned. Diluted earnings per share is computed using the
weighted number of shares determined for the basic computation plus the number
of shares of common stock that would be issued assuming all contingently
issuable shares having a dilutive effect on earnings per share were outstanding
during the period.

COMPREHENSIVE INCOME: Comprehensive income consists of net income and other
comprehensive income. Other comprehensive income includes unrealized gains and
losses on securities available-for-sale, net of tax, which are also recognized
as separate components of equity.

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

OPERATING SEGMENTS: While the chief decision-makers monitor the revenue streams
of the various products and services, the identifiable segments are not material
and operations are managed and financial performance is evaluated on a
company-wide basis. Accordingly, all of the financial service operations are
considered by management to be aggregated in one reportable operating segment.

Adoption of New Accounting Standards: During 2003, the Company adopted FASB
Statement No. 149, AMENDMENT OF STATEMENT ON DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES; FASB Statement No. 150, ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS
WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITIES; FASB Statement No. 132
(revised 2003), EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT
BENEFITS; FASB Interpretation No. 45, GUARANTOR'S ACCOUNTING AND DISCLOSURE
REQUIREMENTS FOR GUARANTEES; and FASB Interpretation No. 46, CONSOLIDATION OF
VARIABLE INTEREST ENTITIES.

Adoption of these new standards did not materially affect the Company's
operating results or financial condition.

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


NOTE 2 - SUBSEQUENT

On January 12, 2004, MB Financial, Inc. ("MB Financial") and the Company
announced their agreement to merge, pursuant to the Agreement and Plan of
Merger, dated as of January 9, 2004 ("the Agreement"), between MB Financial and
the Company. Pursuant to the Agreement, the Company will be merged with and into
MB Financial, with MB Financial as the surviving corporation.


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

                                  (Continued)

                                       33
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 2 - SUBSEQUENT (Continued)

Subject to the allocation provisions of the Agreement, the Company's
shareholders will have the right to elect to receive for each share of the
Company's common stock held, either $35.25 in cash or a number of shares of MB
Financial common stock equal to the quotient obtained by dividing $35.25 by the
average closing price of MB Financial common stock over the ten-trading day
period ending on the second trading day prior to the effective date of the
transaction. The transaction is subject to restructuring as an all-cash
transaction at $35.25 per share if the aggregate value of the MB Financial
common stock to be issued is less than 40% of the value of the aggregate
transaction consideration and MB Financial elects not to increase the number of
shares issuable in the transaction. Subject to any such increase by MB Financial
and/or any increase for the Company's stock options exercised prior to the
effective date, the total number of shares of common stock to be issued by MB
Financial in the cash and stock transaction has been fixed at 1,996,849.


NOTE 3 - SECURITIES

The Company's securities at year end are as follows:

<TABLE>
<CAPTION>
                                                                  ----------------------------2003---------------------------
                                                                                              ----
                                                                                    Gross           Gross
                                                                   Amortized     Unrealized       Unrealized         Fair
                                                                      Cost          Gains           Losses           Value
                                                                  ------------   ------------    ------------    ------------
<S>                                                               <C>            <C>                 <C>         <C>
         Securities available-for-sale
                U.S. Treasury                                     $        257   $         89        $      -    $        346
                U.S. government agencies                                48,062            314            (258)         48,118
                Municipal                                               17,822            741             (64)         18,499
                Mutual funds                                             3,907            113              (6)          4,014
                Other equity securities                                    119             89               -             208
                                                                  ------------   ------------    ------------    ------------
                                                                        70,167          1,346            (328)         71,185
                Mortgage-backed securities
                       Federal Home Loan Mortgage Corporation            3,293             44              (5)          3,332
                       Government National Mortgage Association         13,519            111              (5)         13,625
                       Federal National Mortgage Association            17,348            206             (24)         17,530
                                                                  ------------   ------------    ------------    ------------
                                                                        34,160            361             (34)         34,487
                                                                  ------------   ------------    ------------    ------------

                                                                  $    104,327   $      1,707    $       (362)   $    105,672
                                                                  ============   ============    ============    ============

         Securities held-to-maturity
                U.S. government agencies                          $      9,038   $        208        $      -    $      9,246
                Municipal                                               28,525          2,190               -          30,715
                                                                  ------------   ------------    ------------    ------------
                                                                        37,563          2,398               -          39,961
                Mortgage-backed securities
                       Federal Home Loan Mortgage Corporation            1,010             46               -           1,056
                       Government National Mortgage Association          3,728            161               -           3,889
                       Federal National Mortgage Association               317             15               -             332
                                                                  ------------   ------------    ------------    ------------
                                                                         5,055            222               -           5,277
                                                                  ------------   ------------    ------------    ------------

                                                                  $     42,618   $      2,620        $      -    $     45,238
                                                                  ============   ============    ============    ============
</TABLE>


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

                                  (Continued)

                                       34
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------

NOTE 3 - SECURITIES (Continued)

<TABLE>
<CAPTION>
                                                                  ---------------------------2002----------------------------
                                                                                             ----
                                                                                    Gross           Gross
                                                                   Amortized      Unrealized      Unrealized        Fair
                                                                      Cost          Gains           Losses          Value
                                                                  ------------   ------------    ------------    ------------
<S>                                                               <C>            <C>              <C>            <C>
         Securities available-for-sale
                U.S. Treasury                                     $        258   $        103     $         -    $        361
                U.S. government agencies                                14,753            232              (3)         14,982
                Municipal                                               10,385            684              (5)         11,064
                Corporate
                Mutual funds                                             3,157            137               -           3,294
                Other equity securities                                    119             28               -             147
                                                                  ------------   ------------    ------------    ------------
                                                                        28,672          1,184              (8)         29,848
                Mortgage-backed securities
                       Federal Home Loan Mortgage Corporation            2,978              4             (62)          2,920
                       Government National Mortgage Association            846             11              (1)            856
                       Federal National Mortgage Association             8,937             83             (16)          9,004
                                                                  ------------   ------------    ------------    ------------
                                                                        12,761             98             (79)         12,780
                                                                  ------------   ------------    ------------    ------------

                                                                  $     41,433   $      1,282    $        (87)   $     42,628
                                                                  ============   ============    ============    ============

         Securities held-to-maturity
                U.S. government agencies                          $     28,474   $      1,061    $         (1)   $     29,534
                Municipal                                               28,772          1,795              (9)         30,558
                                                                  ------------   ------------    ------------    ------------
                                                                        57,246          2,856             (10)         60,092
                Mortgage-backed securities
                       Federal Home Loan Mortgage Corporation            2,836             85             (14)          2,907
                       Government National Mortgage Association          8,043            275               -           8,318
                       Federal National Mortgage Association             1,001             44               -           1,045
                                                                  ------------   ------------    ------------    ------------
                                                                        11,880            404             (14)         12,270
                                                                  ------------   ------------    ------------    ------------

                                                                  $     69,126   $      3,260    $        (24)   $     72,362
                                                                  ============   ============    ============    ============
</TABLE>


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

                                  (Continued)

                                       35
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 3 - SECURITIES (Continued)

Securities with unrealized losses at year-end 2003 are presented below by length
of time the securities have been in an unrealized loss position:

<TABLE>
<CAPTION>
                                          Less than 12 Months        12 Months or More                Total
                                        -----------------------   -----------------------   -----------------------
                                           Fair      Unrealized      Fair      Unrealized      Fair      Unrealized
Description of Securities                  Value       Loss         Value         Loss         Value        Loss
-------------------------               ----------   ----------   ----------   ----------   ----------   ----------
<S>                                     <C>          <C>          <C>          <C>          <C>          <C>
U.S. government agencies                $   18,771   $      258   $        -   $        -   $   18,771   $      258
Municipal                                    3,066           64            -            -        3,066           64
Mutual funds                                   626            6            -            -          626            6

Mortgage-backed securities
       Federal Home Loan Mortgage
          Corporation                          427            4           65            1          492            5
       Governmental National Mortgage
         Associations                          359            3           47            2          406            5
       Federal National Mortgage
         Association                         3,445           23          148            1        3,593           24
                                        ----------   ----------   ----------   ----------   ----------   ----------

Total temporarily impaired              $   26,694   $      358   $      260   $        4   $   26,954   $      362
                                        ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>

Unrealized losses on the above-named securities have not been recognized into
income because the issuers of these securities are of high credit quality,
management has the intent and ability to hold these securities for the
foreseeable future, and the decline in fair value is largely due to increased
market interest rates. The Company's management believes that the fair value of
these securities will recover in the future.

Sales of securities are summarized as follows:

                                      2003           2002           2001
                                      ----           ----           ----

         Proceeds                  $        -   $      3,189   $      3,558
         Gross realized gains               -             56             81
         Gross realized losses              -              3              -

The carrying values and fair values of debt securities as of December 31, 2003,
by contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.


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

                                  (Continued)

                                       36
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 3 - SECURITIES (Continued)

<TABLE>
<CAPTION>
                                                                  Amortized    Fair
                                                                    Cost       Value
                                                                  --------   --------
<S>                                                               <C>        <C>
         Securities available-for-sale
                  Due in one year or less                         $    299   $    310
                  Due after one year through five years              1,000      1,013
                  Due after five years through ten years            18,039     18,267
                  Due after ten years                               46,803     47,373
                                                                  --------   --------
                                                                    66,141     66,963

                  Mutual funds                                       3,907      4,014
                  Other equity securities                              119        208
                  Mortgage-backed securities                        34,160     34,487
                                                                  --------   --------
                                                                    38,186     38,709
                                                                  --------   --------

                                                                  $104,327   $105,672
                                                                  ========   ========

         Securities held-to-maturity
                  Due in one year or less                         $  1,000   $  1,004
                  Due after one year through five years              1,700      1,817
                  Due after five years through ten years            15,359     16,191
                  Due after ten years                               19,504     20,949
                                                                  --------   --------
                                                                    37,563     39,961
                  Mortgage-backed securities and collateralized
                    mortgage obligations                             5,055      5,277
                                                                  --------   --------

                                                                  $ 42,618   $ 45,238
                                                                  ========   ========
</TABLE>

Securities in the amount of $3,000,000 and $12,015,000 were pledged to secure
government deposits at December 31, 2003 and 2002.


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

                                  (Continued)

                                       37
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 4 - LOANS RECEIVABLE

Loans receivable consisted of the following:
                                                     2003         2002
                                                  ---------    ---------
         First mortgage loans
                  One-to-four-family residences   $ 169,139    $ 188,449
                  Multifamily residences             24,156       33,464
                  Commercial real estate             55,417       52,208
                  Construction loans                 65,510       32,486
                                                  ---------    ---------
                                                    314,222      306,607
         Home equity loans                           10,769        8,704
         Net deferred loan origination fees          (2,236)      (2,122)
         Construction loans in process              (18,380)     (10,227)
                                                  ---------    ---------
                  Total mortgage loans              304,375      302,962
         Consumer and other loans                     2,634        1,617
         Allowance for loan losses                   (3,032)      (2,937)
                                                  ---------    ---------

                                                  $ 303,977    $ 301,642
                                                  =========    =========

The principal balance of loans on nonaccrual status at December 31, 2003 and
2002 approximated $1,734,000 and $1,095,000. Loans greater than 90 days past due
and still accruing interest approximated $1,015,000 and $963,000 at December 31,
2003 and 2002.


NOTE 5 - ALLOWANCE FOR LOAN LOSSES

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

                                           2003       2002       2001
                                         -------    -------    -------

         Balance, beginning of year      $ 2,937    $ 2,806    $ 2,561
         Provision for loan losses           120        127        144
         Recoveries                            6          8        143
         Charge-offs                         (31)        (4)       (42)
                                         -------    -------    -------

                  Balance, end of year   $ 3,032    $ 2,937    $ 2,806
                                         =======    =======    =======

Impaired loans totaled $225,000 at December 31, 2003 and $296,000 at December
31, 2002. The average balance of impaired loans and the interest income that
would have been recognized are not material for any period presented. There was
no allowance allocated for impaired loans at December 31, 2003 or 2002.


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

                                  (Continued)

                                       38
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 6 - PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:
                                                       2003       2002
                                                     -------    -------

         Land                                        $   545    $   545
         Buildings and improvements                    5,227      3,745
         Furniture and equipment                       2,976      2,769
         Real estate acquired for future expansion       248        248
         Construction in progress                          -      1,160
                                                     -------    -------
                  Total cost                           8,996      8,467
         Less accumulated depreciation                (4,478)    (4,118)
                                                     -------    -------

                                                     $ 4,518    $ 4,349
                                                     =======    =======


NOTE 7 - DEPOSITS

Certificate of deposit accounts with balances of $100,000 or more totaled
approximately $53,059,000 and $54,350,000 at December 31, 2003 and 2002.

At December 31, 2003, the scheduled maturities of certificates of deposit are as
follows:

        2004                                  $  124,068
        2005                                      11,170
        2006                                       2,670
        2007                                      13,340
        2008                                      18,902
                                              ----------
                                              $  170,150
                                              ==========


NOTE 8 - ADVANCES FROM FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank of Chicago at year end were as follows:

<TABLE>
<CAPTION>
                                                                          December 31,
                      Description                                       2003      2002
                      -----------                                       ----      ----
<S>                                                                   <C>       <C>
         Floating, matures October 2005; 5.25% interest rate          $ 2,000   $ 2,000
         Floating, matures July 2008; 5.18% interest rate               2,000     2,000
         Fixed terms; matures September 2004 through November 2011;
           range of rates 2.86% to 6.18%; averaging 4.78%              89,644    88,105
                                                                      -------   -------

                                                                      $93,644   $92,105
                                                                      =======   =======
</TABLE>

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

                                  (Continued)

                                       39
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------



NOTE 8 - ADVANCES FROM FEDERAL HOME LOAN BANK (Continued)

Scheduled repayments and maturities of the Federal Home Loan Bank of Chicago
advances at December 31, 2003 are as follows:

               2004                             $    10,000
               2005                                  16,800
               2006                                  22,500
               2007                                  16,345
               2008                                  16,999
               Thereafter                            11,000
                                                -----------

                                                $    93,644
                                                ===========

The Company maintains a collateral pledge agreement covering advances whereby
the Company has agreed to at all times keep on hand, free of all other pledges,
liens, and encumbrances, whole first mortgage loans on improved residential
property not more than 90 days delinquent, aggregating no less than 167% of the
outstanding advances from the Federal Home Loan Bank of Chicago. At December 31,
2003, $25,000,000 of Federal Home Loan Bank advances had various call provisions
with an average term to call date of 3.4 months.


NOTE 9 - INCOME TAXES

Income tax expense is as follows:
                                           2003      2002       2001
                                         -------   -------    -------
         Current
            Federal                      $ 2,833   $ 2,909    $ 2,701
            State                            642       644        605
         Deferred                            838       465        210
         Change in valuation allowance         -       (60)      (120)
                                         -------   -------    -------

                                         $ 4,313   $ 3,958    $ 3,396
                                         =======   =======    =======


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

                                  (Continued)

                                       40
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 9 - INCOME TAXES (Continued)

A reconciliation of income tax expense and amounts computed by applying the
statutory federal income tax rate to income before taxes follows:

<TABLE>
<CAPTION>
                                         -------2003------    -------2002------    -------2001------
                                                ----                 ----                 ----
<S>                                      <C>         <C>      <C>         <C>      <C>         <C>
         Income taxes computed at
           statutory rate of 34%         $ 4,261     34.0%    $ 4,072     34.0%    $ 3,454     34.0%
         Tax-exempt income                  (622)    (4.9)       (584)    (4.9)       (456)    (4.5)
         State income taxes, net of
           federal income tax benefit        439      3.5         457      3.8         455      4.5
         Change in valuation allowance         -        -         (60)     (.5)       (120)    (1.2)
         Other                               235      1.8          73       .6          63       .6
                                         -------     ----     -------     ----     -------     ----

                                         $ 4,313     34.4%    $ 3,958     33.0%    $ 3,396     33.4%
                                         =======     ====     =======     ====     =======     ====
</TABLE>

The net deferred tax asset included in the accompanying consolidated balance
sheets consists of the following:

<TABLE>
<CAPTION>
                                                                      2003       2002
                                                                     -------    -------
<S>                                                                  <C>        <C>
         Deferred tax assets
                  Allowance for loan losses                          $ 1,146    $ 1,001
                  Amortization of intangible assets                       52         57
                  Contribution carryforward                                -        248
                  Other                                                   22        369
                                                                     -------    -------
                                                                       1,220      1,675
         Deferred tax liabilities
                  Depreciation                                           (42)       (40)
                  Federal Home Loan Bank stock dividends              (1,020)      (581)
                  Loan fees                                             (207)      (232)
                  Other                                                  (33)         -
                  Unrealized gain on securities available-for-sale      (524)      (466)
                                                                     -------    -------
                                                                      (1,826)    (1,319)
                                                                     -------    -------

                  Total net deferred tax asset (liability)           $  (606)   $   356
                                                                     =======    =======
</TABLE>

The Company has qualified under provisions of the Internal Revenue Code which
permit it to deduct from taxable income a provision for bad debts that differs
from the provision charged to income in the financial statements. Retained
earnings at December 31, 2003 include approximately $2,023,000 for which no
deferred federal income tax liability has been recorded.

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

                                  (Continued)

                                       41
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 10 - COMMITMENTS AND CONTINGENCIES

The Company is party to financial instruments with off-balance-sheet risk in the
normal course of business to meet financing needs of its customers. These
financial instruments include commitments to fund loans and previously approved
unused lines of credit. The Company's exposure to credit loss in the event of
nonperformance by the parties to these financial instruments is represented by
the contractual amount of the instruments. The Company uses the same credit
policy for commitments as it uses for on-balance-sheet items. The contract
amount of these financial instruments is summarized as follows:

                                                        2003         2002
                                                        ----         ----

         Commitments to extend credit                $  18,404     $  15,686
         Unused lines of credit, including
           commitments on construction loans            22,645        25,132
         Letters of credit                                 173           137

At December 31, 2003, commitments to extend credit consist primarily of
fixed-rate loan commitments with rates ranging from 4.50% to 8.75%. These
commitments are due to expire within 60 days of issuance. Since many commitments
expire without being used, the amounts above do not necessarily represent future
cash commitments. Collateral may be obtained upon exercise of a commitment. The
amount of collateral is determined by management and may include commercial and
residential real estate and other business and consumer assets.

The Company's principal loan customers are located in Chicago, Illinois and
Philadelphia, Pennsylvania. Most loans are secured by specific collateral,
including residential and commercial real estate.


NOTE 11 - REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classifications are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.



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

                                  (Continued)

                                       42
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------

NOTE 11 - REGULATORY MATTERS (Continued)

As of December 31, 2003, the most recent notification from the Office of Thrift
Supervision categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the following table. There are no conditions or
events since that notification that management believes have changed the Bank's
category.

The Bank's actual capital amounts and ratios are presented in the following
table.

<TABLE>
<CAPTION>
                                                                                   To Be Well Capitalized
                                                                  For Capital      Under Prompt Corrective
                                                Actual        Adequacy Purposes       Action Provisions
                                            --------------    -----------------    -----------------------
                                            Amount   Ratio      Amount   Ratio        Amount      Ratio
                                            ------   -----      ------   -----        ------      -----
<S>                                         <C>       <C>       <C>        <C>        <C>         <C>
As of December 31, 2003:
       Total capital (to risk-weighted
         assets)                            $71,589   26.8%     $21,352    8.0%       $26,690     10.0%
       Tier I capital (to risk-weighted
         assets)                             68,557   25.7       10,676    4.0         16,014      6.0
       Tier I (core) capital (to adjusted
         total assets)                       68,557   14.1       19,484    4.0         24,355      5.0

As of December 31, 2002:
       Total capital (to risk-weighted
         assets)                            $68,856   26.7%     $20,642    8.0%       $25,802     10.0%
       Tier I capital (to risk-weighted
         assets)                             65,919   25.5       10,321    4.0         15,481      6.0
       Tier I (core) capital (to adjusted
         total assets)                       65,919   14.4       18,266    4.0         22,833      5.0

</TABLE>

The Company may not declare or pay cash dividends on or repurchase any of its
shares of capital stock if the effect thereof would cause its net worth to be
reduced below applicable regulatory requirements or the amount of the
liquidation account if such a declaration and payment would otherwise violate
regulatory requirements.

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

                                  (Continued)

                                       43
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 12 - EARNINGS PER COMMON SHARE

A reconciliation of the numerator and denominator of the earnings per common
share computation for the years ended December 31, 2003, 2002, and 2001 is
presented below.

                                                        2003     2002     2001
                                                       ------   ------   ------

                  Net income                           $8,218   $8,018   $6,762
                                                       ======   ======   ======

         Weighted average common shares outstanding
           for basic earnings per common share          3,593    3,641    4,034
         Add:  Dilutive effects of assumed exercises
           of stock options                               151       82       23
         Add:  Dilutive effects of assumed exercise
           of stock awards                                  8        5        3
                                                       ------   ------   ------

         Average shares and dilutive potential
           common shares                                3,752    3,728    4,060
                                                       ======   ======   ======

         Basic earnings per share                      $ 2.29   $ 2.20   $ 1.68
                                                       ======   ======   ======

         Diluted earnings per common share             $ 2.19   $ 2.15   $ 1.67
                                                       ======   ======   ======


NOTE 13 - RELATED PARTY TRANSACTIONS

The Company has lending transactions with directors, executive officers, and
their associates. Activity in these accounts is summarized as follows for the
year ended December 31, 2003.

         Balance at beginning of year                            $  356
         Loans disbursed                                          1,834
         Principal repayments                                       165
                                                                 ------

         Balance at end of year                                  $2,025
                                                                 ======

Certain employees of the Company sit on the Board of Directors of the Heritage
Foundation (the Foundation), a non-for profit affiliate of the Bank, which makes
grants to community organizations. Included in accrued interest and other
liabilities at December 31, 2002 was an account payable to the Foundation in the
amount of $900,000. The error was subsequently rectified in early 2003. The
Foundation also has deposits with the Bank totaling $572,000 and stock in the
Company. The Chief Executive Officer of the Company exercised 130,325 stock
options during 2003. These stock options were exercised in part by cash and in
part by loans from the Bank totaling $1,531,000. These loans were subsequently
repaid in cash on various dates through March 30, 2004.

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

                                  (Continued)

                                       44
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 14 - STOCK-BASED COMPENSATION PLANS

As part of the conversion transaction, the Company established an employee stock
ownership plan (ESOP) for the benefit of substantially all employees. The ESOP
borrowed $5,126,400 from the Company and used those funds to acquire 512,640
shares of the Company's stock at $10 per share.

Shares issued to the ESOP are allocated to ESOP participants based on principal
and interest repayments made by the ESOP on the loan from the Company. The loan
is secured by shares purchased with the loan proceeds and will be repaid by the
ESOP with funds from the Company's discretionary contributions to the ESOP and
earnings on ESOP assets. Principal payments are scheduled to occur over a
twenty-year period. However, in the event the Company's contributions exceed the
minimum debt service requirements, additional principal payments will be made.

Information regarding shares released and shares held by the ESOP at December 31
is as follows:

                                                      2003     2002     2001
                                                    ------   ------   ------

        Shares released                                 30       31       32
        Average fair value of shares released       $27.69   $21.14   $17.59
        Compensation expense                           836      659      571

        Allocated shares                               216      186      155
        Unallocated shares                             297      327      358
                                                    ------   ------   ------

                 Total ESOP shares                     513      513      513
                                                    ======   ======   ======

        Fair value of unallocated shares            $8,907   $8,035   $7,227
                                                    ======   ======   ======





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

                                  (Continued)

                                       45
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------

NOTE 14 - STOCK-BASED COMPENSATION PLANS (Continued)

During 1998, the Company adopted a stock option plan under the terms of which
shares of the Company's common stock were reserved for issuance. The options
became exercisable on a cumulative basis in equal installments over a five-year
period from the date of grant. The options expire 10 years from the date of
grant.

A summary of the status of the Company's stock option plan and changes during
the years are presented below:

<TABLE>
<CAPTION>
                                 -------2003------  -----2002------  ------2001------
                                        ----             ----              ----
                                           Weighted          Weighted          Weighted
                                           Average           Average           Average
                                           Exercise          Exercise          Exercise
                                 Shares     Price   Shares    Price   Shares    Price
                                 ------     -----   ------    -----   ------    -----
<S>                                 <C>    <C>         <C>   <C>         <C>   <C>
         Outstanding at
           beginning of year        544    $ 16.79     544   $ 16.79     519   $ 16.69
           Exercised               (130)     16.69       -         -       -         -
         Granted                      -          -       -         -      25     18.90
                                  -----    -------   -----   -------   -----   -------
                Outstanding at
                  end of year       414    $ 16.82     544   $ 16.79     544   $ 16.79
                                  =====    =======   =====   =======   =====   =======
         Options exercisable at
           end of year              399                420               311
         Weighted-average fair
           value of options
           granted during year    $   -              $   -          $  4.86

</TABLE>

These options are not fully vested. The exercise price equals the market value
at the date the options were granted. Options outstanding at year-end 2003 were
as follows:

                                                              Weighted
                                                              Average
                                                             Remaining
                                                            Contractual
         Prices                                 Number     Life in Years
         ------                                 ------     -------------
         $16.69                                  389           4.3
         $18.90                                   25           7.5
                                               -----           ---

         Outstanding at year end                 414           4.5
                                               =====           ===


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

                                  (Continued)

                                       46
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 14 - STOCK-BASED COMPENSATION PLANS (Continued)

In connection with the conversion to stock ownership, the Company adopted a
management recognition and retention plan (MRP). In 1998, the Company
contributed $4.3 million, allowing the MRP to acquire 256,320 shares of common
stock of the Company, at an average cost of $16.69 per share, to be awarded to
directors and key employees. The Company awarded 216,166 shares during 1998 and
7,500 shares during 2001. These shares generally vest over a five-year period.
The unamortized cost of shares not yet earned (vested) is reported as a
reduction of shareholders' equity as unearned stock awards. MRP compensation
expense totaled $268,000, $767,000, and $721,000 for the years ended December
31, 2003, 2002, and 2001.


NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amount and estimated fair value of financial instruments as of
December 31 are as follows:

<TABLE>
<CAPTION>
                                                         ---------2003----------   ---------2002----------
                                                                  ----                      ----
                                                                       Estimated                 Estimated
                                                          Carrying        Fair      Carrying        Fair
                                                           Amount        Value       Amount        Value
                                                          ---------    ---------    ---------    ---------
         Financial assets
<S>                                                       <C>          <C>          <C>          <C>
                Cash and cash equivalents                 $  13,861    $  13,861    $  27,817    $  27,817
                Securities available-for-sale               105,672      105,672       42,628       42,628
                Securities held-to-maturity                  42,618       45,238       69,126       72,362
                Federal Home Loan Bank stock                 20,139       20,139       14,788       14,788
                Loans, net of allowance for loan losses     303,977      306,215      301,642      304,057
                Accrued interest receivable                   3,164        3,164        3,319        3,319

         Financial liabilities
                Deposits                                   (309,842)    (312,918)    (290,612)    (293,095)
                Advance payments by borrowers for taxes
                  and insurance                              (2,662)      (2,662)      (2,832)      (2,832)
                Advances from Federal Home Loan Bank        (93,644)     (98,479)     (92,105)     (97,497)
                Accrued interest payable                       (633)        (633)        (647)        (647)

</TABLE>

The methods and assumptions used to estimate fair value are described as
follows:


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

                                  (Continued)

                                       47
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------



NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

Carrying amount is the estimated fair value for cash and cash equivalents,
short-term borrowings, Federal Home Loan Bank stock, accrued interest receivable
and payable, demand deposits, short-term debt, and variable rate loans or
deposits that reprice frequently and fully. Security fair values are based on
market prices or dealer quotes and, if no such information is available, on the
rate and term of the security and information about the issuer. For fixed rate
loans or deposits and for variable rate loans or deposits with infrequent
repricing or repricing limits, fair value is based on discounted cash flows
using current market rates applied to the estimated life and credit risk. Fair
values for impaired loans are estimated using discounted cash flow analysis or
underlying collateral values. The fair value of debt is based on current rates
for similar financing. The fair value of off-balance-sheet items is based on the
current fees or costs that would be charged to enter into or terminate such
arrangements, which are not material.

Other assets and liabilities of the Company not defined as financial
instruments, such as property and equipment, are not included in the above
disclosures. Also not included are nonfinancial instruments typically not
recognized in financial statements such as the value of core deposits, customer
goodwill, and similar items.

While the above estimates are based on judgments of the most appropriate
factors, there is no assurance that if the Company disposed of these items, the
fair value would have been achieved, because the market value may differ
depending on the circumstances. The fair values at year end should not
necessarily be considered to apply at subsequent dates.

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

                                  (Continued)

                                       48
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 16 - PARENT COMPANY FINANCIAL STATEMENTS

Presented below are the condensed balance sheets, statements of income, and
statements of cash flows for First SecurityFed Financial, Inc.

                            CONDENSED BALANCE SHEETS
                           December 31, 2003 and 2002

                                                 2003      2002
                                               -------   -------
ASSETS
Cash and cash equivalents                      $ 4,394   $   766
Securities available-for-sale                    8,094     7,466
ESOP loan                                        3,332     3,588
Investment in bank subsidiary                   69,004    66,362
Accrued interest receivable and other assets     2,342       438
                                               -------   -------

                                               $87,166   $78,620
                                               =======   =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Note payable to bank subsidiary                $     -   $ 2,180
Accrued expenses and other liabilities             699       508
Shareholders' equity                            86,467    75,932
                                               -------   -------

                                               $87,166   $78,620
                                               =======   =======









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

                                  (Continued)

                                       49
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 16 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

                         CONDENSED STATEMENTS OF INCOME
              For the years ended December 31, 2003, 2002, and 2001

                                                  2003        2002       2001
                                                --------    --------   --------
Income
         Dividend from subsidiary               $  7,200    $ 17,500   $      -
         Interest on securities                      357         398        456
         Interest on ESOP loan                       243         264        274
         Gain (loss) on sale of securities             -          20         81
                                                --------    --------   --------
                  Total income                     7,800      18,182        811

Expenses
         Interest expense on note payable             54         263        283
         Other operating expenses                    300         356        305
                                                --------    --------   --------
                                                     354         619        588
                                                --------    --------   --------


INCOME BEFORE INCOME TAXES AND EQUITY IN
  UNDISTRIBUTED EARNINGS OF BANK SUBSIDIARY        7,446      17,563        223

Income tax expense (benefit)                         (20)        (99)       (63)
                                                --------    --------   --------


INCOME BEFORE EQUITY IN UNDISTRIBUTED
  EARNINGS OF BANK SUBSIDIARY                      7,466      17,662        286

Equity in undistributed earnings (distributions
  in excess of earnings) of bank subsidiary        1,335      (9,644)     6,476
                                                --------    --------   --------

NET INCOME                                      $  8,801    $  8,018   $  6,762
                                                ========    ========   ========











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

                                  (Continued)

                                       50
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------



NOTE 16 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

                       CONDENSED STATEMENTS OF CASH FLOWS
              For the years ended December 31, 2003, 2002, and 2001

<TABLE>
<CAPTION>
                                                                           2003        2002        2001
                                                                         --------    --------    --------
<S>                                                                      <C>         <C>         <C>
OPERATING ACTIVITIES
         Net income                                                      $  8,801    $  8,018    $  6,762
         Adjustments to reconcile net income to net
           cash provided by operating activities
                  (Equity in undistributed earnings) distribution
                    in excess of earnings of bank subsidiary               (1,335)      9,644      (6,476)
                  Net accretion                                               (18)       (100)       (112)
                  (Gain) loss on sales of securities                            -         (20)        (81)
                  Change in
                           Other assets                                    (1,201)        459         743
                           Other liabilities                               (2,146)    (13,535)     14,961
                                                                         --------    --------    --------
                                    Net cash from operating activities      4,101       4,466      15,797

INVESTING ACTIVITIES
         Purchase of securities available-for-sale                           (592)     (2,075)     (2,759)
         Proceeds from maturities and calls                                     -         250           -
         Proceeds from sales of securities                                      -       2,970       3,558
         Payment received on loan to ESOP                                     256         257         256
                                                                         --------    --------    --------
                  Net cash from investing activities                         (336)      1,402       1,055

FINANCING ACTIVITIES
         Dividends paid                                                    (2,312)     (2,061)     (2,331)
         Stock options exercised                                            2,175           -           -
         Purchase of treasury stock                                             -      (4,061)    (14,163)
                                                                         --------    --------    --------
                  Net cash from financing activities                         (137)     (6,122)    (16,494)
                                                                         --------    --------    --------

Net change in cash and cash equivalents                                     3,628        (254)        358

Cash and cash equivalents at beginning of year                                766       1,020         662
                                                                         --------    --------    --------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                 $  4,394    $    766    $  1,020
                                                                         ========    ========    ========

</TABLE>

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

                                  (Continued)

                                       51
<PAGE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2003, 2002, and 2001
               (Table amounts in thousands, except per share data)
--------------------------------------------------------------------------------


NOTE 17 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)


                                                                   Earnings
                                                  Net              Per Share
                                     Interest  Interest   Net      ---------
                                      Income    Income   Income  Basic  Diluted
                                      ------    ------   ------  -----  -------
         2003
                  First quarter       $7,632    $4,786   $1,954   $.55    $.53
                  Second quarter       7,303     4,544    2,027    .56     .54
                  Third quarter        7,546     4,900    2,228    .62     .60
                  Fourth quarter       7,306     4,721    2,009    .56     .52

         2002
                  First quarter       $7,632    $4,420   $1,907   $.52    $.51
                  Second quarter       7,587     4,418    1,976    .53     .52
                  Third quarter        7,788     4,592    2,065    .57     .56
                  Fourth quarter       7,893     4,824    2,070    .58     .56




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

                                       52







<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                             SHAREHOLDER INFORMATION

ANNUAL MEETING

     The Annual Meeting of Shareholders will be held at 1:00 p.m., local time on
May 12, 2004 at the Main Office of the Company, located at 936 N. Western
Avenue, Chicago, Illinois 60622.

STOCK LISTING

     First SecurityFed Financial, Inc. common stock is traded on the Nasdaq
Stock Market under the symbol "FSFF."

PRICE RANGE OF COMMON STOCK

     As of February 28, 2004, there were approximately 695 shareholders of
record and 4,039,063 outstanding shares of common stock.

     The following table sets forth the high and low sales prices and dividends
paid per share of common stock during the periods indicated. The stock price
information was provided by the NASD, Inc.

        Quarter                                               Dividend
         Ended                  High          Low             Declared
         -----                  ----          ---             --------

March 31, 2002                  20.75        19.00             .13(cent)
June 30, 2002                   22.22        19.51             .13(cent)
September 30, 2002              22.45        20.97             .13(cent)
December 31, 2002               24.30        21.44             .13(cent)
March 31, 2003                  27.71        23.63             .13(cent)
June 30, 2003                   30.22        24.91             .16(cent)
September 30, 2003              29.89        24.90             .17(cent)
December 31, 2003               31.30        26.50             .17(cent)

The payment of cash dividends is dependent on the results of operations and
financial condition of the Company, tax considerations, industry standards,
economic conditions, general business practices, and other factors. Dividend
payments decisions are made with consideration of a variety of factors including
earnings, financial condition, market considerations, and regulatory
restrictions. Under the Company's merger agreement dated January 9, 2004 with MB
Financial, Inc., the Company is prohibited from paying dividends other than its
regular quarterly dividend in an amount not to exceed $0.17 per share provided,
however, that the declaration of the last quarterly dividend by First
SecurityFed prior to effective time of the merger and the amount thereof shall
be coordinated with MB Financial so that no stockholder of First Security shall
be entitled to receive a dividend on both Company common stock and MB Financial
common stock with respect to the same quarterly period, or fail to receive at
least one dividend with respect to such quarterly period.



<PAGE>




TRANSFER AGENT                              SHAREHOLDERS AND GENERAL
                                            INQUIRIES
Registrar and Transfer Co.
10 Commerce Drive                           Peter Ilnyckyj
Cranford, NJ  07016                         First SecurityFed Financial, Inc.
                                            936 North Western Avenue
                                            Chicago, Illinois 60622-4695
                                            (773) 772-4500

SPECIAL COUNSEL                             INDEPENDENT AUDITORS

Luse Gorman Pomerenk & Schick, P.C.         Crowe Chizek and Company LLC
5335 Wisconsin Avenue, N.W.                 One Mid America Plaza
Washington, D.C. 20015                      P.O. Box 3697
                                            Oak Brook, Illinois 60522-3697

ANNUAL AND OTHER REPORTS

     A copy of First SecurityFed Financial, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 2003, as filed with the Securities and Exchange
Commission, may be obtained without charge by contacting Peter Ilnyckyj, First
SecurityFed Financial, Inc., 936 North Western Avenue, Chicago, Illinois
60622-4695

                        FIRST SECURITYFED FINANCIAL, INC.
                              CORPORATE INFORMATION

COMPANY AND BANK ADDRESS

    936 North Western Avenue                 Telephone:  (773) 772-4500
    Chicago, Illinois 60622-4695             Fax:        (773) 772-0487

DIRECTORS OF THE BOARD

Steve Babyk                            Julian Kulas
    DIRECTOR OF FLEET LEASING              PRESIDENT AND CHIEF EXECUTIVE OFFICER
    UNION TANK CAR COMPANY                 FIRST SECURITY FEDERAL SAVINGS BANK

Lila Maria Bodnar                      Paul Nadzikewycz
    ACCOUNTANT, MBA                        SELF-EMPLOYED REAL ESTATE INVESTOR

Myron Dobrowolsky                      Jaroslav H. Sydorenko
    CIVIL ENGINEER                         FINANCIAL SERVICES MANAGER
    DAMES AND MOORE                        WESCO DISTRIBUTION

Terry Gawryk                           Chrysta Wereszczak
    ATTORNEY                               CO-OWNER, B&B Formica

George Kawka
    SENIOR ARCHITECTURAL/ENGINEERING
    PROJECT MANAGER
    CH2M HILL


CORPORATE OFFICERS

Julian Kulas                            Harry I. Kucewicz
   PRESIDENT AND CHIEF EXECUTIVE           TREASURER AND CHIEF FINANCIAL
   OFFICER                                 OFFICER

Mary H. Korb                            Irene S. Subota
   VICE PRESIDENT-LENDING                   VICE PRESIDENT - SAVINGS

Adrian Hawryliw                         Paul T. Bandriwsky
   VICE PRESIDENT - PHILADELPHIA            VICE PRESIDENT AND CHIEF OPERATING
   BRANCH MANAGER                           OFFICER

Peter Ilnyckyj
   VICE PRESIDENT - INVESTOR RELATIONS