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1999 ANNUAL REPORT
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                        FIRST SECURITYFED FINANCIAL, INC.



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TABLE OF CONTENTS

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President's Message............................................... ..........  1
Selected Consolidated Financial Information..................................  3
Management's Discussion and Analysis of Financial
  Condition and Results of Operations........................................  5
Consolidated Financial Statements.............................................20
Stockholder Information.......................................................48
Corporate Information.........................................................49





























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FROM YOUR PRESIDENT
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To Our Stockholders, Depositors and Friends,

     The  century  date  change  came  and  went,  and  the  banking  industry's
preparations  made January 1, 2000 a  non-event,  at least as far as the dreaded
"Y2K Bug" was  concerned.  Our Company  has also  committed  extensive  time and
resources to the readiness effort of Y2K which helped make the rollover period a
smooth one.  Now, it is my pleasure to present to you the Annual Report of First
SecurityFed Financial,  Inc and its subsidiary 1st Security Federal Savings Bank
for the period ended December 31, 1999.

     As you review the  financial  pages of this report you will find that First
SecurityFed  Financial,  Inc. had another  banner  year.  Our total assets as of
December 31, 1999  increased to $372.3  million as compared to $338.1 million at
December  31, 1998,  an increase of $34.2  million or 10.12%.  Consolidated  net
income for 1999 was a record  $5.7  million or $1.14 per share,  as  compared to
$5.3  million or $0.93 per share in 1998.  This 22.6%  increase in earnings  per
share was primarily attributable to higher net interest income, asset growth and
relatively low non-interest expense. The Company's return on equity increased to
6.82% in 1999, a  substantial  increase from 5.97% in 1998. I am also pleased to
report that for the second consecutive year the Company was able to maintain its
efficiency ratio at 40%.

     The Loan Department had another strong year,  originating  $79.5 million in
new  loans and  increasing  loans  receivables  by $22.9  million.  The level of
non-performing  assets as a percentage of total assets  increased  slightly from
0.30% in 1998 to 0.37% in 1999. The construction  loan program that we initiated
towards  the  latter  part of 1998 has been  well  received  in our  gentrifying
communities and we are originating an increasing number of such loans.

     In  1999,  publicly-traded  community  financial  institutions  experienced
further downward  pressure on their stock prices and our stock was no exception.
However,  we  believe  that,  in the long  run our  continued  growth,  positive
earnings,  increased  return  on  equity  and other  sound  fundamentals  should
ultimately  translate into solid investment  performance.  We continue to review
our opportunities to enhance  shareholder  value,  including an aggressive stock
buy-back program.  The Company has repurchased over 20% of its outstanding stock
at  substantially  below book value since the conversion in October 1997. We are
currently  engaged in our 5th repurchase  program and intend to purchase another
5% of our  outstanding  stock.  In March 2000 the  Company  declared a quarterly
dividend  of  $0.12  per  share.  We will  continue  to  evaluate  future  stock
repurchases and dividends based on their effects on shareholder  value including
return on equity and book value per share.

     Community   financial   institutions   continue  to  face  new  challenges.
Competition  in the financial  market place  continues to intensify.  We need to
pursue  new lines of  business  and find new ways to reach  customers.  With Y2K
behind us, we can now focus on other strategic technology issues, in particular,
pursuing new customers via the Internet. The Company remains committed to

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serving the increasing needs of our customers and our communities.  Personal and
efficient  service has always been and shall always remain its primary  mission.
Our continued  personal  involvement  in various  community  activities  and the
charitable  donations made by The Heritage  Foundation of First Security Federal
Savings  Bank  to  numerous  charitable  and  civic  organizations  result  in a
priceless asset, and a special bond with loyalty of our communities.

     1999 was a very successful  year for First  SecurityFed  Financial,  Inc, a
year in which we increased  returns to the Company  while  building  shareholder
value. I want to thank our employees, Directors, and Officers for achieving that
goal.  Above all I want to thank you, our  shareholders  and our customers,  for
your support and encouragement.







                                   Sincerely,


                                   Julian E. Kulas
                                   President and Chief Executive Officer




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                         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>

                                                                              At December 31,
                                                 ----------------------------------------------------------------------------------
                                                  1999          1998        1997          1996          1995
                                                 ----------------------------------------------------------------------------------
                                                                              (In Thousands)
<S>                                            <C>          <C>         <C>           <C>            <C>

Selected Financial Condition Data:
----------------------------------
Total assets....................................$372,292   $ 338,050    $315,849      $258,115       $251,922
Cash and cash equivalents.......................   6,257      24,830      30,090         7,300         19,173
Loans receivable, net(1)........................ 241,168     218,311     186,259       163,348        144,566
Mortgage-backed securities:
  Held-to-maturity..............................   7,577      11,587      18,551        24,109         25,120
  Available-for-sale............................   9,410      12,410      16,733        19,727         20,044
Investment securities:
  Held-to-maturity..............................  85,331      46,680      38,471        25,779         20,566
  Available-for-sale............................  11,212      13,933      15,728         8,997         13,743
Deposits........................................ 238,123     220,495     210,100       219,505        209,387
Total borrowings................................  46,300      29,000      10,000         4,000         10,000
Shareholders equity.............................  83,156      84,587      91,872        29,261         29,038
</TABLE>

(1)  The allowance for loan losses at December 31, 1999, 1998, 1997, 1996, and
     1995, was $2,315,000, $2,069,000, $1,828,000, $1,520,000, and $885,000,
     respectively.




<TABLE>

                                                                            Year Ended December 31,
                                                    -------------------------------------------------------------------------------
                                                    1999          1998      1997          1996          1995
                                                    -------------------------------------------------------------------------------
                                                                                (In Thousands)
<S>                                                <C>         <C>       <C>            <C>           <C>
Selected Operations Data:

Total interest income..............................$25,285     $24,059   $20,674        $19,006        $17,650
Total interest expense............................. 11,037      10,296    10,129          9,494          8,727
                                                   -------   ---------   -------       --------        -------
  Net interest income.............................. 14,248      13,763    10,545          9,512          8,923
Provision for loan losses..........................    246         246       738            706            136
                                                  --------   ---------  --------      ---------       --------
Net interest income after provision for loan
  losses........................................... 14,002      13,517     9,807          8,806          8,787
Fees and service charges...........................    368         416       371            362            378
Gain (loss) on sales of mortgage-backed
  securities and investment securities.............     12          40      (32)             55             24
Other non-interest income..........................    430         356      253             328            454
                                                   -------   ---------   -------      ---------       --------
Total non-interest income..........................    810         812       592            745            856
Total non-interest expense.........................  6,102       5,887     7,557(1)       8,693(2)       4,690
                                                  --------   ---------    ------       --------         ------
Income (loss) before taxes and cumulative effect...  8,710       8,442     2,842            858          4,953
Income tax provision ..............................  3,028      3,098      1,017            406          1,760
                                                  --------   ---------  --------      ---------        -------
Net income........................................  $5,682     $5,344     $1,825       $    452         $3,193
                                                  ========     =======    ======       ========         ======
</TABLE>


(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.



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<TABLE>



                                                                           Year Ended December 31,
                                                    -------------------------------------------------------------------------------
                                                         1999          1998          1997          1996          1995
                                                    ------------------------------------------------------------------------------
<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)........................          1.56%         1.62%         6.4%           .18%          1.34%
 Return on equity (ratio of net income to
  average equity)..............................          6.82          5.97          4.66          1.50          11.64
 Dividend payout ratio . . . . . . . . . . . .          35.08          7.62           ---           ---            ---
 Interest rate spread information:
 Average during period.........................          3.31          3.19          3.34          3.51           3.61
 Net interest margin(1)........................          4.36          4.37          3.97          3.98           4.00
 Ratio of operating expense to average total
  assets.......................................          1.68          1.79          2.66          3.45           1.97
 Efficiency Ratio(2)...........................           .40           .40           .68           .85            .48
 Ratio of average interest-earning assets to
  average interest-bearing liabilities........         132.19        135.90         116.50       111.81         109.93

Quality Ratios:
 Non-performing assets to total assets at end
  of period....................................          .37           .30             .46         1.44           1.11
 Allowance for loan losses to non-performing                                  24
  loans at end of period.......................       166.19        203.24          124.86         41.30          38.73
 Allowance for loan losses to gross loans
  receivable at end of period..................          .96           .93             .96           .91            .60

Capital Ratios:(3)
 Equity to total assets at end of period.......        22.34         25.03           29.10         11.42          11.52
 Average equity to average assets..............        22.90         27.18           13.81         11.97          11.55


(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>



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


General

     First  SecurityFed  Financial,  Inc.  (the  "Company")  became the  holding
company for First Security Federal Savings Bank (the "Bank") 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  mortgages and, to a significantly lesser extent,
multi-family,  consumer and other loans  primarily in its market area.  The Bank
also uses  these  deposits  to  acquire  mortgage  backed  and other  investment
securities.  The Bank's revenues are derived principally from interest earned on
loans and mortgage-backed and other investment 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"

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deposits that are less vulnerable to interest rate changes (and competition from
other financial products) than certificate accounts.

     In  its  lending  operations,   the  Bank  seeks  to  obtain  high  quality
residential and, to a lesser extent,  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, 1999 and December 31, 1998

     Total  assets at December 31, 1999 were $372.3  million  compared to $338.1
million at  December  31,  1998,  an increase  of $34.2  million or 10.12%.  The
increase in total assets was due primarily to an increase in loans receivable of
$22.9 million and an increase in securities of $28.9 million. These increases in
assets were  partially  offset by a decrease  of $18.5  million in cash and cash
equivalents.  Funding for the  increase in assets was  provided by  increases in
Federal Home Loan Bank Advances and Deposits.

     Total  liabilities  at December  31, 1999 were $289.1  million  compared to
$253.5 million at December 31, 1998, an increase of $35.6 million or 14.04%. The
increase in  liabilities  was due  primarily to  increases  of $17.6  million in
deposits  and $17.3  million in  Federal  Home Loan Bank  advances  along with a
$400,000 increase in advance payments by borrowers for taxes and insurance.

     Total  equity at  December  31,  1999 was $83.2  million  compared to $84.6
million at December  31,  1998 a decrease  of $1.4  million.  The  decrease  was
primarily due to the Company's  repurchase of  outstanding  common stock of $5.7
million and $2.0 million of dividends paid. The decrease was primarily offset by
net income of $5.7 million.


Comparison of Operating Results for the Years Ended December 31, 1999 and
December 31, 1998

     General.  Net income for the year ended  December 31, 1999 was $5.7 million
compared to net income of $5.3 million for the year ended  December 31, 1998, an
increase of $400,000.  The increase was primarily due to an increase of $485,000
in net interest income and a $70,000 decrease in the income tax provision.  This
increase in income were partially  offset by a $215,000  increase in noninterest
expense.

     Interest  Income.  Interest income for the year ended December 31, 1999 was
$25.3 million  compared to $24.1 million for the year ended December 31, 1998 an
increase of $1.2 million or 4.98%. The increase was primarily due to an increase
in the average balance of interest earning

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<PAGE>



assets  from  $315.3  million  for the year ended  December  31,  1998 to $338.6
million for the year ended December 31, 1999 due to the continuing investment of
cash  and a  strong  demand  for  loans  due  to  the  favorable  interest  rate
environment.  The average balance of loans increased $21.2 million to $228.8 for
the year ended December 31, 1999 from $207.6 million for the year ended December
31, 1998. In addition,  the average  balance of municipal and government  agency
securities  increased  by $16.0  million,  but were  partially  offset by a $8.3
million  decrease in mortgage backed  securities.  The average yield on interest
earning assets remained fairly constant at 7.63% for the year ended December 31,
1998 and 7.62% for the year ended December 31, 1999.

     Interest Expense. Interest expense for the year ended December 31, 1999 was
$11.0 million compared to $10.3 million for the year ended December 31, 1998, an
increase of $741,000 or 7.20%. This increase was primarily due to an increase in
the average balance of interest-bearing liabilities of $24.1 million from $232.0
million  for the year ended  December  31,  1998 to $256.1  million for the year
ended December 31, 1999. This was partially  offset by a decrease in the average
cost of funds from 4.44% for the year ended  December  31, 1998 to 4.31% for the
year ended December 31, 1999.

     Net  interest  Income.  Net interest  income of $14.2  million for the year
ended  December  31, 1999  represented  an  increase of $485,000  from the $13.8
million  reported for the year ended  December  31, 1998.  The ratio of interest
earning  assets to interest  bearing  liabilities  remained  fairly  consistent,
however the spread increased to 3.31% for 1999 from 3.19% for 1998.

     Provision for Loan Losses. The provision for loan losses for the year ended
December  31, 1999 was  $246,000  and  remained  consistent  with the year ended
December 31, 1998.

     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,
1999 was $810,000  compared to $812,000 for the year ended December 31, 1998 and
remained fairly consistent.


     Non-Interest  Expense.  Non-interest  expense was $6.1 million for the year
ended December 31, 1999 compared to $5.9 million for the year ended December 31,
1998,  an increase of $215,000 or 3.65%.  The  increase was  primarily  due to a
$334,000  increase in compensation and benfits expense and a $71,000 increase in
other expenses.


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<PAGE>



     Compensation expense increased due to the RRP expense allocation for a full
year as compared to eight months in 1998. Other expenses increased primarily due
to a  higher  franchise  tax for the  state  of  Delaware.  The  increases  were
partially offset by a decrease in data processing expense of $139,000 due to the
computer  conversion  which was completed in August 1998, and a $37,000 decrease
in occupancy  and  equipment  due to a $26,000  refund for property  taxes and a
decrease in the provision for property taxes due to reassessments.

     Income Taxes.  The provision for income taxes was $3.0 million for the year
ended December 31, 1999 compared to $3.1 million for the year ended December 31,
1998.

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

                                        8

<PAGE>



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 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.

                                        9

<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.



                                       10

<PAGE>



     The following table presents,  for the periods indicated,  the total dollar
amount of interest income from average interest-earning assets and the resultant
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates. A tax equivalent of 34% was used to compute
the yield on municipal  securities.  No other tax  equivalent  adjustments  were
made. All average balances for 1999 are daily average balances.  All other years
are monthly average balances. Non-accruing loans have been included in the table
as loans carrying a zero yield.

<TABLE>

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

                                              1999                              1998                          1997
                                 ---------------------------------------------------------------------------------------------------
                                    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)............    $ 228,768   $  18,642  8.15%  $ 207,629     $17,141   8.26%   $172,810       $14,669      8.49%
 Mortgage-backed securities &
  CMOs(1)....................          20,498       1,295  6.32      28,795       1,942   6.74      44,780         3,157      7.05
 Mutual funds(1)................        3,172         179  5.64       3,172         188   5.93       4,897           278      5.68
 Agencies/Other(1)..............       58,876       3,745  6.36      50,686       3,389   6.69      22,071         1,333      6.04
Municipal securities(1)........       18,684        1,477  7.91      10,889         812    7.46      5,565           442      7.94
 Federal funds sold.............        2,666         123  4.61       7,337         395   5.38      11,179           646      5.78
 Deposits with other institutions       3,744         181  4.83       4,803         338   7.04       2,761           176      6.37
 FHLB stock.....................        2,176         145  6.66       1,985         130   6.55       1,797           123      6.84
                                    ---------    --------          ---------    -------           ---------     ---------
  Total interest-earning assets       338,584      25,787  7.62     315,296      24,335   7.72     265,860        20,674      7.83
Non-interest earning assets.....       25,128                        13,962                         17,810
                                    ---------                       --------                     ---------
  Total assets................       $363,712                       $329,258                      $283,670
                                     =========                      ========                      ========

Interest-Bearing Liabilities:
 Money market...................     $  4,180         119  2.85      $ 4,962        139   2.80  $    5,169           159      3.08
 NOW............................       11,928         234  1.96       11,045        245   2.22      10,176           217      2.13
 Passbook savings...............       76,259       2,350  3.08       71,494      2,163   3.03      76,391         2,281      2.99
 Certificates of Deposit........      129,163       6,463  5.00      122,835      6,644   5.41     126,917         6,972      5.49
 Advances.......................       34,607       1,871  5.41       21,667      1,105   5.10       9,548           500      5.24
                                    ---------      -------         ---------    --------         ---------       -------
 Total interest-bearing liabilities  256,137       11,037  4.31      232,003     10,296   4.44     228,201        10,129      4.44
                                                   -------                                       ---------      --------
Non-interest bearing liabilities      24,277                           7,754                                      16,299
                                   ---------                      -----------                                 - ---------
  Total liabilities                  280,414                         239,757                                     244,500

Equity..........................      83,298                          89,501                                      39,170
                                    --------                      -----------                                 ----------
  Total liabilities and equity.     $363,712                       $ 329,258                                   $283,670
                                    ========                       =========                                   ========

Net interest-earning spread.....                 $ 14,750  3.31%                $13,763   3.19%                 $10,545       3.34%
                                                 ========  =====                =======   =====                 =======       ----
Margin..........................                           4.36%                          4.37%                               3.97%
                                                           =====                         ======                               ----
Assets to liabilities...........        132.19%                                  135.90%                         116.50%
                                        =======                                  ======                          ======
</TABLE>

(1)  Calculated based on amortized cost.


                                       11

<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>

                                                                                                Year Ended December 31,
                                               ------------------------------------------------------------------------------------
                                                   1998 vs. 1999                1997 vs. 1998               1996 vs. 1997
                                               ------------------------------------------------------------------------------------
                                                   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)
                                               ------------------------------------------------------------------------------------
                                                                            (Dollars in Thousands)
<S>                                            <C>     <C>       <C>       <C>      <C>     <C>         <C>       <C>       <C>
Interest-earning assets:
 Loans receivable..............................$1,725  $(224)   $ 1,501    $2,884   $(412)  $2,472      $1,755    $(154)    $1,601
 Mortgage-backed securities & CMO's............ (531)  (116)       (647)   (1,083)   (132)  (1,215)       (230)    (286)      (516)
 Mutual funds..................................   -      (9)         (9)     (102)     12      (90)        (50)     (10)       (60)
 Agencies and other............................  527   (171)        356     1,899     157    2,056         (38)      45          7
 Municipal securities..........................  614     51         665       263     (19)     244          42      (27)        15
 Federal funds sold............................ (222)   (50)       (272)     (209)    (42)    (251)        542      (14)       528
 Deposits with other institutions..............  (65)   (92)       (157)      142      20      162          53       28         81
 FHLB stock....................................   13      2          15        12      (5)       7          10        2         12
                                            -------- -------     -------   ------- -------  -------    -------    ------    -------
  Total interest-earning assets.............   2,061   (609)      1,452     3,806    (421)   3,385       2,084     (416)     1,668

Interest-bearing liabilities:
 Money market..................................  (22)     2         (20)       (6)    (14)     (20)         (4)      (4)        (8)
 NOW...........................................   19     30)        (11)       19       9       28           8        7         15
 Passbook Savings..............................  146     41         187      (148)     30     (118)        180      (19)       161
 Certificates of deposit.......................  332   (513)       (181)     (222)   (106)    (328)        116       29        145
 Advances......................................  696     70         766       618     (13)     605         326       (4)       322
                                              ------  -----       -----     -----   ------  ------     -------    ------    --------
  Total interest bearing liabilities...........1,171   (430)        741       261     (94)     167         626        9        635
                                                      -----       ------    -----   ------  -------    -------    ------    --------

Net interest/spread..........................   $890  $(179)       $711   $ 3,545    (327)  $3,218      $1,458    $(425)    $1,033
                                                ====  ======       ====   ========  ======  =======     ======     =====    =======
</TABLE>




                                                        12

<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
Directorsreviews  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, 1999, $97.1 million
or 40.8% 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,  1999,  $10.3
million or 60.6% 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 $19.7 million or
20.4% 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, 1999, 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 300 basis points in 100 point increments.



                                       13

<PAGE>


<TABLE>


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

     +300                 $48,492           $(26,478)              (35)%
     +200                  57,325            (17,645)              (24)
     +100                  66,365            ( 8,605)              (11)
      ---                  74,970               ---                 ---
     -100                  82,036              7,066                 9
     -200                  88,452             13,482                18
     -300                  94,645             19,675                26

</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 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

                                       14

<PAGE>



historically maintained its liquidity ratio for regulatory purposes at levels in
excess of those required. At December 31, 1999, First Security's liquidity ratio
for regulatory purposes was 9.19%.

     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 $6.5 million, $7.4
million and $2.8 million for the years ended December 31, 1999,  1998, and 1997,
respectively.  Net cash used in  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 1999 and 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, 1999,
cash and  short-term  investments  totaled $6.3  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, 1999 the Company had  outstanding  commitments to originate
loans of $3.3 million,  $344,000 of which had adjustable interest rates with the
remaining commitments having 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, 1999 totaled  $122.7  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, 1999,  First Security was in compliance with
all applicable  capital  requirements on a fully phased-in basis. See Note 10 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  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.



                                       15

<PAGE>

Impact of New Accounting Standards

     Statement  of  Financial  Accounting  Standards  No. 133,  "Accounting  for
Derivative  Instruments and Hedging  Activities",  requires  companies to record
derivatives  on the  balance  sheet as assets or  liabilities,  measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted  for  depending on the use of the  derivative  and whether it
qualifies for hedge  accounting.  The key criterion for hedge accounting is that
the  hedging  relationship  must be highly  effective  in  achieving  offsetting
changes  in fair  value or cash  flows.  SFAS 133 does not  allow  hedging  of a
security which is classified as held-to-maturity,  accordingly, upon adoption of
SFAS 133,  companies  may  reclassify  any  security  from  held-to-maturity  to
available-for-sale  if they wish to be able to hedge the security in the future.
SFAS 133 is effective  beginning  January 1,2001 with early adoption  encouraged
for any fiscal  quarter  beginning  July 1, 1998 or later,  with no  retroactive
application.  Management  adopted  SFAS 133  effective  January  1, 2000 and the
adoption  did  not  have  a  significant  impact  on  the  Company's   financial
statements.


Year 2000

     The Company  successfully  completed its Year 2000  changeover  without any
problems or  disruptions  to operations.  While  management  believes that it is
unlikely,  there can be no  assurance  that  problems  not yet  apparent  to the
Company or its vendors will not arise as the year  progresses.  Management  will
continue to monitor all business  processes and relationships with third parties
to ensure that all processes continue to function  properly.  Total expenditures
on the Year 2000  project  through  December  31,  1999 were  $583,000  which is
consistent with the amount that management estimated for the project.


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.

                                       16

<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,
1999 and 1998, 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,  1999.   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, 1999 and 1998,
and the results of their  operations  and their cash flows for each of the three
years in the period ended  December  31,  1999,  in  conformity  with  generally
accepted accounting principles.



                                                  Crowe, Chizek and Company LLP



Oak Brook, Illinois
February 4, 2000






                                                                             17.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1999 and 1998
                    (Dollars in thousands, except share data)

<TABLE>
<S>                                                       <C>                   <C>
                                                                 1999                 1998
                                                                 ----                 ----
ASSETS
Cash and due from banks                                    $      6,057         $     15,641
Federal funds sold            200              9,189
                      ------------     --------------
  Total cash and cash equivalents                                 6,257               24,830

Time deposits in other financial institutions                       ---                  200
Securities available-for-sale                                    20,622               26,343
Securities held-to-maturity (fair value:  $89,850 in 1999
 and $58,809 in 1998)                                            92,908               58,267
Loans receivable, net of allowance for loan losses              241,168              218,311
Federal Home Loan Bank stock, at cost                             2,315                2,131
Premises and equipment, net                                       3,672                3,967
Accrued interest receivable                                       2,976                2,475
Intangible assets                                                   190                  236
Other assets                                                      2,184                1,290
                                                           ------------         ------------

  Total assets                                             $    372,292         $    338,050
                                                           ============         ============

LIABILITIES
Deposits
  Non-interest-bearing                                     $      6,089         $      6,379
  Interest-bearing                                              232,034              214,116
                                                           ------------         ------------
                                                                238,123              220,495
Advance payments by borrowers for taxes and insurance             2,811                2,432
Advances from Federal Home Loan Bank                             46,300               29,000
Accrued interest payable and other liabilities                    1,902                1,536
                                                           ------------         ------------
  Total liabilities                                             289,136              253,463

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                                       64,324               64,952
Unearned ESOP shares                                             (4,239)              (4,582)
Unearned stock awards                                            (3,075)              (3,810)
Treasury stock, at cost (979,360 shares in 1999 and

</TABLE>

--------------------------------------------------------------------------------
           See accompanying notes to consolidated financialstatements.


<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.
<S>                                                         <C>                 <C>
  553,488 shares in 1998)                                       (13,227)              (8,234)
Retained earnings, substantially restricted                      39,914               36,225
Accumulated other comprehensive income                             (605)                 (28)
                                                             -----------        ------------
 Total shareholders' equity                                      83,156               84,587

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


   Total liabilities and shareholders' equity              $    372,292         $    338,050
                                                           ============         ============
</TABLE>

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

          See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.

                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 1999, 1998, and 1997
                  (Dollars in thousands, except per share data)


<S>                                                    <C>            <C>        <C>
                                                             1999           1998         1997
                                                             ----           ----         ----
Interest and dividend income
  Loans                                                  $   18,642   $   17,141   $     14,669
  Securities
    Taxable                                                   2,939        3,577          1,561
    Tax-exempt                                                  975          536            302
   Mortgage-backed securities                                 2,279        1,942          3,198
   Federal funds sold and other interest earning assets         450          863            944
                                                         ----------   ----------   -------------
                                                             25,285       24,059         20,674

Interest expense
  NOW and money market                                          353          384            376
  Passbook savings                                            2,350        2,163          2,281
  Certificates of deposit                                     6,463        6,644          6,972
  Federal Home Loan Bank advances                             1,871        1,105            500
                                                         ----------   ----------     ----------
                                                             11,037       10,296         10,129
                                                         ----------   ----------     ----------


Net interest income                                          14,248       13,763         10,545

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


Net interest income after provision for loan losses          14,002       13,517          9,807

Noninterest income
  Deposit service charges                                       368          416            371
  Insurance commissions                                          53           45             47
  Net gain (loss) on sales and calls of securities               12           40            (32)
  Other income                                                  377          311            206
                                                         ----------   ----------     ----------
                                                                810          812            592

Noninterest expense
  Compensation and benefits                                   3,622        3,288          2,669
  Occupancy and equipment                                       695          732            679
  Data processing                                               342          481            297
  Federal insurance premiums                                    204          212            183
  Charitable and foundation contributions                         3            9          2,557
  Other expense                                               1,236        1,165          1,172
                                                         ----------   ----------     ----------
                                                              6,102        5,887          7,557
                                                         ----------   ----------     ----------
Income before income taxes                                    8,710        8,442          2,842
</TABLE>
--------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.



<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.
<S>                                                    <C>            <C>         <C>
Income tax expense                                            3,028        3,098          1,017
                                                         ----------   ----------     ----------


Net income                                               $    5,682   $    5,344   $      1,825
                                                         ==========   ==========      ==========

Earnings (loss) per share
    Basic and diluted                                    $     1.14   $      .93   $       (.11)
                                                         ==========   ==========         =======
</TABLE>
--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.

                                                                              4.

<PAGE>

<TABLE>

                        FIRST SECURITYFED FINANCIAL, INC.

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                  Years ended December 31, 1999, 1998, and 1997
                  (Dollars in thousands, except per share data)


<S>                                                                 <C>         <C>               <C>
                                                                         1999           1998            1997
                                                                         ----           ----            ----

Net income                                                           $     5,682    $     5,344    $     1,825

Other comprehensive income
  Unrealized holding gains and losses on securities
    available-for-sale                                                      (933)            62            234
   Less reclassification adjustments for gains and losses
    recognized in income                                                      12             40            (32)
                                                                      ----------    -----------    ------------
   Net unrealized gain and losses                                           (945)            22            266
   Tax effect                                                                368             (8)          (104)
                                                                    ------------    ------------   ------------
                                                                            (577)            14            162
                                                                    ------------    ------------    -----------
Comprehensive income                                              $        5,105    $     5,358    $     1,987
                                                                  ==============    ============   ============
</TABLE>
--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.



<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years ended December 31, 1999, 1998, and 1997
                  (Dollars in thousands, except per share data)


                                                            Accumulated
                                                                            Other   Total
                                           Additional  Unearned     Unearned                           Compre-   Share-
                                   Common  Paid-in     ESOP         Stock       Treasury   Retained    hensive   holders'
   Stock Capital                                    SharesAwards  StockEarnings  IncomeEquity

<S>                             <C>       <C>         <C>         <C>          <C>         <C>         <C>       <C>
Balance at
  January 1, 1997                $   ---   $   ---     $   ---     $   ---      $   ---     $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 ($.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>
--------------------------------------------------------------------------------
                                   (Continued)




<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  Years ended December 31, 1999, 1998, and 1997
                  (Dollars in thousands, except per share data)


                                   Accumulated
                                                           OtherTotal
                                          Additional    Unearned      Unearned                                 Compre-     Share-
                              Common      Paid-in       ESOP          Stock      Treasury       Retained       hensive     holders'
                          StockCapital  SharesAward   StockEarning  IncomeEquity

<S>                         <C>          <C>          <C>          <C>           <C>            <C>            <C>        <C>
Net income                  $  ---       $  ---        $  ---       $  ---       $  ---         $ 5,682         $  ---     $5,682

ESOP shares earned             ---           60           343          ---          ---             ---            ---        403

Stock awards earned            ---          ---           ---          735          ---             ---            ---        735

Issuance of stock to
  Foundation, net of related
  tax benefit                  ---         (688)          ---          ---          712             ---            ---         24

Purchase of treasury stock     ---          ---           ---          ---       (5,705)            ---            ---      (5,705)

Dividends ($.38 per share)     ---          ---           ---          ---          ---          (1,993)           ---      (1,993)

Change in fair value of
  securities, net of income
  taxes and reclassification
  effects                      ---          ---           ---          ---          ---             ---           (577)       (577)
                         ---------     --------       -------     --------      -------        --------       --------    --------

Balance at
  December 31, 1999      $     64       $64,324       $(4,239)     $(3,075)    $(13,227)        $39,914       $   (605)    $83,156
                          =========    ========      ========     ========     ========         ========      ========     =======
</TABLE>



          See accompanying notes to consolidated financial statements.


<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1999, 1998, and 1997
                             (Dollars in thousands)


<S>                                                                   <C>            <C>        <C>
                                                                             1999         1998         1997
                                                                             ----         ----         ----
Cash flows from operating activities
 Net income                                                            $    5,682   $    5,344   $    1,825
 Adjustments to reconcile net income to net cash from
   operating activities
    Depreciation and amortization of intangibles                              381          377          336
    Net amortization of securities                                            190          168          173
    Net (gain) loss on sales and calls of securities                          (12)         (40)          32
    Provision for loan losses                                                 246          246          738
    Net (gain) loss on real estate owned                                      ---           (3)           3
    Deferred loan origination fees                                             11           (7)          26
    Provision for deferred income taxes                                        26         (119)        (888)
    ESOP compensation expense                                                 403          520          301
    Stock award compensation expense                                          735          467          ---
    Accrued charitable contribution of Company stock                          ---          ---        2,500
    Net change in
      Accrued interest receivable                                            (501)        (404)        (307)
      Other assets                                                           (463)         571         (175)
      Accrued interest payable and other liabilities                         (214)         235       (1,754)
                                                                        ---------   ----------   ----------
        Net cash provided by operating activities                           6,484        7,355        2,810

Cash flows from investing activities
 Purchase of securities available-for-sale                                 (1,062)      (8,800)     (10,184)
 Purchase of securities held-to-maturity                                  (50,311)     (23,402)     (24,684)
 Proceeds from sales of securities available-for-sale                       4,373        6,745        2,587
 Proceeds from calls and maturities of securities                          10,278       19,130        9,200
 Net loan originations                                                    (23,180)     (32,291)     (23,914)
 Principal payments on mortgage-backed and related securities               6,680       11,094       12,272
 Change in time deposits in other financial institutions                      200          ---          ---
 Purchase of Federal Home Loan Bank stock                                    (184)        (279)        (179)
 Property and equipment expenditures                                          (40)        (597)         (44)
 Real estate owned expenditures                                               ---          ---          (35)
 Proceeds from sale of real estate owned                                      ---           53          261
                                                                        ---------   ----------   ----------
      Net cash used in investing activities                               (53,246)     (28,347)     (34,720)

Cash flows from financing activities
 Net change in deposits                                                    17,628       10,395       (9,405)
 Net change in advance payments by borrowers for taxes
  and insurance                                                               379           32          282

</TABLE>
--------------------------------------------------------------------------------
                                   (Continued)



<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.
<S>                                                                       <C>          <C>          <C>
 Change in advances from Federal Home Loan Bank                            17,300       19,000        6,000
 Dividends paid                                                            (1,413)        (409)         ---
 Purchase of treasury stock                                                (5,705)     (13,286)         ---
 Net proceeds from stock issuance                                             ---          ---       57,823
                                                                          ----------   ----------   ----------
   Net cash provided by financing activities                               28,189       15,732       54,700
                                                                          ----------   ----------   ----------
</TABLE>


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


                                   (Continued)


<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1999, 1998, and 1997
                             (Dollars in thousands)



                                                               1999         1998         1997
                                                               ----         ----         ----
<S>                                                    <C>            <C>          <C>
Net change in cash and cash equivalents                  $  (18,573)  $   (5,260)  $   22,790

Cash and cash equivalents at beginning of year               24,830       30,090        7,300
                                                         ----------   ----------   ----------

Cash and cash equivalents at end of year                 $    6,257   $   24,830   $   30,090
                                                         ==========   ==========   ==========

Supplemental disclosures of cash flow information
    Cash paid during the period for
       Interest                                          $   11,027   $   10,292   $   10,146
       Income taxes                                           3,054        3,083        1,667

</TABLE>
--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (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 real estate loans and
securities, with operations conducted through its main office and three branches
in Cook County, Illinois, 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
shareholders' equity.  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

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

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



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.

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

                                   (Continued)


<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (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.  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 to identify a credit
for  consideration  for  impairment  or  nonaccrual  status  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 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.

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

                                   (Continued)


<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (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.  Net intangible assets
at December 31, 1999 and 1998 aggregated $190,000 and $236,000, respectively.

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. Income tax expense
is the total of the current year income tax due or refundable  and the change in
deferred tax assets and liabilities.

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

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

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

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

                                   (Continued)


<PAGE>
<TABLE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 2 - SECURITIES

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

                                                             .......................1999......................
                                                                              Gross        Gross
                                                              Amortized    Unrealized   Unrealized      Fair
                                                                Cost          Gains       Losses        Value
<S>                                                         <C>            <C>         <C>          <C>
    Securities available-for-sale
       U.S. Treasury                                         $      259   $       76   $        -   $      335
       Municipal                                                  7,806            -         (436)       7,370
       Corporate                                                    250            -          (20)         230
       Mutual funds                                               3,172            -         (174)       2,998
       Other equity securities                                      369            -          (90)         279
                                                             ----------   ----------   ----------   ----------
                                                                 11,856           76         (720)      11,212

       Mortgage-backed securities
          Federal Home Loan Mortgage Corporation                  4,741            2         (193)       4,550
          Government National Mortgage Association                1,383            6          (18)       1,371
          Federal National Mortgage Association                   3,634            -         (145)       3,489
                                                             ----------   ----------   ----------   ----------
                                                                  9,758            8         (356)       9,410
                                                             ----------   ----------   ----------   ----------

                                                             $   21,614   $       84   $   (1,076)  $   20,622
                                                             ==========   ==========   ==========   ==========

                                                             .......................1999......................
                                                                              Gross        Gross
                                                              Amortized    Unrealized   Unrealized      Fair
                                                                Cost          Gains       Losses        Value
    Securities held-to-maturity
       U.S. government agencies                              $   69,763   $       69   $   (2,484)  $   67,348
       Municipal                                                 15,568           69         (649)      14,988
                                                             ----------   ----------   ----------   ----------
                                                                 85,331          138       (3,133)      82,336

       Mortgage-backed securities
          Federal Home Loan Mortgage Corporation                  1,846           16          (68)       1,794
          Government National Mortgage Association                3,530           61          (20)       3,571
          Federal National Mortgage Association                   1,043            5          (19)       1,029
          Collateralized mortgage obligations                     1,158            -          (38)       1,120
                                                             ----------   ----------   ----------   ----------
                                                                  7,577           82         (145)       7,514
                                                             ----------   ----------   ----------   ----------

                                                             $   92,908   $      220   $   (3,278)  $   89,850
                                                             ==========   ==========   ==========   ==========

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

                                   (Continued)


<PAGE>

<TABLE>

                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 2 - SECURITIES (Continued)

                                                             .......................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
       Municipal                                                  7,504          175            -        7,679
       Corporate                                                    250            -           (8)         242
       Mutual funds                                               3,172           22          (30)       3,164
       Other equity securities                                      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
       Municipal                                                  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)


<PAGE>


<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 2 - SECURITIES (Continued)

Sales of securities are summarized as follows:

                                     1999            1998            1997
                                 ------------     ------------    ------------

     Proceeds                    $      4,373     $      6,745    $      2,587
     Gross realized gains                  23               40              31
     Gross realized losses                 11                -              63

The carrying  values and fair values of debt securities as of December 31, 1999,
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 one year through five years       $        250    $        230
    Due after ten years                                8,065           7,705
                                                ------------    ------------
                                                       8,315           7,935

    Mutual funds                                       3,172           2,998
    Other equity securities                              369             279
    Mortgage-backed securities
      and collateralized
      mortgage obligations                             9,758           9,410
                                                ------------    ------------
                                                      13,299          12,687
                                                ------------    ------------

                                                $     21,614    $     20,622
                                                ============    ============

Securities held-to-maturity
 Due in one year or less                        $        400    $        399
 Due after one year through five years                17,698          17,349
 Due after five years through ten years               53,333          51,289
 Due after ten years                                  13,900          13,298
                                                ------------    ------------
                                                      85,331          82,336

 Mortgage-backed securities and collateralized
   mortgage obligations                                7,577           7,514
                                                ------------    ------------


                                   (Continued)

                                                                            18.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)




                                                $     92,908    $     89,850
                                                ============    ============




                                   (Continued)

                                                                             19.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 2 - SECURITIES (Continued)

Securities  in the amount of  $15,596,000  and  $250,000  were pledged to secure
government deposits at December 31, 1999 and 1998.


NOTE 3 - LOANS RECEIVABLE

Loans receivable consisted of the following:

                                         1999                         1998
                                    ---------------           ----------------
First mortgage loans,
  including loans purchased
   Secured by one-to-four
      -family residences            $       200,201          $         182,452
   Secured by multifamily
       residences                            13,389                     11,313
   Secured by commercial
       real estate                           24,388                     21,433
   Construction loans                         3,800                          -
                                    ---------------           ----------------
                                            241,778                    215,198

Home equity loans                             5,103                      5,158

Net deferred loan origination fees           (1,500)                    (1,489)
   Construction loans in process             (3,467)                         -
                                    ---------------           ----------------
   Total mortgage loans                     241,914                    218,867


Consumer and other loans
   Automobile                                     3                         16
   Share loans                                1,164                      1,091
   Other                                        410                        415
                                    ---------------           ----------------
                                              1,577                      1,522
Unearned discounts                               (8)                        (9)
                                    ---------------           ----------------
Total consumer and other loans                1,569                      1,513
 Allowance for loan losses                   (2,315)                    (2,069)
                                    ---------------           ----------------

                                    $       241,168           $        218,311
                                    ===============           ================

There were no nonaccrual  loans at December 31, 1999.  The principal  balance of
loans on nonaccrual status at December 31, 1998 approximated $9,000. The Company
maintains an allowance for uncollected interest


                                   (Continued)

                                                                             20.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



for mortgage  loans with  payments  past due. The  allowance  was  approximately
$99,000 and $116,000 at December 31, 1999 and 1998, respectively.



                                   (Continued)

                                                                             21.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (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:

                                     1999            1998           1997
                                  -----------    -----------    -----------
     Balance, beginning of year   $     2,069    $     1,828    $     1,520
     Provision for loan losses            246            246            738
          Recoveries                        -              -              4
          Charge-offs                       -             (5)          (434)
                                  -----------    -----------    -----------
          Balance, end of year    $     2,315    $     2,069    $     1,828
                                  ===========    ===========    ===========

The average  balance of impaired  loans was $18,000 for the year ended  December
31,  1998.  No interest  income was  recognized  on these  loans.  There were no
impaired loans at December 31, 1999 and 1997 or during 1999 and 1997.


NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:
                                                        1999            1998
                                                     -----------    -----------

     Land                                            $       545    $       545
     Buildings and improvements                            3,624          3,621
     Furniture and equipment                               2,577          2,544
     Real estate acquired for future expansion
                                                             377            377
                                                     -----------    -----------
         Total cost                                        7,123          7,087

Less accumulated depreciation                             (3,451)        (3,120)
                                                     -----------    -----------
                                                     $     3,672    $     3,967
                                                     ===========    ===========


NOTE 6 - DEPOSITS

Certificate  of deposit  accounts  with  balances of  $100,000  or more  totaled
approximately  $43,966,000  and  $30,174,000  at  December  31,  1999 and  1998,
respectively.

At December 31, 1999, the scheduled maturities of certificates of deposit are as
follows:

         2000       $    122,679
         2001              7,931
         2002              4,342
         2003              1,862


                                   (Continued)

                                                                             22.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



         2004              4,197
                  --------------
                  $      141,011
                  ==============


                                   (Continued)

                                                                             23.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 7 - ADVANCES FROM FEDERAL HOME LOAN BANK

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

                              1999                            1998
                     -------------------------    ----------------------------
                       Weighted                     Weighted
 FHLB Advances Due   Average Rate     Amount      Average Rate         Amount
                     -------------------------    ----------------------------
      2000               6.04%      $    7,000        5.78%         $    2,000
       2001              5.45                         2,000             5.27
       3,000
       2002              5.71                         4,000             5.62
       5,000
      2003                   -               -        5.18               3,000
      2004               5.55           13,000           -                   -
      2008               5.09           16,000        4.98              16,000
      2009               5.00            2,000           -                   -
    Open line            4.74            2,300           -                   -
                                    ----------                      ----------

                         5.41%      $   46,300        5.20%         $   29,000
                       ======       ==========       =====          ==========

The Company  maintains a collateral  pledge agreement  covering advances whereby
the Company has agreed to at all times keep on hand,  free of all other pledges,
liens,  and  encumbrances,  whole first mortgage  loans on improved  residential
property not more than 90 days delinquent,  aggregating no less than 167% of the
outstanding advances from the Federal Home Loan Bank of Chicago.


NOTE 8 - INCOME TAXES

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

                          1999           1998            1997
                       -----------    -----------    -----------
     Current
         Federal       $     2,502    $     2,680    $     1,585
         State                 500            537            320
     Deferred                   26           (119)          (888)
                       -----------    -----------    -----------

                       $     3,028    $     3,098    $     1,017
                       ===========    ===========    ===========



                                   (Continued)

                                                                             24.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 8 - INCOME TAXES (Continued)

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

                                                                    1999             1998
                                                               ------------     --------------
<S>                                                            <C>              <C>
     Deferred tax assets
         Allowance for loan losses                             $        515     $          324
         Amortization of intangible assets                               54                 56
         Contribution carryforward                                    1,087              1,376
         Unrealized loss on securities available-for-sale               387                 19
         Other                                                          256                145
                                                               ------------     --------------
                                                                      2,299              1,920
     Deferred tax liabilities
         Depreciation                                                   (85)               (75)
         FHLB stock dividend                                            (65)               (65)
         Loan fees                                                     (359)              (332)
                                                               ------------     --------------
                                                                       (509)              (472)

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

         Total net deferred tax asset                          $      1,610     $        1,268
                                                               ============     ==============
</TABLE>

The  valuation  allowance  at December 31, 1999 and 1998  reflects  management's
estimate of temporary deductible differences that may not be realized.

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,
                                          ---------------------------------------------------------------------
                                                  1999                     1998                        1997
                                          -------------------      -------------------       ------------------
<S>                                       <C>            <C>       <C>            <C>        <C>           <C>
    Income taxes computed at
      statutory rate of 34%               $   2,961      34.0%     $   2,870      34.0%      $    966      34.0%
    Tax-exempt income                          (307)     (3.5)          (168)     (2.0)           (90)     (3.2)
    State income taxes, net of
      federal income tax benefit                378       4.3            344       4.1            140       4.9
    Other                                        (4)        -             52        .6              1        .1
                                          ---------   -------      ---------    ------       --------    ------

                                          $   3,028      34.8%     $   3,098      36.7%      $  1,017      35.8%
                                          =========   =======      =========    ======       ========    ======
</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 in the  financial  statements.  Retained
earnings at December  31, 1999  include  approximately  $2,023,000  for which no
deferred federal income tax liability has been recorded.



                                   (Continued)

                                                                             25.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 9 - 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:

                                                     1999          1998
                                                  ----------    ---------
     Commitments to extend credit                 $    3,252    $  3,009
        Unused lines of credit                         7,541       5,803

At December 31, 1999,  commitments  to extend  credit  consist of  $2,908,000 of
fixed-rate  loan  commitments  with rates  ranging  from  6.75% to 9.00%.  These
commitments are due to expire within 60 days of issuance. Since many commitments
expire without being used, the amounts above do not necessarily represent future
cash commitments.  Collateral may be obtained upon exercise of a commitment. The
amount of collateral is determined by management and may include  commercial and
residential real estate and other business and consumer assets.

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


NOTE 10 - 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


                                   (Continued)

                                                                             26.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



defined).  Management believes, as of December 31, 1999, that the Bank meets all
capital adequacy requirements to which it is subject.



                                   (Continued)

                                                                             27.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 10 - REGULATORY MATTERS (Continued)

As of December 31, 1999, the most recent  notification from the Office of Thrift
Supervision  categorized  the  Bank as well  capitalized  under  the  regulatory
framework for prompt  corrective  action. To be categorized as well capitalized,
the Bank must maintain minimum total risk-based,  Tier I risk-based,  and Tier I
leverage ratios as set forth in the following table.  There are no conditions or
events since that notification that management  believes have changed the Bank's
category.

The Bank's actual capital amounts and ratios are 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, 1999:
    Total capital (to risk-weighted
      assets)                           $  71,337     40.6%      $  14,049       8.0%     $  17,561      10.0%
    Tier I capital (to risk-weighted
      assets)                              69,142     39.4           7,024       4.0         10,537       6.0
    Tier I (core) capital (to adjusted
      total assets)                        69,142     19.1          14,488       4.0         18,110       5.0

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
</TABLE>


NOTE 11 - EARNINGS PER COMMON SHARE

A  reconciliation  of the numerator and  denominator of the earnings  (loss) per
common share  computation for the years ended December 31, 1999,  1998, and 1997
is presented below.

                                                          1999    1998    1997
                                                         ------  ------ -------
Earnings per common share
 Net income                                              $5,682  $5,344 $ 1,825
 Less:  net income of Bank prior to conversion                -       -  (2,518)
                                                         ------  ------ -------

   Net income (loss) attributable to common shareholders $5,682  $5,344 $  (693)
                                                         ======  ====== =======


                                   (Continued)

                                                                             28.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)




Weighted average common shares outstanding                   4,834  5,548  5,895
Add: shares committed to be issued to charitable foundation    150    200    250
                                                            ------ ------ ------

     Total weighted average common shares outstanding        4,984  5,748  6,145
                                                            ====== ====== ======

         Basic earnings (loss) per share                    $1.14  $ .93  $(.11)
                                                            =====  =====  =====

NOTE 11 - 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 12 - RELATED PARTY TRANSACTIONS

The Company has lending  transactions with directors,  executive  officers,  and
their  associates.  Activity in these  accounts is summarized as follows for the
year ended December 31, 1999.

         Balance at beginning of year                $      181
         Loans disbursed                                  5,811
         Principal repayments                             3,684

         Balance at end of year                      $    2,308


NOTE 13 - STOCK-BASED COMPENSATION PLANS

As  part  of the  conversion  transaction  described  in Note  15,  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


                                   (Continued)

                                                                             29.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



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 1999, 1998, and 1997, 34,294,  35,334, and 19,154 shares of stock with an
average fair value of $11.75,  $14.72, and $15.74 per share were committed to be
released,  resulting in ESOP  compensation  expense of $402,909,  $520,122,  and
$301,484 respectively. Shares held by the ESOP at December 31 are as follows:



                                   (Continued)

                                                                             30.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 13 - STOCK-BASED COMPENSATION PLANS (Continued)

                                                 1999            1998
                                             ----------     -----------
                                                          (Thousands)

     Allocated shares                                89              54
     Unallocated shares                             424             459

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

     Fair value of unallocated shares        $    4,662     $     5,956
                                             ==========     ===========

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

A summary of the status of the  Company's  stock option plan and changes  during
the years are presented below:
                                     Weighted-              Weighted-
                                      Average                Average
                                       1999     Exercise      1998     Exercise
                                      Shares      Price      Shares      Price
                                       -----  ----------    --------  ----------
                                                      (Thousands)

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

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

Options exercisable at end of year       104                       -
Weighted-average fair value of
  options granted during year          $   -                $   6.48

All of the outstanding options at December 31, 1999 relate to options granted in
May 1998 at an exercise  price of $16.68 and have a remaining  life of 8.3 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


                                   (Continued)

                                                                             31.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



determined  based on the fair value at the grant dates for awards under the plan
in 1999 and 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.



                                   (Continued)

                                                                             32.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 13 - STOCK-BASED COMPENSATION PLANS (Continued)

                                                          1999           1998
                                                      -----------    -----------

Net income as reported                                $     5,682    $     5,344
Pro forma net income                                        5,009          4,896
Earnings per share as reported, basic and diluted            1.14            .93
Pro forma earnings per share, basic and diluted              1.01            .85

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  shareholders'  equity.  MRP
compensation  expense totaled $735,000 and $467,000 for the years ended December
31, 1999 and 1998, respectively.


NOTE 14 - 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>

                                                               1999                  1998
                                                    ----------------------- ------------------------
                                                     Approximate  Estimated  Approximate  Estimated
                                                      Carrying      Fair      Carrying      Fair
                                                       Amount       Value      Amount       Value
                                                    ------------ ---------- ----------- ------------
<S>                                                 <C>          <C>         <C>          <C>
Financial assets
   Cash and cash equivalents                        $   6,257    $   6,257   $  24,830    $  24,830
   Time deposits in other financial institutions            -            -         200          200
   Securities available-for-sale                       20,622       20,622      26,343       26,343
   Securities held-to-maturity                         92,908       89,850      58,267       58,809
   Loans, net of allowance for loan losses            241,168      238,121     218,311      221,849
   Accrued interest receivable                          2,976        2,976       2,475        2,475

Financial liabilities
   NOW and money market accounts                      (21,932)     (21,932)    (21,497)     (21,497)
   Savings                                            (75,180)     (75,180)    (74,966)     (74,966)
   Time deposits                                     (141,011)    (141,573)   (124,032)    (125,326)
   Advance payments by borrowers for taxes
     and insurance                                     (2,811)      (2,811)     (2,432)      (2,432)
</TABLE>


                                   (Continued)

                                                                             33.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



 Advances from Federal Home Loan Bank  (46,300)  (43,123)   (29,000)   (27,989)
 Accrued interest payable                 (530)     (530)      (520)      (520)



                                   (Continued)

                                                                             34.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 14 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

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.

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, 1999 and 1998, 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, 1999 and 1998,  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, 1999 and 1998, the fair value would have been


                                   (Continued)

                                                                             35.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



achieved,  because the market value may differ  depending on the  circumstances.
The fair  values  at  December  31,  1999 and 1998  should  not  necessarily  be
considered to apply at subsequent dates.



                                   (Continued)

                                                                            36.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 15 - 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 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  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.  The
Company  contributed  50,000 shares to the  Foundation in both December 1999 and
1998.




                                   (Continued)

                                                                             37.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 16 - 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
for 1997 reflect the period October 31, 1997 through December 31, 1997.

                            CONDENSED BALANCE SHEETS
                           December 31, 1999 and 1998

                                                 1999            1998
                                             -----------    -----------
ASSETS
Cash and cash equivalents                    $       353    $     1,164
Securities available-for-sale                      7,879         10,387
ESOP loan                                          4,357          4,614
Investment in bank subsidiary                                    70,058
                                                                 67,438
Accrued interest receivable and other assets                      1,127
                                                            -----------
                                                                  1,235
                                                            -----------
                                                            $    83,774
                                                            ===========
                                                            $    84,838
                                                            ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued expenses and other liabilities       $       618    $       251
Shareholders' equity                              83,156         84,587
                                             -----------    -----------

                                             $    83,774    $    84,838
                                             ===========    ===========



                                   (Continued)

                                                                             38.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 16 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)


                         CONDENSED STATEMENTS OF INCOME
               For the years ended December 31, 1999 and 1998 and
              for the period October 31, 1997 to December 31, 1997
<TABLE>
<CAPTION>
<S>                                                   <C>            <C>            <C>

                                                          1999          1998           1997
                                                      -----------    -----------    -----------
Income
     Dividend income                                       $3,500         $    -        $     -
     Securities                                               505            869             33
     ESOP loan                                                 31            232            559
     Gain on sale of securities                                19             40              -
     Other income                                               1              -              -
        Total income                                        4,337          1,234             92

Other expenses
     Charitable contributions                                   -              -          2,500
     Other operating expenses                                 184            198              -
                                                      -----------    -----------    -----------
                                                              184            198          2,500


Income (loss) before income taxes and equity in
  undistributed earnings of bank subsidiary                 4,153          1,036         (2,408)

Income tax expense (benefit)                                  125            270           (939)
                                                      -----------    -----------    -----------


Income (loss) before equity in undistributed                4,028            766         (1,469)
  earnings of bank subsidiary

Equity in undistributed earnings of bank subsidiary         1,654          4,578            776
                                                      -----------    -----------    -----------

Net income (loss)                                     $     5,682    $     5,344    $      (693)
                                                      ===========    ===========    ===========

</TABLE>



                                   (Continued)

                                                                             39.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 16 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)


                       CONDENSED STATEMENTS OF CASH FLOWS
               For the years ended December 31, 1999 and 1998 and
              for the period October 31, 1997 to December 31, 1997
<TABLE>
<S>                                                                 <C>         <C>         <C>

                                                                        1999       1998        1997
                                                                     ---------- --------    ---------
Operating activities
     Net income (loss)                                               $ 5,682    $  5,344    $    (693)
     Adjustments to reconcile net income (loss) to net cash
      provided by operating activities
         Equity in undistributed earnings of bank subsidiary          (1,654)     (4,578)        (776)
         Accrued charitable contribution of Company stock                  -           -        2,500
         Net accretion                                                    (3)         (6)           -
         Gain on sales of securities                                     (19)        (40)           -
         Change in
              Other assets                                               388        (150)      (1,337)
              Other liabilities                                         (213)     (5,240)         595
                                                                     -------    --------    ---------
                  Net cash provided by (used in)
                    operating activities                               4,181      (4,670)         289

Investing activities
     Purchase of bank subsidiary stock                                     -           -      (28,912)
     Purchase of securities available-for-sale                        (1,062)     (8,759)     (10,169)
     Proceeds from sales of securities                                 2,931       6,745            -
     Proceeds from calls of maturitites                                    -       2,000            -
     Payment received on loan to ESOP                                    257         256          256
                                                                     -------    --------    ---------
         Net cash provided by (used in) investing activities           2,126         187      (38,825)

Financing activities
     Net proceeds from sale of common stock                                -           -       57,823
     Dividends paid                                                   (1,413)       (409)           -
     Purchase of treasury stock                                       (5,705)    (13,286)           -
                                                                     -------    --------    ---------
         Net cash provided by (used in) financing activities          (7,118)    (13,695)      57,823
                                                                     -------    --------    ---------

Net change in cash and cash equivalents                                 (811)    (18,123)      19,287
</TABLE>



                                   (Continued)

                                                                             40.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



Cash and cash equivalents at beginning of period      1,164    19,287         -
                                                   --------  --------  --------

Cash and cash equivalents at end of period         $    353  $  1,164  $ 19,287
                                                   ========  ========  ========




                                   (Continued)

                                                                             41.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)



NOTE 17 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

                                           Three Months Ended
                           ---------------------------------------------------
                             March 31      June 30  September 30   December 31
                           -----------  ----------   -----------  ------------
1999

Interest income            $     6,007  $    6,040   $     6,361  $     6,877
Interest expense                 2,599       2,616         2,811        3,011
                           -----------  ----------   -----------  -----------

Net interest income              3,408       3,424         3,550        3,866

Provision for loan losses           62          62            61           61
Noninterest income                 152         189           223          246
Noninterest expense              1,501       1,478         1,471        1,652
                           -----------  ----------   -----------  -----------

Income before income taxes       1,997       2,073         2,241        2,399

Income tax expense                 735         759           795          739
                           -----------  ----------   -----------  -----------

Net income                 $     1,262  $    1,314   $     1,446  $     1,660
                           ===========  ==========   ===========  ===========

Earnings per common share  $       .25  $      .27   $       .30  $       .32
                           ===========  ==========   ===========  ===========


                                           Three Months Ended
                           ---------------------------------------------------
                             March 31      June 30  September 30   December 31
                           -----------  ----------   -----------  ------------
1998

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
Noninterest income                 159         143           182          165
Noninterest 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
                           -----------  ----------   -----------  -----------




                                                                             42.

<PAGE>


                        FIRST SECURITYFED FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998, and 1997
               (Table amounts in thousands, except per share data)


 Net income                $ 1,453   $ 1,369    $  1,442    $  1,080
                           =======   =======    ========    ========

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







                                                                             43.

<PAGE>




<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 10, 2000 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, 2000 there were approximately 922 shareholders of record
and 5,335,476 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.

<TABLE>

     Quarter                                                  Dividend
     Ended                     High          Low              Declared
------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>                 <C>
September 30,1998              16.88        10.50               ---
December 31, 1998              14.94        11.00               .07(cent)
March 31, 1998                 15.75        14.63               ---
June 30, 1998                  17.50        15.00               ---
March 31, 1999                 13.00        11.57               .08(cent)
June 30, 1999                  12.57        11.13               .09(cent)
September 30, 1999             12.88        10.94               .10(cent)
December 31, 1999              11.94        10.57               .11(cent)
</TABLE>


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

SPECIAL COUNSEL                              INDEPENDENT AUDITORS

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
<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, 1999, as filed with the Securities and Exchange
Commission,  may be obtained without charge by contacting Peter Ilnyckyj,  First
SecurityFed  Financial,  Inc.,  936  North  Western  Avenue,  Chicago,  Illinois
60622-4695

                        FIRST SECURITYFED FINANCIAL, INC.
                              CORPORATE INFORMATION

COMPANY AND BANK ADDRESS

   936 North Western Avenue                      Telephone:       (773) 772-4500
   Chicago, Illinois 60622-4695                  Fax:             (773) 772-1043

DIRECTORS OF THE BOARD

Steve Babyk                             Julian Kulas
   Director of Fleet Leasing               President and Cheif Executvie Officer
   Union Tank Car Company                  First Security Federal Savings Bank

Lila Maria Bodnar                       Paul Nadzikewycz
         Accountant, MBA                   Self-Employed Real Estate Investor

Myron Dobrowolsky                        Jaroslav H. Sydorenko
         Construction Project Manager       Credit Manager
         Dames and Moore                    Kanematsu USA

Terry Gawryk                             Chrysta Wereszczak
         Attorney                            Co-owner, B&B Formnica

George Kawka
         Senior Architectural/Engineering
         Project Manager
         PAL Telecom Group

EXECUTIVE OFFICERS

Julian Kulas                             Harry I. Kucewicz
  President and Chief Executive Officer    Treasurer and Chief Financial Officer

Mary H. Korb                             Irene S. Subota
  Vice President-Lending                   Vice President - Savings

Adrian Hawryliw
  Vice President - Philadelphia
          Branch Manager













                                       49