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TABLE OF CONTENTS

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      President's Message...............................................  1
      Selected Consolidated Financial Information.......................  3
      Management's Discussion and Analysis of Financial
        Condition and Results of Operations.............................  5
      Consolidated Financial Statements................................. 20
      Stockholder Information........................................... 49
      Corporate Information............................................. 50





























                                      

<PAGE>



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FROM YOUR PRESIDENT

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To Our Stockholders, Depositors and Friends,

     I am  pleased  to  bring  you  this  annual  report  of  First  SecurityFed
Financial,  Inc.  for  the  year  ending  1998.  Inasmuch  as we  completed  the
conversion of 1st Security  Federal  Savings Bank on October 30,1997 this report
covers  our  first  full  year as a stock  company.  As you read  our  financial
statements you will find that we had a very  successful  year of operation.  Our
assets at December  31,1998 were $338.1  million  compared to $315.8  million at
December  31,1997,  an increase of $22.3 million or 7.1%.  The increase in total
assets was due primarily to an increase in loans receivable.  Net income for the
year was $5.3 million  compared to net income of $1.8 million for the year ended
December  31,1997.  The  return on  average  assets  was 1.62% and the return on
average  shareholders equity was 5.97%.  Earnings per share for 1998 were $0.93.
The  Company  efficiency  ratio,  a  measure  of  operating  efficiency  was  an
outstanding  41% for 1998.  During the year the Company's  net loans  receivable
increased $32.0 million from $186.3 million to $218.3 million.

     The Company's performance in 1998 is significant not only in view of profit
but in an emerging  strategic  plan that will help us achieve  future growth and
enhance the value of your stock  investment.  To increase our assets the Company
commenced a  construction  loan  program and lending on  commercial  properties.
Subject to applicable  regulatory  restrictions,  we are  aggressively  pursuing
stock  repurchases  and  currently  are engaged in the third  buy-back  program.
Recent  declines  in thrift  stock  prices  present  us with an  opportunity  to
purchase  our stock  significantly  below book value  which in the long run will
benefit all  shareholders.  The Company will continue to pay cash  dividends and
continue to grow its balance sheet to leverage the capital.  We are  continually
exploring de novo branch initiatives as well as evaluating in market acquisition
opportunities.

      The keynote of our success  over the years has been our ability to provide
the personal service our customers and our communities  expect.  We look forward
to meeting  these  challenges  in 1999 and  beyond.  I am pleased to report that
during 1998 The Heritage  Foundation of First Security Federal Savings Bank made
grants to charitable  and civic  organizations  in excess of $150,000.  I expect
these grants to increase in 1999 and future years.

      1st Security  remains  committed to community  banking.  To alleviate  the
community's concern about the Year 2000 computer problems, we have invested over
$550,000 this year in new equipment, software, and training to make certain that
our  communities  will  continue  to receive  quality and timely  service.  This
upgrade  will also  improve our  competitive  position  in the future  financial
services environment of year 2000 and beyond.


                                      1

<PAGE>



     As shareholders in the Company,  management, and the board are keenly aware
of the importance of enhancing  shareholders  value.  The successful  pursuit of
strategies  that I have outlined,  should help us succeed in reaching that goal.
On  behalf  of the  employees,  officers,  and  directors  I thank  you for your
investment in First SecurityFed Financial,  Inc. and pledge our untiring efforts
to enhance the value of your investment.



                                    Sincerely,

                                    /s/: Julian E. Kulas
                                    Julian E. Kulas
                                    PRESIDENT AND CHIEF EXECUTIVE OFFICER




                                      2

<PAGE>



                        SELECTED FINANCIAL INFORMATION

      Set forth below are selected financial and other data of First SecurityFed
Financial,  Inc.  and,  prior to October 30, 1997,  for First  Security  Federal
Savings Bank.  The financial  data is derived in part from and should be read in
conjunction with the Consolidated  Financial Statements and Notes of the Company
presented elsewhere in this Annual Report.

<TABLE>
<CAPTION>

                                                   At December 31,
                                  ------------------------------------------------------------------------------

                                       1998     1997      1996      1995         1994
                                  ------------------------------------------------------------------------------
<S>                                    <C>      <C>        <C>       <C>         <C>

                                                           (In Thousands)

SELECTED FINANCIAL CONDITION DATA:

Total assets.....................  $ 338,050  $315,849  $258,115  $251,922      $227,922
Cash and cash equivalents........     24,830    30,090     7,300    19,173         6,800
Loans receivable, net(1).........    218,311   186,259   163,348   144,566       136,207
Mortgage-backed securities:
  Held-to-maturity...............     11,587    18,551    24,109    25,120        42,621
  Available-for-sale.............     12,410    16,733    19,727    20,044          ---
Investment securities:
  Held-to-maturity...............     46,680    38,471    25,779    20,566        17,926
  Available-for-sale.............     13,933    15,728     8,997    13,743        15,662
Deposits.........................    220,495   210,100   219,505   209,387       195,875
Total borrowings.................     29,000    10,000     4,000    10,000         3,000
Retained earnings-Substantially rest  84,587    91,872    29,261    29,038        25,555

(1)   The allowance for loan losses at December 31, 1998, 1997, 1996, 1995 and 1994, was $2,069,000, $1,828,000,
      $1,520,000, $885,000 and $792,000, respectively.
</TABLE>

<TABLE>
<CAPTION>

 


                                                Year Ended December 31,
                                    ------------------------------------------------------------------------------

                                      1998       1997        1996       1995    1994
                                    -------------------------------------------------------------------------------
<S>                                   <C>        <C>          <C>        <C>    <C>

                                                          (In Thousands)

SELECTED OPERATIONS DATA:

Total interest income..............  $24,059   $20,674     $19,006    $17,650   $15,710
Total interest expense.............   10,296    10,129       9,494      8,727     6,584
                                    ---------   -------   ---------    --------  --------
  Net interest income..............   13,763    10,545       9,512      8,923     9,126
Provision for loan losses..........      246       738         706        136       182
                                    ---------  -------   ---------     ---------  --------
Net interest income after provision
 for loan losses...................   13,517     9,807       8,806      8,787     8,944
Fees and service charges...........      154       371         362        378       326
Gain (loss) on sales of mortgage-backed
  securities and investment securities    40       (32)         55         24         5
Other non-interest income..........      618        253        328        454       246
                                     --------   -------   ---------    --------- --------
Total non-interest income..........      812        592        745        856       577
Total non-interest expense.........    5,887      7,557(1)   8,693(2)   4,690     4,271
                                    ---------    ------   --------     --------- --------
Income (loss) before taxes and
  cumulative effect................    8,442      2,842        858      4,953     5,250
Income tax provision ..............    3,098      1,017        406      1,760     1,825
                                    ---------  --------   ---------    --------- -------
Net income.........................    $5,344   $1,825     $   452     $3,193    $3,425
                                       =======  ======     ========     ======    ======

(1)  Includes $2.5 million accrual for stock contribution to the Foundation.
(2)  Includes $1.3 million SAIF special assessment and $2.5 million cash contribution to the Foundation.

 
</TABLE>

                                      3

<PAGE>


<TABLE>
<CAPTION>


                                                                                          Year Ended December 31,
                                                                    ----------------------------------------------------------------

                                                                        1998      1997        1996        1995         1994
                                                                    ----------------------------------------------------------------
<S>                                                                     <C>       <C>         <C>          <C>          <C>

SELECTED FINANCIAL RATIOS AND OTHER DATA:

Performance Ratios:
 Return on assets (ratio of net income to
  average total assets)...................................              1.62%     .64%         .18%        1.34%         1.62%
 Return on equity (ratio of net income to
  average equity).........................................              5.97     4.66         1.50        11.64          14.23
 Interest rate spread information:
  Average during period...................................              3.19     3.34         3.51         3.61           4.28
  Net interest margin(1)..................................              4.37     3.97         3.98         4.00           4.60
 Ratio of operating expense to average total
  assets..................................................              1.79     2.66         3.45         1.97           2.03
 Efficiency Ratio(2)......................................               .40      .68          .85          .48            .44
 Ratio of average interest-earning assets to
  average interest-bearing liabilities....................            135.90   116.50       111.81       109.93         109.51

Quality Ratios:
 Non-performing assets to total assets at end
  of period...............................................               .30      .46         1.44          1.11            .72
 Allowance for loan losses to non-performing
  loans at end of period..................................           203.24    124.86        41.30         38.73          55.58
 Allowance for loan losses to gross loans
  receivable at end of period.............................              .93       .96          .91           .60            .57

Capital Ratios:(3)
 Equity to total assets at end of period.................             25.03     29.10         11.42        11.52          11.33
 Average equity to average assets........................             27.18     13.81         11.97        11.55          11.42


(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) Ratio is exclusive of unrealized gain (loss)on securities available-for-sale.

                  
</TABLE>

                                      4

<PAGE>



                    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") 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.
Concurrent with the Conversion,  the Company sold 6,408,000 shares of its common
stock in a subscription  offering at a price of $10 per share,  resulting in net
proceeds  (after giving effect to an  adjustment to capital  resulting  from the
establishment  of a leveraged  employee stock  ownership plan) of $57.8 million.
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  mortgage and, to a significantly  lesser extent,
multi-family,  consumer and other loans  primarily  in its market  area.  And to
acquire  mortgage-backed  and other securities.  The Bank's revenues are derived
principally  from  interest  earned  on  loans  and  mortgage-backed  and  other
securities.  The operations of the Bank are influenced  significantly by general
economic  conditions  and  by  policies  of  financial  institution   regulatory
agencies,  including the OTS and 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.

      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,  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.

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 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.

                                      5

<PAGE>



      In  its  lending  operations,  the  Bank  seeks  to  obtain  high  quality
residential and, to a lesser extent,  other loans by maintaining a high level of
local  visibility,  offering a high level of customer  service and  limiting its
secondary  market  activities.  The Bank's one- to four-family  residential loan
balances  have  increased  significantly  in  recent  years as a result of these
efforts. At the same time, asset quality has remained high.

      Primarily  as a result of its cost of funds and it loan  yields,  the Bank
has been  profitable  since  1964.  The Board has sought to  enhance  the Bank's
profitability by controlling  expenses and maintaining a relatively steady level
of loan and deposit growth.


COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31,1998 AND DECEMBER 31,1997

      Total assets at December  31,1998 were $338.1  million  compared to $315.8
million at  December  31,  1997,  an  increase  of $22.3  million or 7.06%.  The
increase in total assets was due primarily to an increase in loans receivable of
$32.0  million  partially  offset by decreases in securities of $4.9 million and
cash and cash equivalents of $5.3 million.  Additional  funding for the increase
in assets was  provided  by  increases  in deposits  and Federal  Home Loan Bank
(FHLB) Advances.

      Total  liabilities  at December  31,1998 were $253.5  million  compared to
$224.0 million at December 31, 1997, an increase of $29.5 million or 13.17%. The
increase in  liabilities  was due  primarily  to  increases in deposits of $10.4
million and Federal Home Loan Bank (FHLB) advances of $19.0 million.

      Total  equity at  December  31, 1998 was $84.6  million  compared to $91.9
million at December 31, 1997, a decrease of $7.3  million.  The decrease was due
primarily  to the  Company's  repurchase  of  outstanding  common stock of $13.3
million of which $4.3  million was used to fund the  Recognition  and  Retention
Plan and $775,000 was used to fund the contribution to the Heritage  Foundation.
The decrease was partially offset by net income of $5.3 million for the period.


COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1997 AND DECEMBER 31, 1996

      Total assets at December 31, 1997 were $315.8  million  compared to $258.1
million at  December  31,  1996,  an increase  of $57.7  million or 22.36%.  The
increase in total assets was due primarily to increases in loans  receivable and
securities  (including  overnight  Fed  Funds)  funded  by an  increase  in FHLB
advances and proceeds from the institutions mutual-to-stock conversion.

      Total  liabilities  at December 31, 1997 were $224.0  million  compared to
$228.9 million at December 31, 1996, a decrease of $4.9 million,  or 2.14%.  The
decrease in liabilities  was due to a decrease in deposits of $9.4 million and a
decrease in other  liabilities of $1.7 million  partially offset by increases in
Federal Home Loan Bank ("FHLB") advances of $6.0 million and advance payments by
borrowers  for taxes and  insurance  of  $300,000.  The  primary  reason for the
decrease in deposits  was the use of  depositor  funds to purchase  stock in the
initial public offering of the Company.


                                      6

<PAGE>



      Total  equity at  December  31, 1997 was $91.9  million  compared to $29.3
million at December 31, 1996.  This  increase of $62.6 million was primarily due
to net  proceeds of $57.8  million  from the sale of common  stock in the Bank's
conversion  from a  mutual  to a stock  institution.  Also  contributing  to the
increase in equity was $1.8  million in net income for the period and a decrease
of $162,000 in unrealized losses on securities available-for-sale.


COMPARISON  OF  OPERATING  RESULTS  FOR THE YEARS  ENDED  DECEMBER  31,1998  AND
DECEMBER 31,1997

      GENERAL.  Net income for the year ended December  31,1998 was $5.3 million
compared to net income of $1.8 million for the year ended December  31,1997,  an
increase of $3.5  million.  The increase was  primarily due to increases of $3.3
million in net  interest  income and $220,000 in  noninterest  income along with
decreases  of $492,000  in the  provision  for loan  losses and $1.7  million in
noninterest  expense.  These were partially offset by a $2.1 million increase in
the provision for income taxes.

      INTEREST  INCOME.  Interest income for the year ended December 31,1998 was
$24.1 million compared to $20.7 million for the year ended December 31,1997,  an
increase  of $3.4  million or  16.43%.  The  increase  was  primarily  due to an
increase in the average  balance of interest  earning assets from $265.9 million
for the year  ended  December  31,1997  to  $315.3  million  for the year  ended
December  31,1998 due to the continuing  investment of proceeds from the initial
stock offering in October 1997 and strong demand for loans due to the prevailing
favorable  interest rate  environment.  The average  balance of loans  increased
$34.8 million to $207.6 for the year ended December  31,1998 from $172.8 million
for the year ended  December  31,1997.  In  addition,  the  average  balances of
municipal and government agency securities  increased by $33.9 million, but were
partially offset by a $17.7 million  decrease in mortgage backed  securities and
mutual funds. These increases in average balances were also offset by a decrease
in the average  yield on interest  earning  assets of 15 basis points from 7.78%
for the year ended December 31,1997 to 7.63% for the year ended December 31,1998
primarily as a result of a decrease in loan  interest  rates due to  competitive
market conditions and an overall decline in interest rates in the local economy


      INTEREST EXPENSE. Interest expense for the year ended December 31,1998 was
$10.3 million compared to $10.1 million for the year ended December 31,1997,  an
increase of $167,000 or 1.65%.  The increase was primarily due to an increase in
the average balance of interest-bearing  liabilities of $3.8 million from $228.2
million for the year ended December 31,1997 to $232.0 million for the year ended
December  31,1998.  The average cost of funds remained  steady at 4.44% for both
years.


      NET INTEREST  INCOME.  Net interest  income of $13.8  million for the year
ended  December  31,1998  represented an increase of $3.3 million from the $10.5
million  reported  for the year ended  December  31,1997.  The  increase  in net
interest  income  was  primarily  due to an  increase  in the ratio of  interest
earning assets to interest  bearing  liabilities  from 116.5% for the year ended
December 31,1997 to 135.90% for the year ended December 31,1998 due primarily to
the investment of the

                                      7

<PAGE>



proceeds from the initial  stock  offering in October 1997 and strong demand for
loans due to the prevailing  favorable  interest rate environment.  As a result,
the net interest margin increased by 40 basis points to 4.37% for the year ended
December 31,1998 from 3.97% for the year ended December 31,1997.


      PROVISION  FOR LOAN  LOSSES.  The  provision  for loan losses for the year
ended  December  31,1998 was  $246,000  compared to $738,000  for the year ended
December  31,1997.  A  majority  of the  provision  for loan  losses in 1997 was
related to various loans to the Bennett  Funding Group,  Inc. which were secured
by equipment leases which were paid in full during the year.  However,  the Bank
experienced  significant loan growth during 1998 and 1997, which resulted in the
continuing  provision of the  allowance for loan losses.  Gross loans  increased
$32.3 million or 17.03% from 1997.  The  allowance  for loan losses  represented
0.93%  and  0.96% of gross  loans  receivable  at  December  31,1998  and  1997,
respectively.

      The amount of the provision and allowance for estimated losses on loans is
influenced by current  economic  conditions,  actual loss  experience,  industry
trends and other factors,  including  real estate  values,  in the Bank's market
area. In addition,  various  regulatory  agencies,  as an integral part of their
examination  process,  periodically  review the Bank's  allowance  for estimated
losses on loans.  Such agencies may require the Bank to provide additions to the
allowance based upon judgements which differ from those of management.  Although
management  uses  the  best  information  available  and  maintains  the  Bank's
allowance  for losses at a level it  believes  adequate  to provide  for losses,
future adjustments to the allowance may be necessary due to economic, operating,
regulatory and other conditions that may be beyond the Bank's control.


      NON-INTEREST  INCOME.  Non-interest  income  for the year  ended  December
31,1998 was $812,000  compared to $592,000 for the year ended December  31,1997,
an  increase of $220,000  or 37.16%.  The  increase  was the result of a $45,000
increase in deposit service charges due to the  implementation of ATM surcharges
along with a $99,000  increase in other income largely  related to fees on loans
which were repaid prior to their contractual maturity.  There was also a $72,000
net increase in the gain on sales and redemptions of securities.

      NON-INTEREST  EXPENSE.  Non-interest expense was $5.9 million for the year
ended  December  31,1998  compared to $7.6  million for the year ended  December
31,1997, a decrease of $1.7 million or 22.37%. The decrease was due primarily to
a $2.5 million  decrease in charitable  and foundation  contributions  partially
offset by  increases  of  $619,000  in  compensation  and  benefits  expense and
$184,000 in data processing  expense.  The decrease in charitable  contributions
expense was due to a $2.5 million  expense in 1997  related to a  commitment  to
make contributions to the Heritage  Foundation of First Security Federal Savings
Bank.  Compensation and benefits expense increased due to the  implementation of
the ESOP  plan in  October  1997 and the RRP plan in May 1998 and the  resultant
expense due to the allocation of shares to participants. Data processing expense
increased  due to  increases  in the  numbers of deposit and loan  accounts  and
expenses  associated with the Bank's computer  conversion which was completed in
August 1998.


                                      8

<PAGE>



      INCOME TAXES. The provision for income taxes was $3.1 million for the year
ended  December  31,1998  compared to $1.0  million for the year ended  December
31,1997. The increase was due to an increase of $5.6 million in pre-tax income.


COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1997
AND DECEMBER 31, 1996

      GENERAL.  Net income for the year ended December 31, 1997 was $1.8 million
compared to net income of $452,000  for the year ended  December  31,  1996,  an
increase of $1.4  million.  The increase was primarily due to an increase in net
interest income of $1.0 million and a decrease in  non-interest  expense of $1.0
million.  This was partially offset by a $600,000  increase in the provision for
income taxes. The decrease in non-interest expense was primarily a result of the
special SAIF assessment paid in 1996.

      INTEREST INCOME.  Interest income for the year ended December 31, 1997 was
$20.7 million compared to $19.0 million for the year ended December 31,1996,  an
increase of $1.7 million or 8.95%. The increase was primarily due to an increase
in the average  balance of  interest-earning  assets from $238.8 million for the
year ended  December 31, 1996 to $265.9  million for the year ended December 31,
1997 as a result of the  investment of proceeds from the initial stock  offering
in October 1997. The average  balance of loans increased $20.7 million to $172.8
million for the year ended  December 31, 1997 from $152.1  million for the prior
year. In addition,  the average balance of federal funds sold increased to $11.1
million  for the year ended  December  31,  1997 from $1.8  million for the year
ended  December 31, 1996.  These  increases in average  balances were  partially
offset by a decrease in the average yield on interest-earning assets of 18 basis
points  from 7.96% for the year ended  December  31,  1996 to 7.78% for the year
ended  December 31, 1997  primarily  as a result of a decrease in loan  interest
rates due to competitive  market  conditions and an overall  decline in interest
rates in the local economy.

      INTEREST  EXPENSE.  Interest  expense for the year ended December 31, 1997
was $10.1 million compared to $9.5 million for the year ended December 31, 1996,
an increase of $635,000,  or 6.7%. The increase was primarily due to an increase
in the average  balance of  interest-bearing  liabilities  of $14.6 million from
$213.6  million for the year ended  December 31, 1996 to $228.2  million for the
year ended December 31, 1997. The average cost of funds remained steady at 4.44%
for both years.

      NET INTEREST  INCOME.  Net interest  income of $10.5  million for the year
ended  December 31, 1997  represented  an increase of $1.0 million from the $9.5
million  reported  for the year ended  December  31,  1996.  The increase in net
interest   income  was   primarily   due  to  an   increase   in  the  ratio  of
interest-earning assets to interest-bearing liabilities from 111.8% for the year
ended December 31, 1996 to 116.5% for the year ended December 31, 1997 primarily
as a result of the investment of the proceeds from the initial stock offering in
October 1997. The net interest  margin remained  relatively  steady at 3.97% for
the year ended December 31, 1997.

      PROVISION FOR LOAN LOSSES.  The provision for loan losses for the year
ended December 31, 1997 was $738,000 compared to $706,000 for the year ended
December 31, 1996. A majority of the

                                      9

<PAGE>



provision  for loan  losses in both years was  related  to various  loans to the
Bennett  Funding  Group,  Inc. which were secured by equipment  leases.  Bennett
Funding  filed  bankruptcy  during 1996. In February  1997,  the Bank received a
settlement  offer  from the  bankruptcy  trustee.  As a result  of the  proposed
settlement, a portion of the outstanding loans were charged off and a balance of
$839,000  remained on the books of the Bank.  Subsequent to April  30,1997,  the
Bank received $713,481 from the trustee as part of the settlement.  Several more
payments were received in 1997 and at December 31, 1997, the outstanding balance
on the Bennett  Funding  loans was $81,000.  Furthermore,  the Bank  experienced
significant loan growth during 1997 and 1996, which resulted in increases in the
allowance for loan losses.  Gross loans  increased  $23.2 million or 13.97% from
1996.  The  allowance for loan losses  represented  .96% and .91% of gross loans
receivable at December 31, 1997 and 1996, respectively.

      The amount of the provision and allowance for estimated losses on loans is
influenced by current  economic  conditions,  actual loss  experience,  industry
trends and other factors,  including  real estate  values,  in the Bank's market
area. In addition,  various  regulatory  agencies,  as an integral part of their
examination  process,  periodically  review the Bank's  allowance  for estimated
losses on loans.  Such agencies may require the Bank to provide additions to the
allowance based upon judgments  which differ from those of management.  Although
management  uses  the  best  information  available  and  maintains  the  Bank's
allowance  for losses at a level it  believes  adequate  to provide  for losses,
future adjustments to the allowance may be necessary due to economic, operating,
regulatory and other conditions that may be beyond the Bank's control.

      NON-INTEREST  INCOME.  Non-interest income for the year ended December 31,
1997 was $592,000  compared to $745,000 for the year ended  December 31, 1996, a
decrease of  $153,000,  or 20.5%.  The  decrease was the result of a net loss on
sales and calls of  securities of $32,000 as compared with a net gain of $55,000
in 1996  combined  with a net loss on the sale of real estate owned of $3,000 as
compared with a net gain of $50,000 in 1996.

      NON-INTEREST  EXPENSE.  Non-interest expense was $7.6 million for the year
ended December 31, 1997 compared to $8.7 million for the year ended December 31,
1996,  a decrease of $1.1  million,  or 12.6%.  The  decrease  was due to a $1.3
million one-time  special  assessment on SAIF insured deposits which was paid in
1996 as well as a reduction in Federal deposit  insurance  premiums of $370,000.
These reductions were partially  offset by increases in compensation  expense of
$258,000 and in other expense of $241,000.  The increase in compensation expense
was primarily  due to the  allocation  of ESOP shares to plan  participants.  In
1997, as in 1996,  there was a $2.5 million expense related to  contributions to
the Heritage Foundation of First Security Federal Savings Bank.

      INCOME TAXES. The provision for income taxes was $1.0 million for the year
ended  December 31, 1997  compared to $406,000  for the year ended  December 31,
1996.  The increase was due  primarily to an increase in pre-tax  income of $2.0
million.

      A valuation  allowance of $180,000 was  established  in 1996 to reduce the
deferred tax asset to the amount that  management  believed was more likely than
not to be realized. The valuation allowance related specifically to the deferred
tax asset  recorded for unrealized  capital  losses  reflected as a deduction of
capital under SFAS No.115 and to deferred tax assets recorded for certain future

                                      10

<PAGE>



tax deductions  that are subject to various  expiration  dates. As the amount of
the valuation  allowance did not change during the year ended December 31, 1997,
there was no related impact to income from continuing operations.


                                      11

<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.  No tax equivalent  adjustments  were made.
All average balances are monthly average balances.  Non-accruing loans have been
included in the table as loans carrying a zero yield.

<TABLE>
<CAPTION>

                                                          Year Ended December 31,
                                                    --------------------------------------------------------------------------------

                                                1998                             1997                             1996
                      --------------------------------------------------------------------------------------------------------------

                                   Average    Interest              Average    Interest              Average    Interest
                                Outstanding   Earned/    Yield/   Outstanding  Earned/    Yield/    Outstanding Earned/       Yield/
                                  Balance      Paid      Rate       Balance     Paid       Rate      Balance     Paid          Rate
                      --------------------------------------------------------------------------------------------------------------
                                                                        (Dollars in Thousands)
<S>                                <C>          <C>       <C>        <C>         <C>        <C>        <C>         <C>          <C>

Interest-Earning Assets:
 Loans receivable(1)..         $ 207,629     $17,141     8.26%    $172,810     $14,669     8.49%    $152,147   $13,068        8.59%
 Mortgage-backed securiteis
  & CMOs(1)...............        28,795       1,942     6.74       44,780       3,157     7.05       48,048     3,673        7.64
 Mutual funds(1)......             3,172         188     5.93        4,897         278     5.68        5,776       338        5.85
 Agencies/Other(1)....            50,686       3,389     6.69       22,071       1,333     6.04       22,714     1,326        5.83
 Municipal securities(1)          10,889         536     4.92        5,565         292     5.25        4,794       277        5.78
 Federal funds sold...             7,337         395     5.38       11,179         646     5.78        1,829       118        6.45
 Deposits with other instit        4,803         338     7.04        2,761         176     6.37        1,865        95        5.09
 FHLB stock...........             1,985         130     6.55        1,797         123     6.84        1,645       111        6.75
                               ---------    ---------              --------   ---------            ---------   -------
Total interest-earnings assets   315,296      24,059     7.63      265,860      20,674     7.78      238,818    19,006        7.96
Non-interest earning asset        13,962                            17,810                            13,445
                                  ------                          ---------                        ---------
 Total assets......             $329,258                          $283,670                          $252,263
                                ========                          ========                          ========

Interest-Bearing Liabilities:
 Money market.........            $4,962         139      2.80       5,169         159      3.08       5,301        167       3.15
 NOW..................            11,045         245      2.22      10,176         217      2.13       9,810        202       2.06
 Passbook savings.....            71,494       2,163      3.03      76,391       2,281      2.99      70,356      2,120       3.01
 Certificates of Deposit         122,835       6,644       5.4     126,917       6,972      5.49     124,797      6,827       5.47
 Advances.............            21,667       1,105      5.10       9,548         500      5.24       3,333        178       5.34
                             -----------    --------              --------     -------               -------    -------
Total interest-bearing
 liabilities                     232,003      10,296      4.44     228,201      10,129      4.44     213,597      9,494       4.44
Non-interest bearing liabilities   7,754   ---------                16,299      ------                 8,471     ------
                                 -------                        ----------                          ---------
 Total liabilities               239,757                           244,500                           222,068

Equity................            89,501                            39,170                            30,195
                             -----------                        ----------                          ---------
 Total liabilities and equity  $ 329,258                          $283,670                           $252,263
                               = =======                          ========                           ========

Net interest-earning spread                 $13,763       3.19%               $10,545       3.34%                 $ 9,512      3.52%
                                            =======      =====                =======       ----                  =======    ======
Margin................                                    4.37%                             3.97%                              3.98%
                                                        ======                              ----                             ======
Assets to liabilities.           135.90%                            116.50%                            111.81%
                                 ======                             ======                            =======
</TABLE>

(1)  Calculated based on amortized cost.



                                      12

<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 that 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,
                                     ------------------------------------------------------------------------------

                                           1997 vs. 1998            1996 vs. 1997            1995 vs. 1996
                                     -----------------------------------------------------------------------------------------------
                                         Increase                 Increase                 Increase
                                        (Decrease)     Total     (Decrease)     Total     (Decrease)     Total
                                          Due to      Increase     Due to      Increase     Due to      Increase
                                     -----------------------------------------------------------------------------------------------
                                      Volume   Rate   (Decrease)   Volume  Rate (Decrease) Volume   Rate   (Decrease)
                                     -----------------------------------------------------------------------------------------------
<S>                                    <C>      <C>      <C>       <C>     <C>    <C>        <C>     <C>      <C>
                                                              (Dollars in Thousands)
Interest-earning assets:
 Loans receivable...................   $2,884   $(412)  $2,472  $1,755   $(154)  $1,601  $1,056  $  (68)    $988
 Mortgage-backed securities & CMO's.   (1,083)   (132)  (1,215)   (230)   (286)    (516)    381     425      806
 Mutual funds.......................     (102)     12      (90)    (50)    (10)     (60)    ---     (20)     (20)
 Agencies and other.................    1,899     157    2,056     (38)     45        7      37    (297)    (260)
 Municipal securities...............      263     (19)     244      42     (27)      15     (24)    (26)     (50)
 Federal funds sold.................     (209)    (42)    (251)    542     (14)     528     (98)     (9)    (107)
 Deposits with other institutions...      142      20      162      53      28       81     (14)    ---      (14)
 FHLB stock.........................       12      (5)       7      10       2       12      11       2       13
                                     ----------------------------------------- -------- -------   -----    -----
       Total interest-earning assets    3,806    (421) $ 3,385   2,084    (416)   1,668   1,349       7    1,356

Interest-bearing liabilities:
 Money market.......................       (6)    (14)     (20)     (4)     (4)      (8)    (29)      3      (26)
 NOW................................       19       9       28       8       7       15      12       6       18
 Passbook Savings...................     (148)     30     (118)    180     (19)     161      (7)     14        7
 Certificates of deposit............     (222)   (106)    (328)    116      29      145     645     138      783
 Advances...........................      618     (13)     605     326      (4)     322     (23)      8      (15)
                                     ----------------------------------------- -------- -------  ------   -------
  Total interest bearing liabilities      261     (94)     167     626       9      635     598     169      767
                                      ------- -------- ------- ------- -------  -------  ------    ----     ----

Net interest/spread.................  $ 3,545  $ (327)  $3,218  $1,458   $(425)  $1,033  $  751   $(162)    $589
                                     ========= =======  ======  ======   =====   ======  ======   =====     ====

</TABLE>

                                  

                                      13

<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  assure  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 on the
Company's capital of various interest rate scenarios.

      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 better  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, 1998, $96.5 million
or 43.7% 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.  Third,  the Company has focused a
significant  portion of its investment  activities on securities with adjustable
interest  rates or terms of five years or less.  At December  31,  1998,  $53.87
million or 12.9% of the  Company's  mortgage-backed  securities  had  adjustable
interest rates or terms to maturity (or anticipated average lives in the case of
collateralized  mortgage obligations) of five years or less and $15.8 million or
25.98% of the Company's other securities had adjustable  interest rates or terms
to maturity of five years or less.  Finally,  the Company has recently  begun to
increase its  originations of  construction,  multi-family,  and commercial real
estate  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.  Presented below, as of December 31, 1998, 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, up and
down 400 basis points in 100 point increments.



                                      14

<PAGE>



<TABLE>
<CAPTION>

          Assumed Change                       $ Change in         % Change in
         IN INTEREST RATES       $ AMOUNT         NPV                 NPV
         -----------------       -----------  -------------       -------------
         (Basis Points)           (Dollars in Thousands)
<S>          <C>                     <C>          <C>                  <C>

             +400                   $53,123    $(25,513)              (32)%
             +300                    60,000     (18,637)              (24)
             +200                    66,956     (11,681)              (15)
             +100                    73,428      (5,208)              ( 7)
              ---                    78,636         ~                   ~
             -100                    82,819       4,182                 5
             -200                    86,665       8,029                10
             -300                    91,290      12,654                16
             -400                    95,859      17,223                22


</TABLE>

      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.

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  interest-earning  deposits  and  investment
securities,  and (iv) 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.

      Federal  regulations  require First Security to maintain minimum levels of
liquid assets.  The required  percentage has varied from time to time based upon
economic  conditions  and savings flows and is currently 4% of net  withdrawable
savings deposits and borrowings payable on demand or in

                                      15

<PAGE>



one year or less during the preceding calendar month. Liquid assets for purposes
of this ratio include cash, certain time deposits,  U.S. Government,  government
agency and corporate securities and other obligations generally having remaining
maturities of less than five years.  First Security has historically  maintained
its  liquidity  ratio  for  regulatory  purposes  at  levels  in excess of those
required.  At December 31, 1998, First Security's liquidity ratio for regulatory
purposes was 41.38%.

      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 $7.4 million, $2.8
million and $2.1 million for the years ended December 31, 1998,  1997, and 1996,
respectively.   Net  cash  from  investing  activities  consisted  primarily  of
disbursements  for  loan  originations  and  the  purchase  of  investments  and
mortgage-backed  securities,  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
purchases of Treasury Stock in 1998.

      The Company's most liquid assets are cash and short-term investments.  The
levels of these assets are  dependent  on the  Company's  operating,  financing,
lending and investing  activities during any given period. At December 31, 1998,
cash and short-term  investments  totaled $24.8  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 a source
of funds.

      At December 31, 1998, the Company had outstanding commitments to originate
loans of $3.0 million, all of which had fixed interest rates. 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  through
liquidity or through FHLB advances.  Certificates of deposit which are scheduled
to mature in one year or less from  December  31, 1998 totaled  $100.5  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.

      First  Security  is  subject to various  regulatory  capital  requirements
imposed by the OTS. At December 31, 1998,  First Security was in compliance with
all applicable  capital  requirements on a fully phased-in basis. See Note 11 of
the Notes to Consolidated Financial Statements.

IMPACT OF INFLATION AND CHANGING PRICES

      The  financial  statements  and related  data  presented  herein have been
prepared in accordance  with  generally  accepted  accounting  principles  which
require the measurement of financial  position and operating results in terms of
historical dollars without  considering changes in the relative purchasing power
of money over time due to  inflation.  The primary  impact of  inflation  on the
operations of the Company is reflected in increased operating costs. Unlike most
industrial companies, virtually all of the assets and liabilities of a financial
institution are monetary in nature. As a result, interest rates, generally, have
a more significant impact on a financial institution's

                                      16

<PAGE>



performance  than does inflation.  Interest rates do not necessarily move in the
same direction or to the same extent as the prices of goods and services.

IMPACT OF NEW ACCOUNTING STANDARDS

     In June 1996, the Financial  Accounting  Standards Board released Statement
of Financial  Accounting  Standards  No. 125 ("SFAS No. 125"),  "Accounting  for
Transfers and  Extinguishments of Liabilities." SFAS No. 125 provides accounting
and reporting  standards  for  transfers  and servicing of financial  assets and
extinguishments of liabilities.  SFAS No. 125 requires a consistent  application
of a financial-components approach that focuses on control. Under that approach,
after a transfer of financial  assets,  an entity  recognizes  the financial and
servicing  assets  it  controls  and  the  liabilities  it  has  incurred,   and
derecognizes  liabilities when  extinguished.  SFAS No. 125 also supersedes SFAS
No. 122 and requires  that  servicing  assets and  liabilities  be  subsequently
measured by  amortization  in proportion to and over the period of estimated net
servicing  income  or loss and  requires  assessment  for  asset  impairment  or
increases  obligations  based on their  fair  values.  SFAS No.  125  applies to
transfers and  extinguishments  occurring  after  December 31, 1996 and early or
retroactive  application  is not  permitted.  Because  the volume and variety of
certain  transactions  will make it difficult for some entities to comply,  some
provisions  have been  delayed by SFAS No. 122. The adoption of SFAS No. 125 did
not have a material  impact on the  financial  condition  or  operations  of the
Company. 

     In June 1997, the FASB issued Statement of Financial  Accounting  Standards
No.  130 ("SFAS No.  130")  "Reporting  Comprehensive  Income".  This  statement
establishes  standards for reporting and display of comprehensive income and its
components   (revenues,   expenses,   gains  and   losses)  in  a  full  set  of
general-purpose  financial  statements.  This Statement  requires that all items
that are required to be recognized under  accounting  standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements.  Income tax effects must also
be shown.  This statement is effective for fiscal years beginning after December
15, 1997. The adoption of SFAS No. 130 is not expected to have a material impact
on the results of operations or financial condition of the Company. 

      Statement of Financial  Accounting  Standards No. 131,  "Disclosures about
Segments of an Enterprise  and Related  Information",  was issued in 1997 by the
Financial Accounting Standards Board. This Statement  establishes  standards for
the way that public  business  enterprises  report  information  about operating
segments in annual financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services, geographic areas,
and major  customers.  Statement  131 is effective for periods  beginning  after
December  31, 1997.  Management  does not believe  that the  provisions  of this
Statement  are  applicable  to  the  Company,  since  substantially  all  of the
Company's operations are banking services.


                                      17

<PAGE>



YEAR 2000

      The Bank's lending and deposit  activities are almost  entirely  dependent
upon computer systems which process and record  transactions,  although the Bank
can  effectively  operate  with  manual  systems  for  brief  periods  when  its
electronic  systems  malfunction  or cannot  be  accessed.  Currently,  the Bank
utilizes the services of a nationally  recognized data processing service bureau
which specializes in data processing for financial institutions.

      The Bank has  conducted  a review of its  computer  systems  to review the
systems  that could be affected by the Year 2000 issue and has  developed a plan
of action to resolve the issue. In 1997, the Bank began a process of identifying
any Year 2000 related problems that may be experienced by its computer-dependent
systems.  During this process of  identifying  and assessing any potential  Year
2000  related  problems,  the  Bank  decided  to  convert  from its  prior  data
processing  service  bureau  to the  aforementioned  nationally-recognized  data
processing service bureau. As part of this conversion,  the Bank also decided to
purchase  all new  computer  hardware to replace the  existing  outdated  teller
terminals.  The  installation  of the new hardware and the conversion to the new
service bureau took place successfully in August 1998

      The  Bank has  received  confirmation  from  both  the  computer  hardware
supplier and the data processing  service bureau that both systems (hardware and
software)  are Year 2000  compliant.  Furthermore,  the Bank  performed  its own
independent  testing  of  the  systems  on  November  22,1998  and  all  systems
functioned properly utilizing a date in the year 2000. Further testing utilizing
other dates in the year 2000 will be performed in the spring of 1999.

        The  Bank has  contacted  the  companies  that  supply  or  service  its
computer-dependent  systems  to obtain  confirmation  that each  system  that is
material to the operation of the Bank is either currently Year 2000 compliant or
is  expected  to be Year 2000  compliant.  With  respect to systems  that cannot
presently be confirmed as Year 2000  compliant,  the Bank will  continue to work
with the  appropriate  servicer or supplier to ensure all such  systems  will be
rendered  compliant  in a timely  manner,  with  minimal  expense to the Bank or
disruption of the Bank's  operations.  All of the  identified  computer  systems
affected by the Year 2000 issue are currently in the  renovation,  validation or
implementation phase of the process of becoming Year 2000 compliant.

        In addition to the possible expense related to its own systems, the Bank
could  incur  losses if loan  payments  are  delayed  due to Year 2000  problems
affecting  any of the Bank's  significant  borrowers  or  impairing  the payroll
systems of large employers in the Bank's primary market area. Because the Bank's
loan  portfolio is highly  diversified  with regard to individual  borrowers and
types of  businesses  and the Bank's  primary  market area is not  significantly
dependent on one employer or industry,  the Bank does not expect any significant
or  prolonged  Year 2000 related  difficulties  will affect net earnings or cash
flow.

        As of  December  31,1998,  the Bank has  incurred  $560,000  in  expense
related to its hardware and software  conversion.  Furthermore,  it  anticipates
incurring an additional $25,000 in expense to achieve full Year 2000 compliance.





                                      18

<PAGE>



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.  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 which 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, 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.

                                      19

<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. and its wholly-owned  subsidiary as of December 31,
1998 and 1997, 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,  1998.   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  generally   accepted  auditing
standards.  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. and its wholly-owned  subsidiary at December 31, 1998 and 1997,
and the results of their  operations  and their cash flows for each of the three
years in the period ended  December  31,  1998,  in  conformity  with  generally
accepted accounting principles.




                                     /s/  Crowe, Chizek and Company LLP

Oak Brook, Illinois
February 5, 1999



<PAGE>


<TABLE>
<CAPTION>
                        FIRST SECURITYFED FINANCIAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997
                    (Dollars in thousands, except share data)

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

                                                                1998         1997
                                                                ----         ----
ASSETS
<S>                                                          <C>          <C>      
Cash and due from banks                                      $  15,641    $  12,090
Federal funds sold                                               9,189       18,000
                                                             ---------    ---------
   Total cash and cash equivalents                              24,830       30,090

Time deposits in other financial institutions                      200          200
Securities available-for-sale                                   26,343       32,461
Securities held-to-maturity (fair value:
  $58,809 in 1998 and $57,498 in 1997)                          58,267       57,022
Loans receivable, net of allowance for loan losses             218,311      186,259
Federal Home Loan Bank stock, at cost                            2,131        1,852
Premises and equipment, net                                      3,967        3,692
Accrued interest receivable                                      2,475        2,071
Intangible assets                                                  236          291
Real estate owned                                                   --           50
Other assets                                                     1,290        1,861
                                                             ---------    ---------

   Total assets                                              $ 338,050    $ 315,849
                                                             =========    =========

LIABILITIES
Deposits                                                     $ 220,495    $ 210,100
Advance payments by borrowers for taxes and insurance            2,432        2,400
Advances from Federal Home Loan Bank                            29,000       10,000
Accrued interest payable and other liabilities                   1,536        1,477
                                                             ---------    ---------
   Total liabilities                                           253,463      223,977

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                                      64,952       65,495
Unearned ESOP shares                                            (4,582)      (4,935)
Unearned stock awards                                           (3,810)          --
Treasury stock, at cost (553,488 shares)                        (8,234)          --
Retained earnings, substantially restricted                     36,225       31,290
Accumulated other comprehensive income                             (28)         (42)
                                                             ---------    ---------
   Total shareholders' equity                                   84,587       91,872
                                                             ---------    ---------

      Total liabilities and shareholders' equity             $ 338,050    $ 315,849
                                                             =========    =========
</TABLE>

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

                                                                              21
<PAGE>


<TABLE>
<CAPTION>
                        FIRST SECURITYFED FINANCIAL, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 1998, 1997, and 1996
                  (Dollars in thousands, except per share data)

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

                                                            1998       1997        1996
                                                          --------   --------    --------
<S>                                                       <C>        <C>         <C>     
Interest and dividend income
   Loans                                                  $ 17,141   $ 14,669    $ 13,068
   Securities
     Taxable                                                 3,577      1,561       1,664
     Tax-exempt                                                536        302         277
   Mortgage-backed securities                                1,942      3,198       3,673
   Federal funds sold and other interest earning assets        863        944         324
                                                          --------   --------    --------
                                                            24,059     20,674      19,006
Interest expense
   NOW and money market                                        384        376         369
   Passbook savings                                          2,163      2,281       2,120
   Certificates of deposit                                   6,644      6,972       6,827
   Federal Home Loan Bank advances and other borrowings      1,105        500         178
                                                          --------   --------    --------
                                                            10,296     10,129       9,494
                                                          --------   --------    --------

NET INTEREST INCOME                                         13,763     10,545       9,512

Provision for loan losses                                      246        738         706
                                                          --------   --------    --------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         13,517      9,807       8,806

Noninterest income
   Deposit service charges                                     416        371         362
   Insurance commissions                                        45         47          54
   Net gain (loss) on sales and calls of securities             40        (32)         55
   Net gain (loss) on sale of real estate owned                  3         (3)         50
   Other income                                                308        209         224
                                                          --------   --------    --------
                                                               812        592         745
Noninterest expense
   Compensation and benefits                                 3,288      2,669       2,411
   Occupancy and equipment                                     732        679         678
   Data processing                                             481        297         269
   SAIF assessment                                              --         --       1,293
   Federal insurance premiums                                  212        183         553
   Charitable and foundation contributions                       9      2,557       2,558
   Other expense                                             1,165      1,172         931
                                                          --------   --------    --------
                                                             5,887      7,557       8,693
                                                          --------   --------    --------

INCOME BEFORE INCOME TAXES                                   8,442      2,842         858

Income tax provision                                         3,098      1,017         406
                                                          --------   --------    --------

NET INCOME                                                $  5,344   $  1,825    $    452
                                                          ========   ========    ========
Earnings (loss) per share
   Basic and diluted                                      $    .93    $   (.11)
                                                          ========    ========
</TABLE>


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

                                                                              22

<PAGE>


<TABLE>
<CAPTION>
                       FIRST SECURITYFED FINANCIAL, INC.
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                 Years ended December 31, 1998, 1997, and 1996
                 (Dollars in thousands, except per share data)

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

                                                                1998      1997       1996
                                                              -------   -------    -------

<S>                                                           <C>       <C>        <C>    
Net income                                                    $ 5,344   $ 1,825    $   452

Other comprehensive income
     Unrealized holding gains and losses on securities
       available-for-sale                                          62       234       (320)
     Less reclassification adjustments for gains and losses
       recognized in income                                        40       (32)        55
                                                              -------   -------    -------
     Net unrealized gain and losses                                22       266       (375)
     Tax effect                                                     8       104       (146)
                                                              -------   -------    -------
                                                                   14       162       (229)
                                                              -------   -------    -------

Comprehensive income                                          $ 5,358   $ 1,987    $   223
                                                              =======   =======    =======

</TABLE>

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

                                                                              23


<PAGE>


<TABLE>
<CAPTION>
                        FIRST SECURITYFED FINANCIAL, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years ended December 31, 1998, 1997, and 1996
                             (Dollars in thousands)

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

                                                                                                      Accumulated
                                                                                                         Other      Total
                                          Additional   Unearned    Unearned                             Compre-     Share-
                                 Common     Paid-in      ESOP        Stock    Treasury    Retained      hensive    holders'
                                  Stock     Capital     Shares      Awards      Stock     Earnings      Income      Equity
                               ---------  ----------  ---------   ---------   --------    --------    -----------  --------

<S>                            <C>        <C>         <C>         <C>         <C>         <C>         <C>         <C>     
Balance at January 1, 1996     $     --   $     --    $     --    $     --    $     --    $ 29,013    $     25    $ 29,038

Net income                           --         --          --          --          --         452          --         452

Change in fair value of
  securities, net of income
  taxes and reclassification
  effects                            --         --          --          --          --          --        (229)       (229)
                               --------   --------    --------    --------    --------    --------    --------    --------


Balance at
  December 31, 1996                  --         --          --          --          --      29,465        (204)     29,261

Issuance of common stock,
  net of conversion costs of
  $1,130 and contribution of
  stock to foundation                64     65,385      (5,126)         --          --          --      60,323

ESOP shares earned                   --        110         191          --          --         301

Net income                           --         --          --          --          --       1,825          --       1,825

Change in fair value of
  securities, net of income
  taxes and reclassification
  effects                            --         --          --          --          --          --         162         162
                               --------   --------    --------    --------    --------    --------    --------    --------


Balance at
  December 31, 1997                  64     65,495      (4,935)         --          --      31,290         (42)     91,872

Net income                           --         --          --          --          --       5,344          --       5,344

Stock awards allocated               --         --          --      (4,277)      4,277          --          --          --

ESOP shares earned                   --        167         353          --          --          --          --         520

Stock awards earned                  --         --          --         467          --          --          --         467

Issuance of stock to
  Foundation, net of related
  tax benefit                        --       (710)         --          --         775          --          --          65

Purchase of treasury stock           --         --          --          --     (13,286)         --          --     (13,286)

Dividends paid
  ($.07 per share)                   --         --          --          --          --        (409)         --        (409)

Change in fair value of
  securities, net of income
  taxes and reclassification
  effects                            --         --          --          --          --          --          14          14
                               --------   --------    --------    --------    --------    --------    --------    --------


Balance at
  December 31, 1998            $     64   $ 64,952    $ (4,582)   $ (3,810)   $ (8,234)   $ 36,225    $    (28)   $ 84,587
                               ========   ========    ========    ========    ========    ========    ========    ========

---------------------------------------------------------------------------------------------------------------------------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                              24


<PAGE>


<TABLE>
<CAPTION>
                        FIRST SECURITYFED FINANCIAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1998, 1997, and 1996
                             (Dollars in thousands)

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

                                                                     1998        1997        1996
                                                                   --------    --------    --------
<S>                                                                <C>         <C>         <C>     
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                     $  5,344    $  1,825    $    452
    Adjustments to reconcile net income to net cash from
      operating activities
       Depreciation and amortization of intangibles                     377         336         358
       Net amortization (accretion) of securities                       168         173         (90)
       Net (gain) loss on sales and calls of securities                 (40)         32         (55)
       Provision for loan losses                                        246         738         706
       Net (gain) loss on real estate owned                              (3)          3         (50)
       Deferred loan origination fees                                    (7)         26         (80)
       Provision for deferred income taxes                             (119)       (888)       (937)
       ESOP compensation expense                                        520         301          --
       Stock award compensation expense                                 467          --          --
       Accrued charitable contribution of Company stock                  --       2,500          --
       Net change in
          Accrued interest receivable                                  (404)       (307)       (148)
          Other assets                                                  571        (175)       (141)
          Accrued interest payable and other liabilities                235      (1,754)      2,125
                                                                   --------    --------    --------
              Net cash provided by operating activities               7,355       2,810       2,140

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of securities available-for-sale                        (8,800)    (10,184)     (2,989)
    Purchase of securities held-to-maturity                         (23,402)    (24,684)    (20,129)
    Proceeds from sales of securities available-for-sale              6,745       2,587          --
    Proceeds from calls and maturities of securities                 19,130       9,200      15,814
    Net loan originations                                           (32,291)    (23,914)    (19,548)
    Principal payments on mortgage-backed and related securities     11,094      12,272       7,965
    Purchase of Federal Home Loan Bank stock                           (279)       (179)       (120)
    Property and equipment expenditures                                (597)        (44)       (189)
    Real estate owned expenditures                                       --         (35)         (5)
    Proceeds from sale of real estate owned                              53         261         614
                                                                   --------    --------    --------
       Net cash used in investing activities                        (28,347)    (34,720)    (18,587)

CASH FLOWS FROM FINANCING ACTIVITIES
    Net change in deposits                                           10,395      (9,405)     10,137
    Net change in advance payments by borrowers for taxes
      and insurance                                                      32         282         437
    Change in advances from Federal Home Loan Bank                   19,000       6,000      (6,000)
    Dividends paid                                                     (409)         --          --
    Purchase of treasury stock                                      (13,286)         --          --
    Net proceeds from stock issuance                                     --      57,823          --
                                                                   --------    --------    --------
       Net cash provided by financing activities                     15,732      54,700       4,574
                                                                   --------    --------    --------

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

</TABLE>

                                  (Continued)

                                                                              25
<PAGE>



<TABLE>
<CAPTION>
                        FIRST SECURITYFED FINANCIAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1998, 1997, and 1996
                             (Dollars in thousands)


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

                                                                       1998        1997        1996
                                                                   --------    --------    --------

<S>                                                                <C>         <C>         <C>      
Net change in cash and cash equivalents                            $ (5,260)   $ 22,790    $(11,873)

Cash and cash equivalents at beginning of year                       30,090       7,300      19,173
                                                                   --------    --------    --------

CASH AND CASH EQUIVALENTS AT END OF YEAR                           $ 24,830    $ 30,090    $  7,300
                                                                   ========    ========    ========

Supplemental disclosures of cash flow information
    Cash paid during the period for
       Interest                                                    $ 10,292    $ 10,146    $  9,498
       Income taxes                                                   3,083       1,667       1,497


----------------------------------------------------------------------------------------------------
</TABLE>









          See accompanying notes to consolidated financial statements.

                                                                              26



<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (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.  The only business of the Company is the ownership of the Bank.  The
Bank's  revenues  primarily  arise from interest  income from  residential  real
estate loans, with operations  conducted through its main office, three branches
in Cook County, and one branch in Philadelphia, Pennsylvania.

USE OF  ESTIMATES:  In  preparing  financial  statements,  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, 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 market value with  unrealized  gains and losses  charged or credited,  net of
income  taxes,  to a valuation  allowance  included as a separate  component  of
retained earnings. 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.

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.

ALLOWANCE  FOR LOAN  LOSSES:  Because  some loans may not be repaid in full,  an
allowance for loan losses is maintained. Increases to the allowance are recorded
by a provision for loan losses  charged to expense.  Estimating the risk of loss
and the amount of loss on any loan is necessarily subjective.  Accordingly,  the
valuation  allowance is maintained at levels considered adequate to cover losses
that are currently anticipated based on delinquencies, property appraisals, past
loss  experience,  general  economic  conditions,   information  about  specific
borrower situations  including their financial  position,  and other factors and
estimates  which  are  subject  to  change  over  time.   While  management  may
periodically  allocate  portions of the  allowance  for  specific  problem  loan
situations,  including  impaired loans discussed  below,  the whole allowance is
available for any charge-offs  that occur.  Loans are charged off in whole or in
part when management's estimate of the undiscounted cash flows from the loan are
less than the  recorded  investment  in the loan,  although  collection  efforts
continue and future recoveries may occur.

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

                                                                              27
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans  considered  to be impaired  are reduced to the present  value of expected
future cash flows or to the fair value of collateral, by allocating a portion of
the  allowance  for loan losses to such loans.  If these  allocations  cause the
allowance  for loan losses to require  increase,  such increase is reported as a
provision for loan losses.

Smaller balance homogenous loans are defined as residential first mortgage loans
secured  by  one-to-four-family  residences,   residential  construction  loans,
consumer loans,  and share loans and are evaluated  collectively for impairment.
Commercial real estate loans are evaluated  individually for impairment.  Normal
loan evaluation procedures,  as described in the second preceding paragraph, are
used to identify loans which must be evaluated for impairment. In general, loans
classified as doubtful or loss are considered impaired while loans classified as
substandard are individually evaluated for impairment. Depending on the relative
size of the credit relationship,  late or insufficient payments of 30 to 90 days
will cause  management to reevaluate the credit under its normal loan evaluation
procedures.  While the factors  which  identify a credit for  consideration  for
measurement  of  impairment,   or  nonaccrual,   are  similar,  the  measurement
considerations  differ.  A loan  is  impaired  when  management  believes  it is
probable  they  will be unable to  collect  all  amounts  due  according  to the
contractual  terms of the loan  agreement.  A loan is placed on nonaccrual  when
payments  are  more  than  90 days  past  due  unless  the  loan  is  adequately
collateralized and in the process of collection.

RECOGNITION  OF INCOME ON LOANS:  Interest on real  estate and certain  consumer
loans is accrued  over the term of the loans  based upon the  principal  balance
outstanding.  Where serious doubt exists as to the collectibility of a loan, the
accrual of interest is  discontinued.  The carrying values of impaired loans are
periodically adjusted to reflect cash payments, revised estimates of future cash
flows,  and  increases  in the present  value of expected  cash flows due to the
passage of time.  Cash  payments  representing  interest  income are reported as
such.  Other cash payments are reported as reductions in carrying  value,  while
increases or decreases due to changes in estimates of future payments and due to
the  passage of time are  reported  as  adjustments  to the  allowance  for loan
losses.  If these  adjustments  cause the  allowance  for loan losses to require
adjustment,  such  adjustment  is reported as an adjustment to the provision for
loan losses.

Loan fees, net of direct loan origination costs, are deferred and amortized over
the contractual life of the loan as a yield adjustment.

PREMISES  AND  EQUIPMENT:  Premises  and  equipment  are  stated  at  cost  less
accumulated  depreciation.  Depreciation  is  computed  using the  straight-line
method over the estimated useful lives of the respective premises and equipment,
which are primarily thirty to fifty years for premises and five to ten years for
furniture,  fixtures,  and  equipment.  Maintenance  and  repairs are charged to
expense as incurred and improvements which extend the useful lives of assets are
capitalized.

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

                                                                              28
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

GOODWILL AND CORE DEPOSIT INTANGIBLE: Goodwill and the core deposit intangibles,
included in other assets,  result from the  application  of purchase  accounting
principles to the  acquisition of assets and assumption of liabilities  from the
Resolution Trust Corporation. Goodwill represents the excess of acquisition cost
over the fair value of net assets of the branches and is amortized over 25 years
using the  straight-line  method.  The premium paid to acquire core  deposits is
being amortized over ten years on an accelerated method.

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.

EMPLOYEE STOCK OWNERSHIP PLAN: The cost of shares issued to the ESOP but not yet
allocated to participants are 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.

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

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.

EARNINGS PER SHARE:  Earnings per common share is computed  under the provisions
of Statement of Financial  Accounting  Standards No. 128,  "Earnings Per Share,"
which was adopted by the Company in 1997.  The amount  reported as earnings  per
common share for the year ended  December 31, 1997  reflects the earnings  since
October  31,  1997  available  to common  shareholders  divided by the  weighted
average number of common shares outstanding since October 31, 1997.

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.  The  accounting  standard  that  requires
reporting  comprehensive  income first applies for 1998, with prior  information
restated to be comparable.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              29
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 2 - SECURITIES

The Company's securities are as follows:

<TABLE>
<CAPTION>
                                                     --------------------------1998-------------------------
                                                                      Gross           Gross
                                                     Amortized      Unrealized     Unrealized         Fair
                                                       Cost            Gains         Losses           Value
                                                       ----            -----         ------           -----
<S>                                                  <C>            <C>             <C>             <C>     
Securities available-for-sale
   U.S. government and agencies                      $  2,407       $    170        $     --        $  2,577
   Municipals                                           7,504            175              --           7,679
   Corporates                                             250             --              (8)            242
   Mutual funds                                         3,172             22             (30)          3,164
   Other equity investments                               369             --             (98)            271
                                                     --------       --------        --------        --------
                                                       13,702            367            (136)         13,933

   Mortgage-backed securities
      Federal Home Loan Mortgage Corporation            6,144             --            (237)          5,907
      Government National Mortgage Association          1,962             33             (12)          1,983
      Federal National Mortgage Association             4,371              2             (64)          4,309
      Collateralized mortgage obligations                 211             --              --             211
                                                     --------       --------        --------        --------
                                                       12,688             35            (313)         12,410
                                                     --------       --------        --------        --------

                                                     $ 26,390       $    402        $   (449)       $ 26,343
                                                     ========       ========        ========        ========

                                                     --------------------------1998-------------------------
                                                                      Gross           Gross
                                                     Amortized      Unrealized     Unrealized         Fair
                                                       Cost            Gains         Losses           Value
                                                       ----            -----         ------           -----

Securities held-to-maturity
   U.S. government agencies                          $ 41,504       $    246        $    (14)       $ 41,736
   Municipals                                           5,176            276           5,452
                                                     --------       --------        --------        --------
                                                       46,680            522             (14)         47,188

   Mortgage-backed securities
      Federal Home Loan Mortgage Corporation            2,955             35            (146)          2,844
      Government National Mortgage Association          4,975            159              (9)          5,125
      Federal National Mortgage Association             1,474             14              (7)          1,481
      Collateralized mortgage obligations               2,183              2             (14)          2,171
                                                     --------       --------        --------        --------
                                                       11,587            210            (176)         11,621
                                                     --------       --------        --------        --------

                                                     $ 58,267       $    732        $   (190)       $ 58,809
                                                     ========       ========        ========        ========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              30
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 2 - SECURITIES (Continued)

<TABLE>
<CAPTION>
                                                     --------------------------1997-------------------------
                                                                      Gross           Gross
                                                     Amortized      Unrealized     Unrealized         Fair
                                                       Cost            Gains         Losses           Value
                                                       ----            -----         ------           -----
<S>                                                  <C>            <C>             <C>             <C>     
Securities available-for-sale
   U.S. government and agencies                      $  7,902       $    116        $     (4)       $  8,014
   Municipals                                           3,904             62              --           3,966
   Corporates                                             250             --              --             250
   Mutual funds                                         3,172             26             (43)          3,155
   Other equity investments                               369             --             (26)            343
                                                     --------       --------        --------        --------
                                                       15,597            204             (73)         15,728

   Mortgage-backed securities
      Federal Home Loan Mortgage Corporation            7,758             17            (174)          7,601
      Government National Mortgage Association          2,929             66             (13)          2,982
      Federal National Mortgage Association             5,701             13            (109)          5,605
      Collateralized mortgage obligations                 545             --              --             545
                                                     --------       --------        --------        --------
                                                       16,933             96            (296)         16,733
                                                     --------       --------        --------        --------

                                                     $ 32,530       $    300        $   (369)       $ 32,461
                                                     ========       ========        ========        ========


                                                     --------------------------1997-------------------------
                                                                      Gross           Gross
                                                     Amortized      Unrealized     Unrealized         Fair
                                                       Cost            Gains         Losses           Value
                                                       ----            -----         ------           -----
Securities held-to-maturity
   U.S. government agencies                          $ 33,562       $    120        $    (25)       $ 33,657
   Municipals                                           4,909            197              (1)          5,105
                                                     --------       --------        --------        --------
                                                       38,471            317             (26)         38,762

   Mortgage-backed securities
      Federal Home Loan Mortgage Corporation            4,558             61            (109)          4,510
      Government National Mortgage Association          7,781            255             (15)          8,021
      Federal National Mortgage Association             2,531             14             (26)          2,519
      Collateralized mortgage obligations               3,681             26             (21)          3,686
                                                     --------       --------        --------        --------
                                                       18,551            356            (171)         18,736
                                                     --------       --------        --------        --------

                                                     $ 57,022       $    673        $   (197)       $ 57,498
                                                     ========       ========        ========        ========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              31
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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


NOTE 2 - SECURITIES (Continued)

Sales of securities are summarized as follows:

                                     1998                 1997
                                    ------               ------

Proceeds                            $6,745               $2,587
Gross realized gains                    40                   31
Gross realized losses                   --                   63


Call  premiums on debt  securities  of $55,376  were  recognized  by the Company
during 1996.

The carrying  values and fair values of debt securities as of December 31, 1998,
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.

                                                        Amortized      Fair
                                                          Cost         Value
                                                          ----         -----
Securities available-for-sale
    Due after five years through ten years              $ 2,398      $ 2,437
    Due after ten years                                   7,763        8,061
                                                        -------      -------
                                                         10,161       10,498

    Mutual funds                                          3,172        3,164
    Other equity investments                                369          271
    Mortgage-backed securities  and collateralized
      mortgage obligations                               12,688       12,410
                                                        -------      -------
                                                         16,229       15,845
                                                        -------      -------

                                                        $26,390      $26,343
                                                        =======      =======

Securities held-to-maturity
    Due in one year or less                             $   526      $   535
    Due after one year through five years                15,229       15,297
    Due after five years through ten years               28,921       29,260
    Due after ten years                                   2,004        2,096
                                                        -------      -------
                                                         46,680       47,188

    Mortgage-backed securities and collateralized
      mortgage obligations                               11,587       11,621
                                                        -------      -------

                                                        $58,267      $58,809
                                                        =======      =======

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              32
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 2 - SECURITIES (Continued)

Securities in the amount of $250,000 were pledged to secure government  deposits
at December 31, 1998 and 1997.


NOTE 3 - LOANS RECEIVABLE

Loans receivable consisted of the following:

                                                        1998            1997
                                                     ---------       ---------
First mortgage loans, including loans purchased
    Secured by one-to-four-family residences         $ 182,452       $ 154,819
    Secured by multifamily residences                   11,313          10,999
    Secured by commercial real estate                   21,433          17,235
                                                     ---------       ---------
                                                       215,198         183,053

Home equity loans                                        5,158           4,602

Less net deferred loan origination fees                 (1,489)         (1,496)
                                                     ---------       ---------
         Total mortgage loans                          218,867         186,159

Consumer and other loans
    Automobile                                              16              47
    Share loans                                          1,091           1,421
    Improvement                                             11               7
    Loans secured by leases                                 --              81
    Other                                                  404             387
                                                     ---------       ---------
                                                         1,522           1,943
Less unearned discounts                                     (9)            (15)
                                                     ---------       ---------
    Total consumer and other loans                       1,513           1,928
Less allowance for loan losses                          (2,069)         (1,828)
                                                     ---------       ---------

                                                     $ 218,311       $ 186,259
                                                     =========       =========

The  principal  balance of loans on  nonaccrual  status at December 31, 1998 and
1997  approximated  $9,000.  The Company  maintains an allowance for uncollected
interest  for  mortgage   loans  with  payments  past  due.  The  allowance  was
approximately $116,000 and $45,000 at December 31, 1998 and 1997, respectively.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              33
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

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

                                     1998             1997             1996
                                   -------          -------          -------

Balance, beginning of year         $ 1,828          $ 1,520          $   885
Provision for loan losses              246              738              706
Recoveries                              --                4               --
Charge-offs                             (5)            (434)             (71)
                                   -------          -------          -------

    Balance, end of year           $ 2,069          $ 1,828          $ 1,520
                                   =======          =======          =======

The average  balance of impaired  loans was $18,000 and  $565,000  for the years
ended  December  31,  1998  and  1997,  respectively.  No  interest  income  was
recognized on these loans. There were no impaired loans at December 31, 1998. At
December 31, 1997, the balance of impaired loans was $81,000 for which $8,000 of
the allowance for loan losses was allocated.


NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:
                                                    1998             1997
                                                  -------          -------

Land$                                                 545          $   545
Buildings and improvements                          3,621            3,615
Furniture and equipment                             2,544            1,946
Real estate acquired for future expansion             377              377
                                                  -------          -------
    Total cost                                      7,087            6,483
Less accumulated depreciation                      (3,120)          (2,791)
                                                  -------          -------

                                                  $ 3,967          $ 3,692
                                                  =======          =======


NOTE 6 - INTANGIBLE ASSETS

Intangible   assets,   which  arose  from  the  Company's   acquisition  of  its
Philadelphia location consisted of the following:
                                                           1998           1997
                                                          -----          -----

Excess of purchase price over net assets acquired         $ 156          $ 156
Core deposit intangible                                     377            377
                                                          -----          -----
    Total                                                   533            533
Less accumulated amortization                              (297)          (242)
                                                          -----          -----

    Intangible assets, net                                $ 236          $ 291
                                                          =====          =====

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              34
<PAGE>



                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 7 - DEPOSITS

Certificate  of deposit  accounts  with  balances of  $100,000  or more  totaled
approximately  $30,475,000  and  $27,013,000  at  December  31,  1998 and  1997,
respectively.

At December 31, 1998, the scheduled maturities of certificates of deposit are as
follows:

                   1999                              $100,460
                   2000                                14,762
                   2001                                 3,435
                   2002                                 3,450
                   2003 and thereafter                  1,925
                                                     --------

                                                     $124,032
                                                     ========


NOTE 8 - ADVANCES FROM FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank of Chicago are summarized as follows:

<TABLE>
<CAPTION>
                                                                  ----Principal Balance---
                              Contractual      Frequency
      Maturity                 Interest         of Rate
        Date                     Rate         Adjustment            1998             1997
        ----                     ----         ----------            ----             ----

<S>                              <C>            <C>               <C>              <C>    
February 11, 1998                5.88%          Fixed             $    --          $ 2,000
March 20, 1998                   5.91           Fixed                  --            1,000
February 21, 2000                6.08           Fixed               1,000            1,000
February 21, 2000                5.48           Fixed               1,000            1,000
September 3, 2001                4.90           Fixed               1,000               --
September 3, 2001                5.45           Fixed               2,000               --
June 18, 2002                    5.71           Fixed               4,000            4,000
August 8, 2002                   5.26           Fixed               1,000            1,000
April 6, 2003                    5.15           Fixed               2,000               --
July 24, 2003                    5.24           Floating            1,000               --
January 16, 2008                 4.95           Fixed               5,000               --
February 17, 2008                5.05           Fixed               2,000               --
May 29, 2008                     5.01           Fixed               1,000               --
June 19, 2008                    5.17           Fixed               4,000               --
July 24, 2008                    5.24           Floating            2,000               --
October 6, 2008                  4.35           Fixed               1,000               --
October 6, 2008                  4.30           Fixed               1,000               --
                                                                  -------          -------

                                                                  $29,000          $10,000
                                                                  =======          =======

</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              35
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

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

The Company  maintains a collateral  pledge agreement  covering secured 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  secured  advances  from the Federal  Home Loan Bank of
Chicago.


NOTE 9 - INCOME TAXES

An analysis of the provision for income taxes is as follows:

                               1998              1997              1996
                             -------           -------           -------
Current
    Federal                  $ 2,680           $ 1,585           $ 1,132
    State                        537               320               211
Deferred                        (119)             (888)           (1,117)
Valuation allowance               --                --               180
                             -------           -------           -------

                             $ 3,098           $ 1,017           $   406
                             =======           =======           =======

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

                                                           1998         1997
                                                         -------      -------
Deferred tax assets
    Bad debts                                            $   324      $   135
    Amortization of intangible assets                         56           46
    Contribution carryforward                              1,376        1,641
    Other                                                    145           --
    Unrealized loss on securities available-for-sale          19           26
                                                         -------      -------
                                                           1,920        1,848
Deferred tax liabilities
    Depreciation                                             (75)         (87)
    FHLB stock dividend                                      (65)         (65)
    Loan fees                                               (332)        (333)
    Other                                                     --          (27)
                                                         -------      -------
                                                            (472)        (512)

Valuation allowance on deferred tax assets                  (180)        (180)
                                                         -------      -------

    Total deferred tax asset                             $ 1,268      $ 1,156
                                                         =======      =======

The  valuation  allowance  at December 31, 1998 and 1997  reflects  management's
estimate of temporary deductible differences that may not be realized.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              36
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 9 - INCOME TAXES (Continued)

The difference  between the provision for income taxes shown on the consolidated
statements  of income and amounts  computed by applying  the  statutory  federal
income tax rate to income before taxes follows:

<TABLE>
<CAPTION>
                                  --------------------For the Years Ended December 31,-----------------
                                  --------1998-------     --------1997--------     ---------1996-------
<S>                               <C>           <C>        <C>           <C>        <C>           <C>  
Provision for federal income
  taxes computed at statutory
  rate of 34%                     $ 2,870       34.0%      $   966       34.0%      $   292       34.0%
Tax-exempt income                    (168)      (2.0)          (90)      (3.2)          (85)      (9.9)
State income taxes, net of
  federal income tax benefit          344        4.1           140        4.9            37        4.3
Other                                  52         .6             1         .1           (18)      (2.1)
Valuation allowance                    --         --            --         --           180       21.0
                                  -------       ----       -------       ----       -------       ----

                                  $ 3,098       36.7%      $ 1,017       35.8%      $   406       47.3%
                                  =======       ====       =======       ====       =======       ====
</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 which differs
from the  provision  charged  to income on the  financial  statements.  Retained
earnings at December  31, 1998  include  approximately  $2,023,000  for which no
deferred federal income tax liability has been recorded.


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:

                                                 1998                 1997
                                                ------               ------

     Commitments to extend credit               $3,009               $1,610
     Unused lines of credit                      5,803                4,887

At December 31, 1998,  commitments  to extend credit  consist of fixed rate loan
commitments with rates ranging from 6.50% 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.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              37
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued)

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.

The  deposits  of savings  institutions  are  presently  insured by the  Savings
Association  Insurance  Fund (SAIF),  which,  along with the Bank Insurance Fund
(BIF),  is one of the two insurance  funds  administered  by the Federal Deposit
Insurance Corporation (FDIC). Due to the inadequate  capitalization of the SAIF,
a recapitalization plan was signed into law on September 30, 1996 which required
a special assessment of approximately .65% of all SAIF-insured  deposit balances
as of March 31, 1995.  The Bank's  assessment  of $1,292,882 is reflected in the
1996 statement of income.

The Bank  established The Heritage  Foundation of First Security Federal Savings
Bank, Inc. (the Foundation) in December 1996. The Foundation is a not-for-profit
charitable  foundation.  In 1996, the Board approved a $2,500,000  unconditional
contribution  to the  Foundation,  of  which  $250,000  was  paid in  1996.  The
remaining  contribution  of $2,250,000 was funded in 1997.  Refer to Note 16 for
discussion of the stock contribution committed during 1997.


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.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of  total  and  Tier  I  capital  (as  defined  in the  regulations)  to
risk-weighted  assets (as defined) and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1998, that the Bank
meets all capital adequacy requirements to which it is subject.

As of December 31, 1998, 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.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              38
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 11 - REGULATORY MATTERS (Continued)

The Bank's actual capital amounts and ratios are also presented in the 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, 1998:
    Total capital (to risk-weighted
      assets)                                   $68,666      43.1%      $12,743       8.0%     $15,929      10.0%
    Tier I capital (to risk-weighted
      assets)                                    66,675      41.9        10,372       4.0        9,557       6.0
    Tier I (core) capital (to adjusted
      total assets)                              66,675      20.4        13,050       4.0       16,813       5.0
    Tier I (tangible) capital (to tangible
      assets)                                    66,675      20.4         4,894       1.5          N/A    N/A

As of December 31, 1997:
    Total capital (to risk-weighted
      assets)                                   $63,149      42.8%      $11,811       8.0%     $14,763      10.0%
    Tier I capital (to risk-weighted
      assets)                                    61,368      41.6         5,905       4.0        8,858       6.0
    Tier I (core) capital (to adjusted
      total assets)                              61,368      19.8        12,384       4.0       15,480       5.0
    Tier I (tangible) capital (to tangible
      assets)                                    61,368      21.6         4,644       1.5          N/A    N/A

</TABLE>

NOTE 12 - EARNINGS PER COMMON SHARE

A  reconciliation  of the numerator and  denominator of the earnings  (loss) per
common  share  computation  for the year  ended  December  31,  1998 and 1997 is
presented below.
<TABLE>
<CAPTION>
                                                                        1998        1997
                                                                     -------     -------
<S>                                                                  <C>         <C>    
Earnings per common share
    Net income                                                       $ 5,344     $ 1,825
    Less:  net income of Bank prior to conversion                         --      (2,518)
                                                                     -------     -------

         Net income (loss) attributable to common shareholders       $ 5,344     $  (693)
                                                                     =======     =======

    Weighted average common shares outstanding                         5,548       5,895
    Add:  shares committed to be issued to charitable foundation         200         250
                                                                     -------     -------

         Total weighted average common shares outstanding              5,748       6,145
                                                                     =======     =======

             Basic earnings (loss) per share                         $   .93     $  (.11)
                                                                     =======     =======
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              39
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 12 - EARNINGS PER COMMON SHARE  (Continued)

The Company's  outstanding stock options and stock awards were not considered in
the  computations  of diluted  earnings per share because the effects of assumed
exercise  would  have been  antidilutive.  In future  years,  outstanding  stock
options may be exercised which would increase the weighted average common shares
outstanding and, thereby, dilute earnings per share. In addition, if the average
common stock price were to exceed the exercise price of outstanding options in a
future year, the assumed  exercise of the options and/or the assumed issuance of
the stock  awards  would have a dilutive  effect on earnings  per share for that
future  year.  However,  previously  reported  earnings  per share  and  diluted
earnings per share are not  restated to reflect  change in the status of changes
in the relationship between exercise prices and average stock prices.


NOTE 13 - RELATED PARTY TRANSACTIONS

The Company has lending  transactions with directors,  executive  officers,  and
their associates.  Loans to these individuals totaled approximately $181,000 and
$32,000 at December 31, 1998 and December 31, 1997, respectively.


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.

During  1998 and 1997,  35,334 and 19,154  shares of stock with an average  fair
value of $14.72 and $15.74 per share were committed to be released, resulting in
ESOP compensation expense of $520,122 and $301,484, respectively.
Shares held by the ESOP at December 31 are as follows:

                                                1998                1997
                                                ----                ----

Allocated shares                                  54                  19
Unallocated shares                               459                 494
                                              ------              ------
    Total ESOP shares                            513                 513
                                              ======              ======

Fair value of unallocated shares              $5,956              $7,780
                                              ======              ======

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              40
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (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 5-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 year are presented below:

                                                                       Weighted-
                                                                       Average
                                                               1998    Exercise
                                                              Shares    Price
                                                               ------    -----
                                                                (Thousands)

Outstanding at beginning of year                              $  --    $   --
Granted                                                         519     16.68
                                                              -----    ------

    Outstanding at end of year                                $ 519    $16.68
                                                              =====    ======

Options exercisable at end of year                               --
Weighted-average fair value of options granted during year    $6.48

All of the outstanding options at December 31, 1998 relate to options granted in
May 1998 at an exercise  price of $16.68 and have a remaining  life of 9.3 years
before expiration. These options are not fully vested. The exercise price equals
the market value on the date the options were granted.

The Company applies APB Opinion 25 and related Interpretations in accounting for
its stock option plan. Accordingly,  no compensation cost has been recognized at
the date of grant. Had compensation cost been determined based on the fair value
at the grant dates for awards under the plan in 1998  consistent with the method
of SFAS No. 123,  "Accounting for Stock Based  Compensation,"  the Company's net
income and earnings  per share would have been reduced to the pro forma  amounts
in the table below.  For purposes of pro forma  disclosure,  the estimated  fair
value of the options is amortized to expense over the options' vesting period.

                                                          1998
                                                          ----

Net income as reported                               $   5,344
Pro forma net income                                     5,087
Earnings per share as reported, basic and diluted          .93
Pro forma earnings per share, basic and diluted            .89

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              41
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (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.
These shares vest over a five-year  period.  The unamortized  cost of shares not
yet earned  (vested) is reported as a reduction  of  stockholders'  equity.  MRP
compensation expense totaled $467,000 for the year ended December 31, 1998.


NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS

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

<TABLE>
<CAPTION>
                                                      --------------1998----------    -----------1997-----------
                                                         Approximate    Estimated      Approximate     Estimated
                                                          Carrying        Fair          Carrying         Fair
                                                           Amount         Value          Amount          Value
<S>                                                      <C>            <C>            <C>            <C>      
    Financial assets
       Cash and cash equivalents                         $  24,830      $  24,830      $  30,090      $  30,090
       Time deposits in other financial institutions           200            200            200            200
       Securities available-for-sale                        26,343         26,343         32,461         32,461
       Securities held-to-maturity                          58,267         58,809         57,022         57,498
       Loans, net of allowance for loan losses             218,311        221,849        186,259        191,323
       Accrued interest receivable                           2,475          2,475          2,071          2,071

    Financial liabilities
       NOW and MM accounts                                 (21,497)       (21,497)       (20,279)       (20,279)
       Savings                                             (74,966)       (74,966)       (68,572)       (68,572)
Time deposits                                             (124,032)      (125,326)      (121,249)      (121,795)
       Advance payments by borrowers for taxes
         and insurance                                      (2,432)        (2,432)        (2,400)        (2,400)
       Advances from Federal Home Loan Bank                (29,000)       (27,989)       (10,000)        (9,853)
       Accrued interest payable                               (520)          (520)          (516)          (516)
</TABLE>

For purposes of the above, the following assumptions were used:

CASH AND CASH EQUIVALENTS: The fair value for cash and cash equivalents is based
on their carrying value due to the short-term nature of these assets.

SECURITIES: The fair value of securities is based on the quoted market value for
the individual security or its equivalent.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              42
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

LOANS:  The fair value for loans has been  determined by calculating the present
value of future cash flows based on the current  rate the Company  would  charge
for similar  loans with  similar  maturities  at December  31,  1998,  and 1997,
applied for an estimated time period until the loan is assumed to be repriced or
repaid.

DEPOSIT  LIABILITIES:  The fair value for time  deposits has been  determined by
calculating  the present  value of future cash flows based on estimates of rates
the Company  would pay on such  deposits at December 31, 1998 and 1997,  applied
for the time period  until  maturity.  The  estimated  fair value of NOW,  Money
Market,  and  savings  accounts  is assumed  to  approximate  carrying  value as
management  establishes rates on these deposits at a level that approximates the
local market area.

ADVANCES  FROM FEDERAL HOME LOAN BANK:  The fair value for the Federal Home Loan
Bank  advances was  determined by  calculating  the present value of future cash
flows using the current rate for an advance with a similar length to maturity.

ACCRUED INTEREST:  The fair value of accrued interest  receivable and payable is
assumed to equal the carrying value.

OFF-BALANCE-SHEET  INSTRUMENTS:  Off-balance-sheet  items consist principally of
unfunded loan commitments. The fair value of these commitments is 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,  loan
servicing rights, 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 on
December 31, 1998 and 1997, the fair value would have been achieved, because the
market  value may differ  depending  on the  circumstances.  The fair  values at
December  31, 1998 and 1997 should not  necessarily  be  considered  to apply at
subsequent dates.


NOTE 16 - ADOPTION OF PLAN OF CONVERSION

On June 23,  1997,  the  Board of  Directors  of the  Company  adopted a Plan of
Conversion  to convert from a federal  mutual  savings  bank to a federal  stock
savings bank with the concurrent  formation of a holding company. The conversion
was accomplished through the amendment of the Bank's charter and the sale of the
holding  company's common stock in an amount equal to the consolidated pro forma
market  value of the  holding  company and the Bank after  giving  effect to the
conversion.  A  subscription  offering of the shares of common stock was offered
initially to the Bank's eligible deposit account holders,  then to other members
of the Bank.  Any shares of the holding  company's  common stock not sold in the
subscription  offering  were  offered  for sale to the  general  public,  giving
preference to the Bank's market area. On


--------------------------------------------------------------------------------
                                  (Continued)
                                                                              43
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 16 - ADOPTION OF PLAN OF CONVERSION (Continued)

October  31,  1997,  the  Company  sold  6,408,000  shares  at $10 per share and
received proceeds of $57,823,000 net of conversion expenses and ESOP shares.

At the time of  conversion,  the Bank  established a  liquidation  account in an
amount equal to its total net worth as of the latest balance sheet  appearing in
the  final  prospectus.  The  balance  as of  that  date  was  $31,840,000.  The
liquidation  account will be maintained  for the benefit of eligible  depositors
who continue to maintain  their accounts at the Bank after the  conversion.  The
liquidation  account  will be  reduced  annually  to the  extent  that  eligible
depositors have reduced their qualifying deposits. Subsequent increases will not
restore an eligible account holder's interest in the liquidation account. In the
event of a complete  liquidation,  each eligible  depositor  will be entitled to
receive a distribution from the liquidation  account in an amount  proportionate
to the  current  adjusted  qualifying  balances  for  accounts  then  held.  The
liquidation account balance is not available for payment of dividends.

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  accounts of such a declaration and payment would otherwise  violate
regulatory requirements.

As part of the conversion,  the Bank's depositors  approved a stock contribution
of 250,000 shares to The Heritage  Foundation of First Security  Federal Savings
Bank,  Inc.  (the  Foundation).  The  contribution  was  accrued  at the time of
conversion  for $2.5 million based on the $10 per share initial  offering  price
and  resulted  in $2.5  million of  expense  ($1.5  million,  net of tax) to the
Company. Additional paid-in capital was increased by $2.5 million as a result of
the  unconditional  commitment to  contribute  the stock to the  Foundation.  In
December 1998, the Company contributed 50,000 shares to the Foundation.


NOTE 17 - PARENT COMPANY FINANCIAL STATEMENTS

Presented  below are the  condensed  balance  sheet,  statement  of income,  and
statement of cash flows for First  SecurityFed  Financial,  Inc. The Company was
formed on October 31, 1997. Accordingly, the statements of income and cash flows
reflect the period October 31, 1997 through December 31, 1997.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              44
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 17 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>
                            CONDENSED BALANCE SHEETS
                           December 31, 1998 and 1997

                                                                     1998          1997
                                                                     ----          ----
<S>                                                               <C>           <C>     
ASSETS
Cash and cash equivalents                                         $  1,164      $ 19,287
Securities available-for-sale                                       10,387        10,211
ESOP loan                                                            4,614         4,870
Investment in bank subsidiary                                       67,438        61,905
Accrued interest receivable and other assets                         1,235         1,320
                                                                  --------      --------

                                                                  $ 84,838      $ 97,593
                                                                  ========      ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued expenses and other liabilities                            $    251      $  5,721
Shareholders' equity
     Common stock                                                       64            64
     Additional paid-in capital                                     64,952        65,495
     Unearned ESOP shares                                           (4,582)       (4,935)
     Unearned MRP shares                                            (3,810)           --
     Treasury stock, at cost                                        (8,234)           --
     Retained earnings                                              36,225        31,290
     Unrealized depreciation on securities available-for-sale          (28)          (42)
                                                                  --------      --------
                                                                    84,587        91,872

                                                                  $ 84,838      $ 97,593
                                                                  ========      ========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              45
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 17 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>
                         CONDENSED STATEMENTS OF INCOME
                    For the year ended December 31, 1998 and
              for the period October 31, 1997 to December 31, 1997

                                                                    1998        1997
                                                                  -------     -------
<S>                                                               <C>         <C>    
Income
     Securities                                                   $   869     $    33
     ESOP loan                                                        325          59
     Gain on sale of securities                                        40          --
                                                                  -------     -------
         Total income                                               1,234          92

Other expenses
     Charitable contributions                                          --       2,500
     Other operating expenses                                         198          --
                                                                  -------     -------
                                                                      198       2,500


INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED
  EARNINGS OF BANK SUBSIDIARY                                       1,036      (2,408)

Income taxes (benefit)                                                270        (939)
                                                                  -------     -------


INCOME (LOSS) BEFORE EQUITY IN UNDISTRIBUTED                          766      (1,469)
  EARNINGS OF BANK SUBSIDIARY

Equity in undistributed earnings of bank subsidiary                 4,578         776
                                                                  -------     -------

NET INCOME (LOSS)                                                 $ 5,344     $  (693)
                                                                  =======     =======
</TABLE>


--------------------------------------------------------------------------------
                                  (Continued)
                                                                              46
<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 17 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>
                       CONDENSED STATEMENTS OF CASH FLOWS
                    For the year ended December 31, 1998 and
              for the period October 31, 1997 to December 31, 1997

                                                                            1998          1997
                                                                          --------      --------
<S>                                                                       <C>           <C>      
OPERATING ACTIVITIES
     Net income (loss)                                                    $  5,344      $   (693)
     Adjustments to reconcile net income (loss) to net cash
      provided by operating activities
         Equity in undistributed earnings of bank subsidiary                (4,578)         (776)
         Accrued charitable contribution of Company stock                       --         2,500
         Net accretion                                                          (6)           --
         Gain on sales of securities                                           (40)           --
         Change in
              Other assets                                                    (150)       (1,337)
              Other liabilities                                             (5,185)          595
                                                                          --------      --------
                  Net cash provided by (used in) operating activities       (4,615)          289

INVESTING ACTIVITIES
     Purchase of bank subsidiary stock                                          --       (28,912)
     Purchase of securities available-for-sale                              (8,759)      (10,169)
     Proceeds from sales of securities                                       6,745            --
     Proceeds from calls of maturitites                                      2,000            --
                                                                          --------      --------
         Net cash used in investing activities                                 (69)      (39,081)

FINANCING ACTIVITIES
     Net proceeds from sale of common stock                                     --        57,823
     Payment received on loan to ESOP                                          256           256
     Dividends paid                                                           (409)           --
     Purchase of treasury stock                                            (13,286)           --
                                                                          --------      --------
         Net cash provided by (used in) financing activities               (13,439)       58,079
                                                                          --------      --------

Net change in cash and cash equivalents                                    (18,123)       19,287

Cash and cash equivalents at beginning of period                            19,287            --
                                                                          --------      --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                $  1,164      $ 19,287
                                                                          ========      ========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              47
<PAGE>





                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996
               (Table amounts in thousands, except per share data)

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

NOTE 18 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
                                       ------------------------Three Months Ended-----------------------
                                        March 31         June 30         September 30        December 31
                                        --------         -------         ------------        -----------
1998
----
<S>                                    <C>                <C>                <C>                <C>   
Interest income                        $6,024             $5,998             $6,207             $6,154
Interest expense                        2,513              2,598              2,635              2,711
                                       ------             ------             ------             ------

NET INTEREST INCOME                     3,511              3,400              3,572              3,443

Provision for loan losses                  62                 61                 62                 61
Other income                              159                143                182                165
Other expense                           1,240              1,332              1,634              1,657
                                       ------             ------             ------             ------

INCOME BEFORE INCOME TAXES              2,368              2,150              2,058              1,890

Income tax expense                        915                781                616                810
                                       ------             ------             ------             ------

NET INCOME                             $1,453             $1,369             $1,442             $1,080
                                       ======             ======             ======             ======

Earnings per common share              $  .24             $  .22             $  .26             $  .21
                                       ======             ======             ======             ======


                                       ------------------------Three Months Ended-----------------------
                                        March 31         June 30         September 30        December 31
                                        --------         -------         ------------        -----------
1997
----

Interest income                        $4,858             $4,850             $5,018             $5,948
Interest expense                        2,404              2,485              2,585              2,655
                                       ------             ------             ------             ------

NET INTEREST INCOME                     2,454              2,365              2,433              3,293

Provision for loan losses                  61                554                 62                 61
Other income                              149                146                180                117
Other expense                           1,118              1,363              1,150              3,926
                                       ------             ------             ------             ------

INCOME (LOSS) BEFORE INCOME TAXES       1,424                594              1,401               (577)

Income tax expense (benefit)              564                186                540               (273)
                                       ------             ------             ------             ------

NET INCOME (LOSS)                      $  860             $  408             $  861             $ (304)
                                       ======             ======             ======             ======

Earnings (loss) per common share*         N/A                N/A                N/A               (.11)

</TABLE>

* Since date of conversion (October 31, 1997).


                                                                              48

<PAGE>

                       FIRST SECURITYFED FINANCIAL, INC.
                            STOCKHOLDER INFORMATION

ANNUAL MEETING

        The Annual Meeting of Stockholders will be held at 7:00 p.m., local time
on May 12,  1999 at the Suma  Hall  located  at 2457 W.  Chicago  Ave,  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 15, 1999 there were  approximately  1,056 shareholders of
record and 5,776,208 outstanding shares of common stock.

        The following table sets forth the high and low bid prices and dividends
paid per share of common  stock  since the stock  began  trading on October  31,
1997. The stock price information was provided by the NASD, Inc.


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


December 31, 1997         16.6250      15.0000           -
March 31, 1998            15.7500      14.6250           -
June 30, 1998             17.5000      15.0000           -
September 30, 1998        16.8750      10.5000           -
December 31, 1998         14.9375      11.0000          .07(cent)


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

Silver, Freedman & Taff, L.L.P.        Crowe, Chizek and Company LLP
1100 New York Avenue, NW               One Mid America Plaza
7th Floor                              P.O. Box 3697
Washington, DC  20005                  Oak Brook, Illinois 60522-3697


                                      49

<PAGE>



ANNUAL AND OTHER REPORTS

      A copy of First SecurityFed  Financial,  Inc.'s Annual Report on Form 10-K
for the year ended  December 31, 1998, as filed with the Securities and Exchange
Commission,  may be obtained without charge by contacting Orest Olchowyj,  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) 772-1043

DIRECTORS OF THE BOARD

Steve Babyk
      DIRECTOR OF FLEET LEASING
      UNION TANK CAR COMPANY

Lila Maria Bodnar
      ACCOUNTANT, MBA

Myron Dobrowolsky
      CONSTRUCTION PROJECT MANAGER
      DAMES AND MOORE

Terry Gawryk
      ATTORNEY

George Kawka
      SENIOR ARCHITECTURAL/ENGINEERING
      PROJECT MANAGER
      PAL TELECOM GROUP

EXECUTIVE OFFICERS

Julian Kulas
      PRESIDENT AND CHIEF EXECUTIVE OFFICER

Mary H. Korb
      VICE PRESIDENT-LENDING

Adrian Hawryliw
      VICE PRESIDENT - PHILADELPHIA
       BRANCH MANAGER



Julian Kulas
      PRESIDENT AND CHIEF EXECUTIVE OFFICER
      FIRST SECURITY FEDERAL SAVINGS BANK

Paul Nadzikewycz
      PRESIDENT AND CHIEF EXECUTIVE OFFICER,
      OAKLEY ASSOC. LTD.

Janoslav H. Sydonenko
      CREDIT MANAGER
      KANEMATSU USA

Chrysta Wereszczak
      CO-OWNER, B&B FORMICA







Harry I. Kucewicz
      TREASURER AND CHIEF FINANCIAL OFFICER

Irene S. Subota
      VICE PRESIDENT - SAVINGS



                                      50