SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1996

                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [No Fee Required]

                  For the transition period from _______ to _______

                         Commission file number 0-23182

                               AMB FINANCIAL CORP.
        (Exact Name of Small Business Issuer as Specified in its Charter)

         Delaware                                          35-1905382
 (State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                         Identification No.)

8230 Hohman Avenue, Munster, Indiana                        46321-1578
(Address of principal executive offices                     (Zip Code)

Issuer's telephone number, including area code: (219) 836-5870

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                                (Title of Class)

         Check whether the Issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past twelve  months (or for
such shorter period that the Issuer was required to file such reports),  and (2)
has been subject to such requirements for the past 90 days. YES [X] NO [ ]

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained, to the best of Issuer's knowledge, in definitive proxy or information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

         The Issuer had $6.5 million in gross income for the year ended December
31, 1996.

         As of March 15,  1997,  there  were  issued and  outstanding  1,067,919
shares of the Issuer's Common Stock.  The Issuer's voting stock is not regularly
and actively traded,  and there are no regularly quoted bid and asked prices for
the Issuer's  voting stock.  Accordingly,  the Issuer is unable to determine the
aggregate market value of the voting stock held by non-affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

         PARTS II and IV of Form  10-KSB--1997  Annual  Report to  Stockholders.
         PART III of Form 10-KSB--Proxy Statement for the 1997 Annual Meeting of
         Stockholders.
<PAGE>
                                     PART I

Item  1. Description of Business

General

         AMB Financial  Corp.  (the  "Company"),  was formed in 1993 by American
Savings,  FSB ("American  Savings" or the "Bank") under the laws of Delaware for
the purpose of becoming a savings and loan holding  company.  American  Savings,
headquartered in Munster,  Indiana, was founded in 1957 as a federally chartered
institution.  Its deposits are insured up to  applicable  limits by the FDIC. In
March 1996,  the Bank  converted to the stock form of  organization  through the
sale and  issuance of 1,124,125  shares of its common stock to the Company.  The
principal asset of the Company is the outstanding  stock of the Bank, its wholly
owned  subsidiary.  The Company  presently  has no separate  operations  and its
business  consists  only of the  business  of the Bank.  All  references  to the
Company,  unless otherwise  indicated,  at or before March 29, 1996 refer to the
Bank.

         American   Savings  has  been,   and  intends  to  continue  to  be,  a
community-based   financial  institution  that  offers  a  variety  of  selected
financial  services  to meet the  needs of the  community  it  serves.  The Bank
attracts  deposits from the general  public and using such deposits to originate
one- to four-family residential mortgage and, to a lesser extent,  multi-family,
non-residential real estate, land, commercial business and consumer loans in its
primary  market  area.  The Bank also  invests  in  mortgage-backed  securities,
investment  securities  consisting primarily of U.S. government  obligations and
various  types of short-term  liquid  assets.  See  "--Lending  Activities"  and
"--Investment Activities."

         American  Savings  serves the  financial  needs of  families  and local
businesses in its primary market area, northwest Lake County,  Indiana,  through
its main office located in Munster,  Indiana and three branch offices located in
the  communities of Dyer,  East Chicago and Hammond,  Indiana.  Its deposits are
insured up to applicable  limits by the Federal  Deposit  Insurance  Corporation
("FDIC").  At December 31, 1996,  the Company had total assets of $86.1 million,
deposits of $60.4 million and  stockholders'  equity of $15.2 million (or 17.62%
of total assets).

         The executive  office of the Company is located at 8230 Hohman  Avenue,
Munster,  Indiana  46321-1578 and its telephone  number at that address is (219)
836-5870.

Lending Activities

         General.  The principal lending activity of the Bank is originating for
its portfolio first mortgage loans secured by owner-occupied one- to four-family
residential  properties  located in its primary  market areas.  In addition,  in
order to  increase  the  yield  and/or  the  interest  rate  sensitivity  of its
portfolio  and in order to provide  more  comprehensive  financial  services  to
families and community  businesses in the Bank's primary  market area,  American
Savings also originates and purchases non-residential real estate, multi-family,
commercial business, consumer and land loans.
<PAGE>
Loan Portfolio Composition

         The following table sets forth  information  concerning the composition
of the Bank's  loan  portfolio  in dollar  amounts  and in  percentages  (before
deductions for loans in process,  deferred fees and discounts and allowances for
losses) as of the dates indicated.
<TABLE>
<CAPTION>
                                                                               December 31,
                                             ---------------------------------------------------------------------------
                                                         1996                    1995                       1994
                                             -----------------------     ----------------------    ---------------------
                                                Amount       Percent      Amount       Percent      Amount       Percent
                                                ------       -------      ------       -------      ------       -------
                                                                          (Dollars in Thousands)
<S>                                           <C>           <C>          <C>           <C>          <C>           <C>
Real Estate Loans:
 One- to four-family........................   $43,669       63.41%      $38,056        68.60%      $37,050        69.02%
 Multi-family...............................     3,259        4.73         3,419         6.16         3,445         6.42
 Non-residential............................     8,806       12.79         4,146         7.47         3,971         7.40
 Construction...............................     4,406        6.40         3,194         5.76         3,580         6.67
 Land.......................................       217         .32           223          .40           736         1.37
                                              --------      ------       -------       ------       -------       -------
     Total real estate loans................    60,357       87.65        49,038        88.39        48,782        90.88
                                              --------      ------       -------       ------       -------      -------

Other Loans:
 Consumer Loans:
  Deposit account...........................       185         .27           223          .40          263          .49
  Student...................................         3         .01             4          .01            5          .01
  Home improvement..........................        15         .01            12          .01           21          .04
  Line of credit............................     2,968        4.31         2,745         4.96        2,873         5.35
  Other ....................................     1,818        2.64         1,037         1.87          824         1.54
                                              --------      ------      --------      -------      -------       -------
     Total consumer loans...................     4,989        7.24         4,021         7.25        3,986         7.43
                                              --------      ------      --------      -------      -------      -------
 Commercial business loans..................     3,519        5.11         2,420         4.36          905         1.69
                                              --------      ------      --------      -------      -------      -------

     Total loans receivable.................    68,865      100.00%       55,479       100.00%      53,673       100.00%
                                                            ======                     ======                   ======

Less:
 Loans in process...........................       910                       268                     1,245
 Deferred fees and discounts................       234                       213                       248
 Allowance for losses.......................       355                       359                       331
                                              --------                   -------                   -------
 Total loans receivable, net................   $67,366                   $54,639                   $51,849
                                               =======                   =======                   =======

<PAGE>
<CAPTION>

                                                         1993                      1992
                                               ------------------------    --------------------
                                                 Amount       Percent      Amount       Percent
                                                 ------       -------      ------       -------
<S>                                            <C>            <C>          <C>           <C>

Real Estate Loans:
 One- to four-family........................   $35,202         71.64%      $35,144        74.59%
 Multi-family...............................     2,877          5.85         2,957         6.28
 Non-residential............................     3,726          7.58         2,625         5.57
 Construction...............................     1,161          2.36          ,151         2.44
 Land.......................................       493          1.00           415          .88
                                              --------        ------       -------       ------
     Total real estate loans................    43,459         88.43        42,292        89.76
                                              --------        ------       -------       ------

Other Loans:
 Consumer Loans:
  Deposit account...........................       111           .23           121          .26
  Student...................................        16           .03            33          .07
  Home improvement..........................        62           .13            67          .14
  Line of credit............................     2,642          5.38         2,285         4.85
  Other ....................................       639          1.30           442          .94
                                                -------       ------      --------       ------
     Total consumer loans...................     3,470          7.07         2,948         6.26
                                                -------       ------      --------       ------
 Commercial business loans..................     2,211          4.50         1,873         3.98
                                                -------       ------       --------      ------

     Total loans receivable.................    49,140        100.00%       47,113       100.00%
                                                              ======                     ======

Less:
 Loans in process...........................        14                          11
 Deferred fees and discounts................       233                         248
 Allowance for losses.......................       291                         439
                                              ---------                    --------
 Total loans receivable, net................  $ 48,602                     $46,415
                                              ========                     =======

</TABLE>
<PAGE>
         The following table shows the composition of the Bank's loan portfolios
by fixed- and adjustable-rate at the dates indicated.
<TABLE>
<CAPTION>
                                                                       December 31,
                                                  1996                   1995                    1994
                                          ---------------------------------------------------------------------
                                           Amount     Percent     Amount      Percent      Amount      Percent
                                           ------     -------     ------      -------      ------      -------
                                                                   (Dollars in Thousands)
<S>                                       <C>         <C>         <C>           <C>       <C>           <C>
Fixed-Rate Loans:
 Real estate:
  One- to four-family...............      $33,248       48.28%    $30,512        55.00%   $30,657        57.12%
  Multi-family......................        1,999        2.90       2,102         3.79      2,220         4.14
  Non-residential...................        2,917        4.24       2,021         3.64      2,168         4.04
  Construction......................          ---         ---         ---        ---          ---          ---
  Land..............................          ---         ---         ---        ---          ---          ---
                                          -------     -------     -------       -----   ----------      ------
     Total real estate loans........       38,164      55.42       34,635        62.43     35,045        65.30
                                          -------     ------      -------        ------   --------      ------
 Consumer...........................        1,588       2.31        1,272         2.29      1,108         2.06
 Commercial business................        3,252       4.72        2,089         3.76        644         1.20
                                          -------    -------      -------       ------   --------       ------
     Total fixed-rate loans.........       43,004      62.45       37,996        68.48     36,797        68.56
                                          -------     ------      -------       ------    -------       ------

Adjustable-Rate Loans:
 Real estate:
  One- to four-family...............       10,421      15.13        7,544        13.60      6,393        11.91
  Multi-family......................        1,260       1.83        1,317         2.37      1,225         2.28
  Non-residential...................        5,889       8.55        2,125         3.83      1,803         3.36
  Construction......................        4,406       6.40        3,194         5.76      3,580         6.67
  Land .............................          217        .32          223          .40        736         1.37
                                         --------    -------      -------       -------  ---------      ------
     Total real estate loans........       22,193      32.23       14,403        25.96     13,737        25.59
                                          -------     ------      -------       -------   --------      ------
 Consumer...........................        3,401       4.93        2,749         4.96      2,878         5.36
 Commercial business................          267        .39          331          .60        261          .49
                                         --------    -------     --------       ------  ---------       ------
     Total adjustable-rate loans....       25,861      37.55       17,483        31.52     16,876        31.44
                                          -------                --------       -------   -------       -------

     Total loans receivable.........       68,865     100.00%   $  55,479        100.00%   53,673       100.00%
                                                     =======                     ======                 ======

Less:
 Loans in process...................          910                     268                   1,245
 Deferred fees and discounts........          234                     213                     248
 Allowance for loan losses..........          355                     359                     331
                                         --------                ---------                -------
    Total loans receivable, net.....      $67,366                 $54,639                 $51,849
                                          =======                 =======                 =======

<PAGE>
<CAPTION>
                                                  1993                        1992
                                         ------------------------     -----------------------
                                          Amount        Percent       Amount        Percent
                                          ------        -------       ------        -------
<S>                                       <C>             <C>         <C>             <C>
Fixed-Rate Loans:
 Real estate:
  One- to four-family...............      $26,563          54.06%     $25,528          54.18%
  Multi-family......................        2,284           4.65        2,371           5.03
  Non-residential...................        2,177           4.43        1,560           3.31
  Construction......................          ---            ---          ---           ---
  Land..............................          ---            ---          ---           ---
                                          -------        -------      -------         ------
     Total real estate loans........       31,024          63.14       29,459          62.52
                                          -------        -------      -------         ------
 Consumer...........................          812           1.65          509           1.09
 Commercial business................          959           1.95          146            .31
                                         --------        -------      --------        ------
     Total fixed-rate loans.........       32,795          66.74       30,114          63.92
                                          -------         ------      -------         ------

Adjustable-Rate Loans:
 Real estate:
  One- to four-family...............        8,639          17.58        9,616          20.41
  Multi-family......................          593           1.21          586           1.24
  Non-residential...................        1,549           3.15        1,065           2.26
  Construction......................        1,161           2.36        1,151           2.44
  Land .............................          493           1.00          415            .88
                                         ---------       -------      -------         ------
     Total real estate loans........       12,435          25.30       12,833          27.23
                                          --------       -------      -------         ------
 Consumer...........................        2,658           5.41        2,439           5.18
 Commercial business................        1,252           2.55        1,727           3.67
                                          --------       -------      -------         ------
     Total adjustable-rate loans....       16,345          33.26       16,999          36.08
                                          --------       ------       -------         ------

     Total loans receivable.........       49,140         100.00%      47,113         100.00%
                                                          ======                     ======

Less:
 Loans in process...................           14                          11
 Deferred fees and discounts........          233                         248
 Allowance for loan losses..........          291                         439
                                          -------                     -------
    Total loans receivable, net.....      $48,602                     $46,415
                                          =======                     =======

</TABLE>
<PAGE>
         The following table  illustrates  the interest rate  sensitivity of the
Bank's loan portfolio at December 31, 1996.  Mortgages  which have adjustable or
renegotiable interest rates are shown as maturing in the period during which the
contract requires the final payment to be made,  without regard to interest rate
adjustments.  The table does not reflect the effects of possible  prepayments or
enforcement of due-on-sale clauses.
<TABLE>
<CAPTION>
                                                       Real Estate
                                                     Multi-family and
                             One- to Four-Family     Non-residential        Construction             Land                Consumer
                           ---------------------   -------------------  ---------------------   -------------------  ---------------
                                       Weighted              Weighted               Weighted              Weighted          Weighted
                                        Average               Average                Average               Average           Average
                             Amount      Rate      Amount      Rate       Amount      Rate      Amount     Rate      Amount    Rate
                           -------------------------------- ----------  --------------------    ---------- --------  ---------------
                                                                         (Dollars in Thousands)
<S>                          <C>          <C>     <C>         <C>       <C>         <C>        <C>        <C>       <C>        <C>
 Due During
Period Ending December 31,

1997.......................  $   729      8.65    $ 1,400      9.34%    $2,317      9.41%      $148       9.49%     $  665     7.52%
1998 to 1999...............    1,092      7.87      1,118      9.09      1,568      9.33         17       9.17         793     7.94
2000 and 2001..............    2,446      7.91        793      9.32        ---       ---         52       8.18         546     8.03
2002 to 2006...............   13,679      7.61      2,393      8.90        ---       ---        ---        ---      ------     ---
2007 to 2016...............   15,179      7.87      5,066      8.67        521      8.31        ---        ---           3     9.00
2017 and following.........   10,544      7.38      1,295      8.66        ---       ---        ---        ---       2,982     9.83
                             -------      ----    -------      ----                ------                ------                ----
   Total...................  $43,669      7.69%   $12,065      8.87%    $4,406      9.25%      $217       9.15%     $4,989     9.02%
                             =======              =======               ======                 ====                 ======

<CAPTION>
                                           Commercial
                                          Business                Total
                                   --------------------    ---------------------
                                              Weighted                Weighted
                                               Average                Average
                                    Amount      Rate       Amount      Rate
                                    ------      ----       ------      ----
<S>                               <C>            <C>      <C>           <C>
Due During
Period Ending December 31,

1997.......................       $  623         9.51%    $ 5,882       9.10%
1998 to 1999...............        2,896         7.44       7,484       8.20
2000 and 2001..............          ---         ---        3,837       8.22
2002 to 2006...............           ---        ---       16,072       7.80
2007 to 2016...............          ---         ---       20,769       8.08
2017 and following.........          ---         ---       14,821       7.98
                                                          -------
   Total...................       $3,519         7.81%    $68,865       8.10%
                                  ======                  =======

</TABLE>
<PAGE>
         The total  amount  of loans due after  December  31,  1997  which  have
predetermined  interest rates is $40.6 million,  while the total amount of loans
due after such dates which have floating or adjustable  interest  rates is $22.4
million.

         Under  federal  law,  the  aggregate  amount of loans  that the Bank is
permitted to make to any one borrower is generally  limited to 15% of unimpaired
capital  and  surplus  (25%  if  the  security  for  such  loan  has a  "readily
ascertainable"  value or 30% for  certain  residential  development  loans).  At
December  31,  1996,  based on the above,  the Bank's  regulatory  loan-to-  one
borrower limit was approximately $1.7 million. On the same date, the Bank had no
borrowers with outstanding balances in excess of this amount. As of December 31,
1996,  the largest  dollar  amount of  indebtedness  to one borrower or group of
related borrowers was $1.05 million in loans secured by multi-family residential
property. Such loans are performing in accordance with their terms.

         Loan  applications  are  initially  considered  and  approved  by  Bank
officers with various  levels of lending  authority  depending on the collateral
type and loan  amount.  Loans that exceed  individual  or combined  loan officer
authority are referred to the Loan  Committee.  Loans greater than $500,000 must
be approved by the Board of Directors after review and  preliminary  approval by
the Loan Committee.

         All of the  Bank's  lending  is  subject  to its  written  underwriting
standards and to loan origination  procedures.  The Bank is an equal opportunity
lender.  Decisions  on loan  applications  are  made on the  basis  of  detailed
applications  and  property  valuations  (consistent  with  the  Bank's  written
appraisal policy) by qualified independent appraisers. The loan applications are
designed  primarily to determine  the  borrower's  ability to repay and the more
significant items on the application are verified through use of credit reports,
financial statements, tax returns and/or confirmations.

         Generally,  the Bank requires title  insurance on its mortgage loans as
well as fire and extended coverage casualty  insurance in amounts at least equal
to the  principal  amount  of the  loan  or the  value  of  improvements  on the
property,  depending on the type of loan. The Bank also requires flood insurance
to protect the property  securing its interest when the property is located in a
flood plain or otherwise deemed prudent by management.

One- to Four-Family Residential Real Estate Lending

         The  cornerstone  of the  Bank's  lending  program  has  long  been the
origination of long-term  permanent loans secured by mortgages on owner-occupied
one- to four-family  residences.  At December 31, 1996, $43.7 million, or 63.41%
of the Bank's loan portfolio consisted of permanent loans on one- to four-family
residences.  At that date, the average outstanding  residential loan balance was
$54,700 and the largest outstanding  residential loan had a principal balance of
$346,000.  Virtually all of the residential loans originated by American Savings
are  secured  by  properties   located  in  the  Bank's  market  area.   See  "-
Originations, Sales and Purchases of Loans."

         Historically,  American  Savings  originated  for  retention in its own
portfolio  30-year  fixed-rate loans secured by one- to four-family  residential
real estate.  Beginning  in 1982,  in order to reduce its exposure to changes in
interest  rates,  American  Savings began to originate  ARMs and balloon  loans,
subject to market conditions and consumer  preference.  As a result of continued
consumer demand,  particularly  during periods of relatively low interest rates,
for fixed-rate loans,  American Savings has continued to originate for retention
<PAGE>
in its portfolio fixed-rate  residential loans in amounts and at rates which are
monitored for  compliance  with the Bank's  asset/liability  management  policy.
Currently,  the Bank  originates  fixed-rate  loans with  maturities of up to 15
years for retention in it own portfolio.  All ARMs and balloon loans  originated
by the Bank are retained and serviced by it. At December 31, 1996,  the Bank had
$17.6  million  of  fixed-rate  residential  loans  with  less  than 10 years to
maturity,  $13.9 million of fixed-rate residential loans with maturities between
10 and 20 years and $1.7 million of fixed-rate residential loans with maturities
in  excess  of 21 years  in its  portfolio.  See  "Management's  Discussion  and
Analysis of Financial  Condition  and Results of  Operations  -  Asset/Liability
Management" in the Company's  Annual Report to Stockholders  filed as Exhibit 13
hereto (the "Annual Report").

         The Bank has offered ARM loans at rates, terms and points determined in
accordance  with market and  competitive  factors.  The Bank's  current  one- to
four-family  residential  ARMs  are  fully  amortizing  loans  with  contractual
maturities  of up to 30 years.  The  interest  rates on the ARMs  originated  by
American  Savings are generally  subject to  adjustment at three-year  intervals
based on a margin  over the Three Year  Treasury  Securities  Constant  Maturity
Index.  Decreases  or  increases  in the  interest  rate of the Bank's  ARMs are
generally  limited to 5% above or below the initial  interest rate over the life
of the loan. The Bank's ARMs are not convertible  into fixed-rate  loans, do not
contain prepayment penalties and do not produce negative amortization. ARM loans
may be assumed provided home buyers meet the Bank's  underwriting  standards and
the applicable fees are paid. At December 31, 1996, the total balance of one- to
four-family ARMs was $10.4 million.

         The Bank  evaluates  both the  borrower's  ability  to make  principal,
interest and escrow  payments and the value of the property that will secure the
loan. American Savings originates  residential mortgage loans with loan-to-value
ratios up to 95%. On mortgage loans exceeding an 80% loan-to-value  ratio at the
time of origination,  American  Savings will generally  require private mortgage
insurance in an amount  intended to reduce the Bank's exposure to 80% or less of
the appraised value of the underlying property.

         As  of  December  31,  1996,  the  Bank  had  18  one-  to  four-family
residential  mortgage  loans  having an  aggregate  balance of $4.6 million with
current  balances  in excess of the  current  FHLMC  maximum,  $207,000  ("jumbo
loans").  The Bank's  delinquency  experience on its jumbo residential loans has
been similar to its experience on its other residential loans.

         The Bank's residential  mortgage loans customarily  include due-on-sale
clauses  giving  the Bank the  right to  declare  the loan  immediately  due and
payable in the event that,  among other things,  the borrower sells or otherwise
disposes of the property subject to the mortgage and the loan is not repaid.

Multi-Family and Non-Residential Real Estate Lending

         The Bank has long made permanent  multi-family and non-residential real
estate loans in its primary market area.  However,  the Bank has increased these
portfolios in recent years in  accordance  with its  asset/liability  management
policy.  See  "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations -  Asset/Liability  Management" in the Annual  Report.  At
December   31,  1996,   the  Bank  had  $12.1   million  in   multi-family   and
non-residential real estate loans,  representing 17.52% of the Bank's gross loan
portfolio.
<PAGE>
         The Bank's  multi-family loan portfolio  includes loans secured by five
or more unit  residential  buildings  located  primarily  in the Bank's  primary
market area. The Bank's  non-residential  real estate loan portfolio consists of
loans on a variety of  non-residential  properties  including retail facilities,
small office buildings and motel/hotels.

         The Bank has originated both  adjustable-  and fixed-rate  multi-family
and non-residential  real estate loans,  although most current originations have
adjustable  rates.  Rates  on  the  Bank's   adjustable-rate   multi-family  and
non-residential  real estate loans generally adjust in a manner  consistent with
the   Bank's   one-  to   four-family   residential   ARMs.   Multi-family   and
non-residential real estate loans are generally underwritten in amounts of up to
80% of the appraised value of the underlying property.

         Appraisals on properties securing multi-family and non-residential real
estate loans  originated  by the Bank are  performed by a qualified  independent
appraiser  at the time the loan is made.  In addition,  the Bank's  underwriting
procedures  generally  require  verification  of the borrower's  credit history,
income and financial statements,  banking  relationships,  references and income
projections for the property. Personal guarantees are generally obtained for the
Bank's multi-family and non-residential real estate loans.

         Substantially all of the multi-family  residential and  non-residential
real  estate  loans  originated  by the Bank are secured by  properties  located
within 25 miles of one or more of the Bank's offices.

         The table below sets forth by type of security  property the  estimated
number,  loan amount and outstanding  balance of American Savings'  multi-family
and non-residential real estate loans at December 31, 1996.
<TABLE>
<CAPTION>
                                                                                                  Outstanding
                                                     Number of              Original               Principal
                                                       Loans               Loan Amount              Balance
                                                       -----               -----------              -------
                                                                       (Dollars in Thousands)
<S>                                                       <C>                <C>                     <C>

Multi-family...................................           16                 $ 4,308                 $ 3,259
Office.........................................           10                   2,179                   1,861
Retail.........................................            3                     465                     398
Commercial building............................            2                   1,350                   1,219
Auto service/repair............................            1                     290                     257
Restaurants....................................            2                     295                     246
Hotel..........................................            4                   3,500                   3,437
Other..........................................           11                   1,459                   1,388
                                                         ---                --------                --------

   Total.......................................           49                 $13,846                 $12,065
                                                         ===                 =======                 =======
</TABLE>
         At December  31,  1996,  the Bank's  largest  multi-family  and largest
non-residential   real  estate  loans   totalled   $523,000  and  $1.1  million,
respectively.  As of December  31, 1996 none of these loans were 60 days or more
delinquent and were otherwise performing in accordance with their terms.
<PAGE>
         Multi-family and non-residential  real estate loans generally present a
higher level of risk than loans secured by one- to four-family residences.  This
greater risk is due to several factors, including the concentration of principal
in a limited  number of loans and  borrowers,  the  effects of general  economic
conditions  on income  producing  properties  and the  increased  difficulty  of
evaluating and monitoring  these types of loans.  Furthermore,  the repayment of
loans secured by  multi-family  residential and  non-residential  real estate is
typically  dependent  upon the  successful  operation of the related real estate
project.  If the cash flow from the project is reduced (for  example,  if leases
are not obtained or renewed),  the  borrower's  ability to repay the loan may be
impaired. At December 31, 1996, the Bank had no multi-family loans which were 90
days or more delinquent.

Construction Lending

         The Bank makes  construction  loans to individuals for the construction
of their primary or secondary residences and loans to builders or developers for
the  construction  of  single-family  and  multi-family  properties.   Loans  to
individuals  for the  construction  of their  residences  typically  run for six
months.  The  borrower  pays  interest  only  during  the  construction  period.
Residential  construction loans are generally  underwritten pursuant to the same
guidelines used for  originating  permanent  residential  loans. At December 31,
1996, the Bank had seven construction loans with outstanding  aggregate balances
of $2.3 million (including an additional  $586,000 in undisbursed loan proceeds)
secured by one- to four- family residential  property to borrowers  intending to
live in the properties upon completion of construction. Subject to future market
conditions,  the Bank intends to continue its construction lending activities to
persons intending to be owner occupants.

         The  Bank  makes  loans to  builders  and  developers  to  finance  the
construction  of residential  property.  Such loans  generally  have  adjustable
interest  rates based upon prime with terms of from six months to one year.  The
proceeds of the loan are advanced during  construction based upon the percentage
of  completion  as  determined  by an  independent  inspector.  The loan  amount
normally  does not exceed 80% of projected  completed  value for homes that have
been  pre-sold  to  the  ultimate  occupant.  For  loans  to  builders  for  the
construction  of homes not yet  pre-sold,  which may  carry a higher  risk,  the
loan-to value ratio is generally  limited to 75%. Whether the Bank is willing to
provide  permanent  takeout financing to the purchaser of the home is determined
independently of the construction loan by separate underwriting.

         At,  December  31,  1996,  the  Bank  had 16  construction  loans  with
outstanding aggregate balances of $2.1 million (including an additional $312,000
in  undisbursed  loan  proceeds)  secured  by  one- to  four-family  residential
property built on speculation.

         The Bank also provides construction  financing on multi-family housing.
However,  there were no loans of this type  outstanding as of December 31, 1996.
Additionally,  while the Bank does on occasion participate with other lenders in
loans to developers and builders to finance multi-family  housing  construction,
there were no loans of this type outstanding as of December 31, 1996.
<PAGE>
         Construction  lending  generally  affords  the Bank an  opportunity  to
receive interest at rates higher than those obtainable from residential  lending
and to receive higher  origination and other loan fees. In addition,  such loans
are  generally  made for  relatively  short  terms.  Nevertheless,  construction
lending to persons other than owner-occupants is generally considered to involve
a higher level of credit risk than one- to four-family  residential  lending due
to the concentration of principal in a limited number of loans and borrowers and
the effects of general economic conditions on construction projects, real estate
developers  and  managers.  In addition,  the nature of these loans is such that
they are more  difficult to evaluate  and monitor.  The Bank's risk of loss on a
construction loan is dependent largely upon the accuracy of the initial estimate
of the  property's  value upon  completion of the project and the estimated cost
(including  interest)  of the  project.  If the  estimate of value  proves to be
inaccurate, the Bank may be confronted, at or prior to the maturity of the loan,
with a project  with a value  which is  insufficient  to assure  full  repayment
and/or the possibility of having to make substantial investments to complete and
sell the  project.  Because  defaults  in  repayment  may not occur  during  the
construction  period,  it may be difficult to identify problem loans at an early
stage. When loan payments become due, the cash flow from the property may not be
adequate to service the debt. In such cases,  the Bank may be required to modify
the  terms  of the  loan.  The  Bank had no  non-performing  construction  loans
outstanding as of December 31, 1996.

Land Lending

         Land loans,  which include vacant land and developed  lots, are made to
various  builders  and  developers  with  whom the  Bank  has had  long-standing
relationships.  All of such  loans are  secured  by land  zoned for  residential
developments and located within the Bank's market area. Disbursements related to
acquisition and development  land loans are typically based on the  construction
cost estimate of an  independent  architect or engineer who inspects the project
in connection with significant  disbursement requests. At December 31, 1996, the
Bank had  $217,000 in loans  secured by land,  or .32% of its entire  gross loan
portfolio.

         Land  lending  generally  affords  the Bank an  opportunity  to receive
interest at rates higher than those  obtainable  from  residential  lending.  In
addition,  land loans are  limited to a maximum 75%  loan-to-value  and are made
with adjustable rates of interest and for relatively short terms.  Nevertheless,
land  lending is generally  considered  to involve a higher level of credit risk
due to the fact that funds are advanced upon the security of the land,  which is
of  uncertain  value  prior to its  development.  Because  of the  uncertainties
inherent in estimating land development costs as well as the market value on the
completed  project and the effects of governmental  regulation of real property,
it is relatively  difficult to evaluate  accurately  the total funds required to
complete a development project and the related loan-to-value ratio.

         As of  December  31,  1996,  the Bank has not  experienced  significant
losses  in  connection   with  its  land   lending.   See   "Delinquencies   and
Non-Performing Assets."

Consumer Lending

         Management  believes  that offering  consumer  loan  products  helps to
expand the Bank's  customer  base and to create  stronger  ties to its  existing
customer base. In addition,  because consumer loans generally have shorter terms
to maturity  and carry  higher rates of interest  than do  residential  mortgage
<PAGE>
loans, they can be valuable asset/liability management tools. The Bank currently
originates  substantially  all of its  consumer  loans in its  market  area.  At
December 31, 1996,  the Bank's  consumer loans totalled $5.0 million or 7.24% of
the Bank's gross loan portfolio.

         American Savings offers a variety of secured consumer loans,  including
home equity lines of credit,  home improvement  loans,  loans secured by savings
deposits and automobile loans.  Although the Bank primarily  originates consumer
loans secured by real estate,  deposits or other  collateral,  the Bank also, on
occasion, makes unsecured personal loans.

         The Bank's home equity loans are  generally  limited to  $100,000.  The
Bank uses the same underwriting  standards for home equity lines of credit as it
uses for one- to four-family  residential mortgage loans. The Bank's home equity
lines of credit are originated in amounts which, together with the amount of the
first  mortgage,  generally  do not  exceed  80% of the  appraised  value of the
property  securing the loan.  The interest rate for all home equity loans floats
at a stated margin over the prime rate. At December 31, 1996,  the Bank had $3.0
million  of home  equity  lines of credit  and an  additional  $5.4  million  of
additional funds committed, but undrawn, under such lines.

         The Bank also offers a Visa/Mastercard credit card program. At December
31, 1996,  approximately  370 credit  cards had been  issued,  with an aggregate
outstanding  loan balance of $430,000 and unused  credit  available of $618,000.
The Bank presently  charges no annual  membership fee and a fixed annual rate of
interest on these credit cards.

         The terms of other types of consumer  loans vary  according to the type
of collateral,  length of contract,  and  creditworthiness of the borrower.  The
underwriting  standards  employed  by the  Bank for  consumer  loans  include  a
determination  of  the  applicant's  payment  history  on  other  debts  and  an
assessment of the borrower's ability to meet payments on the proposed loan along
with his  existing  obligations.  In  addition  to the  creditworthiness  of the
applicant,  the underwriting  process also includes a comparison of the value of
the  security,  if any, in  relation  to the  proposed  loan  amount.  Unsecured
personal  loans are made to  borrowers  for a variety of personal  needs and are
usually limited to 20% of the borrower's net worth not to exceed $15,000, with a
minimum loan amount of $2,500.

         In April 1996, the Bank purchased 151 individual consumer  orthodontist
loans for a purchase price of $503,000. As of December 31, 1996, the outstanding
balance on those loans was $348,000.

         Consumer loans may entail greater risk than residential mortgage loans,
particularly  in the case of consumer  loans which are  unsecured  or secured by
rapidly  depreciable assets such as automobiles.  In such cases, any repossessed
collateral  for defaulted  consumer  loans may not provide  adequate  sources of
repayment  for  the  outstanding  loan  balances  as a  result  of  the  greater
likelihood  of  damage,  loss  or  depreciation.   In  addition,  consumer  loan
collections are dependent on the borrower's continuing financial stability,  and
thus  are  more  likely  to  be  affected  by  adverse  personal  circumstances.
Furthermore,  the  application  of various  federal  and state  laws,  including
federal and state bankruptcy and insolvency laws, may limit the amount which can
be recovered on such loans. At December 31, 1996, $45,000, or approximately .90%
of the consumer loan portfolio, was 60 days or more delinquent.  There can be no
assurance that delinquencies will not continue to increase in the future.
<PAGE>
Commercial Business Lending

         In order to increase the yield and  interest  rate  sensitivity  of its
loan  portfolio  and in order to  satisfy  the  demand  for  financial  services
available to  individuals  and  businesses in its primary  market area, the Bank
maintains a portfolio of commercial business loans. Unlike residential  mortgage
loans,  which generally are made on the basis of the borrower's  ability to make
repayment from his or her employment and other income,  and which are secured by
real  property  whose value tends to be more  easily  ascertainable,  commercial
business  loans are generally of higher risk and typically are made on the basis
of the borrower's ability to make repayment from the cash flow of the borrower's
business. As a result, the availability of funds for the repayment of commercial
business  loans may be  substantially  dependent  on the success of the business
itself (which, in turn, may be dependent upon the general economic environment).
During  the past five  years,  the Bank has made  commercial  business  loans to
businesses such as small retail  operations,  small  manufacturing  concerns and
professional  firms. The Bank's commercial  business loans almost always include
personal guarantees and are usually, but not always, secured by business assets,
such as accounts receivable,  equipment, inventory and real estate. However, the
collateral  securing  the loans may  depreciate  over time,  may be difficult to
appraise and may fluctuate in value based on the success of the business.

         Most of the Bank's  commercial  business  loans have terms ranging from
six months to five years and carry  adjustable  interest rates. The underwriting
process for commercial  business loans generally  includes  consideration of the
borrower's  financial  statements,  tax returns,  projections of future business
operations and inspection of the subject collateral, if any.

         In August 1995, the Bank  purchased  seasoned  commercial  leases for a
purchase  price  of  $2.0  million  covering  manufacturing  equipment  for  the
embroidery  of garments.  As of December 31, 1996,  the  outstanding  balance on
these leases was $1.2 million.  In November  1996,  the Bank  purchased a second
package of similar  type leases for a purchase  price of $2.1  million  covering
similar  equipment.  In general,  the leases are  full-payout  finance leases in
which the lease payments  effectively repay the lessor for the purchase price of
the equipment,  plus an acceptable yield. The leases were purchased from another
financial  institution  with expertise in originating and acquiring such leases.
The other  institution  continues to service the leases for American Savings and
provides  limited  recourse  in the event of a default by the  lessor.  The Bank
purchased  these leases because they were available at relatively high yields at
a time when  investment  alternatives  were  generating  much  lower  yields and
because  they  had   relatively   short  terms,   consistent   with  the  Bank's
asset/liability  management strategy.  Although,  like other commercial business
financings,  commercial  leases  involve higher risk than  residential  mortgage
loans,  management  believes that these  purchases are prudent in furtherance of
the  Bank's  lending  strategy  and in  light  of the  higher  yields,  personal
guarantees  on most of the leases and the  limited  additional  credit  recourse
provided by the  seller.  These  leases are  classified  as loans for  financial
statement purposes.  As of December 31, 1996, all of such leases were performing
in accordance with their terms.

Originations, Purchases and Sales of Loans

         The Bank  originates  real  estate and other  loans  through  employees
located at each of the Bank's offices. Walk-in customers and referrals from real
estate brokers and builders are also important sources of loan originations. The
Bank occasionally utilizes the services of mortgage brokers.
<PAGE>
         In order to supplement its loan production, the Bank may purchase loans
from third parties. In general, the Bank uses the same underwriting standards in
evaluating  loan  purchases  as it does in  originating  loans.  The  Bank  will
continue  to  evaluate  loan  purchase  opportunities  as they  arise  and  make
purchases in the future depending on market conditions.

         From time to time the Bank sells long-term fixed-rate loans pursuant to
forward commitments.  To date, most of the Bank's loan sales have been made on a
servicing  released basis. At December 31, 1996,  approximately  $8.5 million of
American  Savings' loan  portfolio  was serviced by others and American  Savings
serviced no loans for others.

         In periods of rising  interest  rates,  the Bank's ability to originate
large  dollar  volumes  of real  estate  loans may be  substantially  reduced or
restricted,  with a  resultant  decrease  in related  fee  income and  operating
earnings.  In  addition,  the Bank's  ability  to sell  loans may  substantially
decrease if potential buyers reduce their purchasing activities.

         The  following  table shows the loan  origination,  purchase,  sale and
repayment activities of the Bank for the periods indicated.
<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                            -----------------------------------------------
                                                              1996         1995         1994         1993
                                                           --------     --------      --------      -------
<S>                                                         <C>          <C>           <C>         <C>
Originations by type:
 Adjustable rate:
  Real estate - one- to four-family..................       $ 4,027      $ 3,899       $ 1,312     $  3,990
                - multi-family.......................           ---          ---           170          ---
                - non-residential....................         2,880        1,359           555          625
                - construction.......................         2,778        1,400         3,248          321
                - land...............................           ---          136           432          130
  Non-real estate - consumer.........................         4,485        2,944         3,409          979
                     - commercial business...........           158          103           301        1,530
                                                           --------     --------      --------      -------
         Total adjustable-rate.......................        14,328        9,841         9,427        7,575
                                                            -------     --------       -------      -------
 Fixed rate:
  Real estate - one- to four-family..................         8,219        2,588         7,070        5,500
                - multi-family.......................           101          377           ---          383
                - non-residential....................            17           96           783          ---
                - construction.......................           ---          ---           ---          ---
                - land...............................           ---          ---           ---          ---
  Non-real estate - consumer.........................           793        1,041         1,196          537
                     - commercial business...........            85          ---            40           14
                                                          ---------    ---------      --------    ---------
         Total fixed-rate............................         9,215        4,102         9,089        6,434
                                                           --------      -------       -------     --------
         Total loans originated......................        23,543       13,943        18,516       14,009
                                                           --------      -------       -------     --------
<PAGE>
<CAPTION>
                                                                        Year Ended December 31,
                                                            -----------------------------------------------
                                                              1996         1995         1994         1993
                                                           --------     --------      --------      -------
<S>                                                         <C>          <C>           <C>         <C>
Purchases:
  Real estate - one- to four-family..................           ---          524            60          ---
                - multi-family.......................           ---          653           497          ---
                - non-residential....................         2,079          ---           ---          ---
                - construction.......................           ---          250         1,000          ---
  Non-real estate - consumer.........................           503          ---           ---          ---
                     - commercial business...........         2,066        2,013           ---        1,049
                                                            -------      -------     ---------     --------
         Total loans purchased.......................         4,648        3,440         1,557        1,049
                                                            -------      -------       -------     --------

Sales and Repayments:
  Real estate - one- to four-family..................           ---          ---           112          320
                - multi-family.......................           ---          ---           ---          ---
                - non-residential....................           ---          ---           ---          ---
                - construction.......................           ---          ---           ---          ---
  Non-real estate - consumer.........................           ---          ---           ---          ---
                    - commercial business............           ---          ---           ---          ---
                                                          ---------    ---------    ----------   ----------
         Total loans sold............................           ---          ---           112          320
  Principal repayments...............................        14,801       15,518        15,428       12,711
                                                            -------      -------      --------      -------
         Total reductions............................        14,801       15,518        15,540       13,031
Increase (decrease) in other items, net..............          (663)         925       (1,286)          160
                                                           --------     --------     --------      --------
         Net increase (decrease).....................       $12,727      $ 2,790      $  3,247      $ 2,187
                                                            =======      =======      ========      =======


</TABLE>
<PAGE>
Delinquencies and Non-Performing Assets

         Delinquency  Procedures.  When a  borrower  fails  to  make a  required
payment on a loan,  the Bank  attempts to cause the  delinquency  to be cured by
contacting  the  borrower.  In the case of loans,  a late  notice is sent on all
loans over 30 days delinquent. Another late notice is sent 60 days after the due
date.  Additional written and verbal contacts are made with the borrower between
45 and 90 days after the due date.

         If the  delinquency  is not  cured by the 90th  day,  the  customer  is
provided 10 days written notice that the account will be referred to counsel for
collection  and  foreclosure,  if  necessary.  A drive-by  appraisal is normally
obtained at this time and a title search is ordered.  A good faith effort by the
borrower at this time will defer  foreclosure  for a  reasonable  length of time
depending on  individual  circumstances.  The Bank may agree to accept a deed in
lieu of foreclosure.  If it becomes necessary to foreclose, the property is sold
at public sale and the Bank may bid on the property to protect its interest. The
decision to foreclose is made by the Senior Loan Officer after  discussion  with
the members of the Loan Committee.

         Consumer  loans are charged off if they remain  delinquent for 120 days
unless the borrower and lender agree on a payment plan. If terms of the plan are
not met,  they are then  subject  to  charge  off.  The  Bank's  procedures  for
repossession and sale of consumer collateral are subject to various requirements
under Indiana consumer protection laws.

         Real estate acquired by American  Savings as a result of foreclosure or
by deed in lieu of  foreclosure  is  classified as real estate owned until it is
sold.  When property is acquired by foreclosure or deed in lieu of  foreclosure,
it is recorded at the lower of cost or  estimated  fair  value,  less  estimated
selling  costs,  at the  date  of  acquisition,  and  any  write-down  resulting
therefrom is charged to the allowance for loan losses.  Subsequent  decreases in
the value of the  property are charged to  operations  through the creation of a
valuation  allowance.  After acquisition,  all costs incurred in maintaining the
property are expensed.  Costs relating to the development and improvement of the
property,  however,  are  capitalized to the extent of estimated fair value less
estimated costs to sell.
<PAGE>
         Loan  Delinquencies.  The  following  table sets forth the Bank's  loan
delinquencies by type, by amount and by percentage of type at December 31, 1996.
<TABLE>
<CAPTION>
                                                    Loans Delinquent For:
                                         60-89 Days                      90 Days and Over                 Total Delinquent Loans
                                 -------------------------------   -------------------------------     -----------------------------
                                                       Percent                            Percent                          Percent
                                                       of Loan                            of Loan                           of Loan
                                  Number    Amount     Category     Number     Amount     Category     Number    Amount    Category
                                  ------    ------     --------     ------     ------     --------     ------    ------    --------
                                                                        (Dollars in Thousands)
<S>                                <C>       <C>         <C>        <C>        <C>           <C>        <C>       <C>        <C>
Real Estate:
  One- to four-family......          6       $341         .78%         5       $269           .62%       11       $ 610      1.40%
  Multi-family.............        ---        ---          ---        ---        ---          ---        ---        ---        ---
  Non-residential..........        ---        ---          ---        ---        ---          ---        ---        ---        ---
  Construction.............        ---        ---          ---        ---        ---          ---        ---        ---        ---
  Land.....................        ---        ---          ---        ---        ---          ---        ---        ---        ---
Consumer...................          1          9         .18          3         36           .72         4          45       .90
Commercial business........        ---        ---          ---        ---        ---          ---        ---        ---        ---
                                   ---     ------                     ---      -----                     ---       ----

     Total.................          7       $350         .15%         8       $305           .44%       15        $655       .95%
                                   ===       ====                     ===      ====                      ==        ====

</TABLE>

         Classification of Assets. Federal regulations require that each savings
institution  classify  its own  assets  on a  regular  basis.  In  addition,  in
connection  with  examinations of savings  institutions,  OTS and FDIC examiners
have authority to identify  problem assets and, if appropriate,  require them to
be classified.  There are three classifications for problem assets: Substandard,
Doubtful and Loss.  Substandard  assets have one or more defined  weaknesses and
are characterized by the distinct  possibility that the savings institution will
sustain some loss if the  deficiencies  are not corrected.  Doubtful assets have
the weaknesses of Substandard assets, with the additional  characteristics  that
the weaknesses  make collection or liquidation in full on the basis of currently
existing  facts,  conditions  and  values  questionable,  and  there  is a  high
possibility of loss. An asset classified Loss is considered uncollectible and of
such  little  value that  continuance  as an asset on the  balance  sheet of the
institution  is not  warranted.  The  regulations  have  also  created a Special
Mention  category,  consisting of assets which do not currently expose a savings
institution  to a sufficient  degree of risk to warrant  classification,  but do
which possess credit deficiencies or potential weaknesses deserving management's
close attention. As of December 31, 1996, the Bank had not designated any assets
as special  mention.  Assets  classified as Substandard or Doubtful  require the
institution to establish prudent general allowances for loan losses. If an asset
or portion thereof is classified as Loss, the institution  must either establish
specific  allowances for loan losses in the amount of 100% of the portion of the
asset  classified  Loss, or charge off such amount.  If an institution  does not
agree  with  an  examiner's  classification  of an  asset,  it may  appeal  this
determination to the District  Director of the OTS. On the basis of management's
review of its assets,  at December 31, 1996,  had classified a total of $305,000
of its loans, as follows:
<PAGE>
<TABLE>
<CAPTION>
                                              One- to Four-
                                                 Family         Construction       Consumer            Total
                                                 ------         ------------       --------            -----
                                                                      (In Thousands)
<S>                                               <C>              <C>                <C>              <C>

Substandard.........................              $269             $---               $36              $305
Doubtful............................               ---              ---               ---               ---
Loss................................               ---              ---               ---               ---
                                                  ----             ----              ----            ------
                                                  $269             $---               $36              $305
                                                  ====             ====               ===              ====
</TABLE>
         American Savings'  classified assets consist of the (i)  non-performing
loans and (ii) loans and other  assets of concern  discussed  herein.  As of the
date hereof,  these asset  classifications  are consistent with those of the OTS
and FDIC.

         Non-Performing  Assets.  The following table sets forth the amounts and
categories  of  non-performing  assets in the Bank's loan  portfolio.  Loans are
reviewed  quarterly and any loan whose  collectibility  is doubtful is placed on
non-accrual status. Loans are placed on non-accrual status when either principal
or interest is 90 days or more past due, unless,  in the judgment of management,
the loan is well  collateralized  and in the  process  of  collection.  Interest
accrued and unpaid at the time a loan is placed on non-accrual status is charged
against  interest  income.   Subsequent  payments  are  either  applied  to  the
outstanding  principal balance or recorded as interest income,  depending on the
assessment of the ultimate  collectibility of the loan. For all years presented,
the Bank has had no troubled debt  restructurings  (which  involved  forgiving a
portion  of  interest  or  principal  on any  loans  or  making  loans at a rate
materially  less than that of market  rates).  Foreclosed  assets include assets
acquired in settlement of loans. Except as noted, the loans and foreclosed asset
amounts shown are stated  without  giving effect to the specific  reserves which
have been established against such assets. See "- Loan Loss Reserve Analysis."
<PAGE>
<TABLE>
<CAPTION>
                                                                                      December 31,
                                                         ------------------------------------------------------------------------
                                                         1996         1995        1994        1993         1992          1991
                                                         ------------------------ ------------------------------------- ---------
                                                                                (Dollars in Thousands)
<S>                                                       <C>         <C>       <C>           <C>         <C>          <C>
Non-accruing loans:
  One- to four-family............................         $269        $318      $   344       $  206      $  142       $  237
  Multi-family...................................          ---         ---          ---          ---         ---          ---
  Non-residential................................          ---         ---          ---           60         282          272
  Construction...................................          ---         ---          109          242         ---          ---
  Consumer.......................................           36          51           47           40          10           58
  Commercial business............................          ---         ---          ---           10         ---           51
                                                        ------      ------    ---------      -------    --------     --------
     Total.......................................          305         369          500          550         434          618
                                                         -----       -----     --------       ------      ------      -------

Non-accruing mortgage-backed securities..........          ---         ---          ---          ---         ---          155
                                                        ------      ------    ---------      -------    --------     --------
Accruing loans delinquent more than 90 days......          ---         ---          ---          ---         ---          ---
                                                        ------      ------    ---------      -------    --------    ---------

Foreclosed assets:
  One- to four-family............................          ---         ---          ---           12         199          289
  Multi-family...................................          ---         ---          ---          ---         ---          ---
  Non-residential................................          ---         ---          ---          ---         ---          ---
  Construction...................................          ---         ---          ---          ---         ---          ---
  Consumer.......................................          ---         ---          ---          ---         ---          ---
  Commercial business............................          ---         ---          ---          ---         ---          ---
                                                        ------      ------    ---------     --------    --------     --------
     Total.......................................           --         ---          ---           12         199          289
                                                        ------      ------    ---------      -------      ------       ------

Total non-performing assets......................         $305        $369      $   500       $  570       $ 633       $1,062
                                                          ====        ====      =======       ======       =====       ======
Total as a percentage of total assets............         .35%        .53%         .76%         .88%        .99%        1.68%
                                                         ====       =====          ===          ===         ===         ====
</TABLE>
         For the year ended December 31, 1996, gross interest income which would
have been recorded had the  non-accruing  loans been current in accordance  with
their original terms amounted to $23,000.

         At December  31,  1996,  there were no other loans not  included on the
table or  discussed  above where known  information  about the  possible  credit
problems of borrowers caused management to have serious doubts as to the ability
of the borrower to comply with present loan repayment terms and which may result
in disclosure of such loans in the future.

         Allowance for Loan Losses. The allowance for loan losses is established
through a provision for loan losses  charged to earnings  based on  management's
evaluation of the risk inherent in its entire loan  portfolio and changes in the
nature and volume of its loan activity. Such evaluation, which includes a review
of all  loans  of  which  full  collectibility  may not be  reasonably  assured,
considers the  estimated  net  realizable  value of the  underlying  collateral,
<PAGE>
economic  conditions,  historical  loan loss  experience  and other factors that
warrant  recognition in providing for an adequate  allowance for loan losses. In
determining the general  reserves under these policies,  historical  charge-offs
and recoveries, changes in the mix and levels of the various types of loans, net
realizable  values,  the current loan portfolio and current economic  conditions
are  considered.  Management  also considers the Bank's  non-performing  and "of
concern"  assets in  establishing  its  allowance  for loan  losses.  The Bank's
policies have had the effect of increasing the Bank's allowance for loan losses.

         As of December  31,  1996,  the Bank's  allowance  for loan losses as a
percentage of loans and as a percentage of non-performing loans amounted to .52%
and 116.27%,  respectively.  In light of the level of  non-performing  assets to
total  assets  and the  nature of these  assets,  management  believes  that the
allowance for loan losses is adequate.  While  management  believes that it uses
the best  information  available to  determine  the  allowance  for loan losses,
unforeseen  market  conditions  could result in adjustments to the allowance for
loan losses, and net earnings could be significantly  affected, if circumstances
differ   substantially   from  the   assumptions   used  in  making   the  final
determination.
<PAGE>
         The following table sets forth an analysis of the Bank's  allowance for
loan losses.
<TABLE>
<CAPTION>
                                                                          Year Ended December 31
                                                ------------------------------------------------------------------------
                                                  1996         1995         1994        1993         1992          1991
                                                ------------------------------------------------------------------------
                                                                         (Dollars in Thousands)
<S>                                              <C>         <C>         <C>          <C>         <C>           <C>

Balance at beginning of period...........         $360         $331       $  291       $  439       $  406       $  239

Charge-offs:
  One- to four-family....................          ---          ---            2          ---           14           15
  Multi-family...........................          ---          ---          ---          131          ---          ---
  Non-residential........................          ---          ---          ---          264          ---            4
  Construction...........................          ---          ---          ---          ---          ---          ---
  Consumer...............................            5           10            5           13            2           16
  Commercial business....................          ---          ---           15           69            8          ---
                                                 -----        -----        -----      -------     --------     --------
         Total charge-offs...............            5           10           22          477           24           35
                                                 -----         ----        -----       ------      -------      -------

Recoveries:
  One- to four-family....................          ---          ---          ---          ---          ---          ---
  Multi-family...........................          ---          ---          ---          ---          ---          ---
  Non-residential........................          ---          ---          ---          154          ---          ---
  Construction...........................          ---          ---          ---          ---          ---          ---
  Consumer...............................          ---          ---          ---            5          ---          ---
  Commercial business....................          ---          ---          ---          ---          ---          ---
                                                 -----        -----      -------     --------     --------     --------
        Total recoveries.................          ---          ---          ---          159          ---          ---
                                                 -----        -----      -------       ------     --------     --------

Net charge-offs..........................            5           10           22          318           24           35
Additions charged to operations..........          ---           39           62          170           57          202
                                                 -----        -----      -------       ------      -------       ------
Balance at end of period.................         $355         $360       $  331       $  291       $  439       $  406
                                                  ====         ====       ======       ======       ======       ======

Ratio of net charge-offs during the
 period to average loans outstanding
during the period........................         .01%         .02%         .06%         .66%         .05%         .07%
                                                  ===          ===         ====          ===          ===         ====

Ratio of net charge-offs during the              1.48%        2.30%        3.96%       60.80%        4.76%         .28%
                                                 ====         ====        =====        =====         ====         ====
 period to average non-performing
 assets..................................


</TABLE>
<PAGE>
         The  distribution  of the Bank's  allowance  for losses on loans at the
dates indicated is summarized as follows:
<TABLE>
<CAPTION>
                                                                  December 31,
                        -----------------------------------------------------------------------------------------------
                                      1996                           1995                            1994
                        ------------------------------ ------------------------------  --------------------------------
                                                Percent                        Percent                         Percent
                                               of Loans                       of Loans                        of Loans
                                       Loan     in Each               Loan     in Each               Loan      in Each
                         Amount of   Amounts  Category  Amount of   Amounts  Category   Amount of  Amounts    Category
                         Loan Loss     by     to Total  Loan Loss     by     to Total   Loan Loss    by       to Total
                        Allowance   Category    Loans   Allowance  Category   Loans     Allowance   Category     Loans
                         ---------- ---------- -------- ------------------------------  -------------------------------
                                                                      (Dollars In Thousands)

One- to four-family .   $    89    $43,669       63.41%   $ 93   $38,056      68.60%      $ 89     $37,050      69.02%
Multi-family ........        10      3,259        4.73      10     3,419       6.16         10       3,445       6.42
Non-residential .....        26      8,806       12.79      13     4,146       7.47         72       3,971       7.40
Construction and land        23      4,623        6.72      17     3,417       6.16         38       4,316       8.04
Consumer ............        45      4,989        7.24      23     4,021       7.25         29       3,986       7.43
Commercial business .        35      3,519        5.11      24     2,420       4.36          9         905       1.69
Unallocated .........       127       --            --     180       --          --         84          --        --

     Total ..........   $   355    $68,865      100.00%   $360   $55,479     100.00      $ 331     $53,673     100.00%
                        =======    =======      ======    ====   =======     ======      =====     =======     ======

<CAPTION>

                         -------------------------------------------------------------
                                     1993                           1992
                         ----------------------------- ------------------------------
                                               Percent                        Percent
                                              of Loans                       of Loans
                                      Loan     in Each               Loan     in Each
                        Amount of   Amounts  Category  Amount of   Amounts   Category
                        Loan Loss     by     to Total  Loan Loss     by      to Total
                        Allowance  Category    Loans   Allowance  Category     Loans
                        --------- ---------- -----------------------------------------

<S>                       <C>      <C>          <C>      <C>      <C>         <C>
One- to four-family .     $ 66     $35,202       71.64%  $  56    $35,144      74.59%
Multi-family ........        9       2,877        5.85       9      2,957       6.28
Non-residential .....       71       3,726        7.58     290      2,625       5.57
Construction and land       45       1,654        3.36       8      1,566       3.32
Consumer ............       25       3,470        7.07      16      2,948       6.26
Commercial business .       23       2,211        4.50      19      1,873       3.98
Unallocated .........       52         --          --       41       --         --

     Total ..........     $291     $49,140      100.00%   $439    $47,113     100.00%
                          ====     =======      ======    ====    =======     ======
</TABLE>
<PAGE>
Investment Activities

         As part of its asset/liability management strategy, the Company invests
in U.S.  government and agency obligations to supplement its lending activities.
The Company regularly uses Piper Capital  Management,  Inc. as  non-commissioned
investment  adviser.  The  Company  has not made any  investments  in  municipal
securities  although  it is  authorized  by its  general  investment  policy  to
purchase  investment  grade  municipal   securities  and,  depending  on  market
conditions,  may  purchase  such  securities  in the future.  The  Company  also
invests, to a limited degree, in equity securities of other financial companies.
At December 31, 1996,  the Company did not own any securities of a single issuer
which exceeded 10% of the Bank's retained earnings,  other than U.S.  government
or federal  agency  obligations.  See  "Management's  Discussion and Analysis of
Financial Condition and Results of Operation" in the Annual Report.

         The Bank is  required  by  federal  regulations  to  maintain a minimum
amount of liquid assets that may be invested in specified securities and is also
permitted  to make  certain  other  securities  investments.  See  "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Liquidity and Capital" in the Annual Report. Cash flow projections are regularly
reviewed  and updated to assure  that  adequate  liquidity  is  provided.  As of
December 31, 1996, the Bank's  liquidity ratio (liquid assets as a percentage of
net withdrawable  savings and current  borrowings) was 15.43% as compared to the
OTS requirement of 5.0%.

         All of the Company's investment and mortgage-backed securities,  except
for those held for trade securities noted above, are classified as available for
sale in  accordance  with SFAS 115.  This was done in order for the  Company  to
maintain maximum flexibility when making investment decisions.  Unrealized gains
and losses in available for sale securities,  net of tax effect, are reported as
a separate component of stockholders'  equity. The Company may elect to classify
investment securities acquired in the future as held to maturity,  instead of as
available for sale, but there are no current plans to do so.
<PAGE>
         The  following  table  sets  forth  the  composition  of the  Company's
investment securities at the dates indicated.
<TABLE>
<CAPTION>
                                                                               December 31,
                                                       ------------------------------------------------------------------
                                                              1996                  1995                 1994
                                                       ------------------------------------------------------------------
                                                          Book         % of       Book       % of       Book       % of
                                                         Value          Total     Value      Total      Value      Total
                                                         -----          -----     -----      -----      -----      -----
                                                                              (Dollars in Thousands)
<S>                                                      <C>          <C>      <C>          <C>        <C>         <C>

Investment securities held to maturity:
  FHLB Stock.........................................    $   546         5.45%   $   546       7.22%   $  546        7.96%
                                                         -------       ------    -------     ------    ------       -----

Investment securities available for sale:
  U.S. government securities.........................      8,283        82.62      6,384      84.41     5,758       83.92
  Government securities mutual fund..................        656         6.54        633       8.37       557        8.12
                                                        --------      -------    -------     ------    ------       -----
                                                           8,939        89.16      7,017      92.78     6,315       92.04
                                                        --------       ------    -------      -----    ------       ------

Investment securities held for trade:
  Marketable equity securities.......................        540         5.39        ---      ---        ---       ---
                                                        --------       ------    -------     ------    ------      ------
  Common stock of other financial institutions.......        540         5.39      ---        ---        ---       ---
                                                        --------       ------    -------     ------    ------      ------

     Total investment securities.....................    $10,025       100.00%   $ 7,563     100.00%  $ 6,861      100.00%
                                                         =======       ======    =======     ======   =======      ======

Average remaining life of debt investment                2.3 years               2.7 years            2.9 years
 securities..........................................

Other interest-earning assets:
  Interest-bearing deposits with banks...............    $ 1,093       100.00%   $ 1,004     100.00%  $   307      100.00%
  Federal funds sold.................................        ---        ---          ---      ---        ---       ---
                                                         -------       ------    -------     ------   -------      ------
     Total...........................................    $ 1,093       100.00%   $ 1,004     100.00%  $   307      100.00%
                                                         =======       ======    =======     ======   =======       ======
</TABLE>
<PAGE>


         The composition and maturities of the investment  securities portfolio,
excluding FHLB stock and equity securities are indicated in the following table.
<TABLE>
<CAPTION>
                                                                             December 31, 1996
                                                  --------------------------------------------------------------------------------
                                                  Less Than     1 to 5        5 to 10       Over
                                                    1 Year       Years         Years      10 Years     Total Investment Securities
                                                  Book Value   Book Value    Book Value   Book Value    Book Value    Fair Value
                                                  ----------   ----------    ----------   ----------    ----------    ----------
                                                                            (Dollars in Thousands)
<S>                                                 <C>          <C>            <C>           <C>         <C>            <C>

U.S. government securities..................          $751       $7,306          $226         $---        $8,283         $8,283
                                                      ----       ------          ----         ----        ------         ------

Total investment securities (excluding
FHLB stock and equity securities)...........          $751       $7,306          $226         $---        $8,283         $8,283
                                                      ====       ======          ====         ====        ======         ======

Weighted average yield......................         6.09%        6.08%         6.36%         ---%         6.09%



</TABLE>

         At December 31, 1996, the Company's  marketable  equity securities held
for trade were as follows:
<TABLE>
<CAPTION>

     Name of Issuer                 Number of Shares             Fair Value
     --------------                 ----------------             ----------
<S>                                       <C>                      <C>
Home Financial Bancorp                    9,400                    $119,850
Sobieski Bancorp                          8,000                     114,000
Community Bancshares of                   7,500                      97,500
Indiana
Park Bancorp                              8,600                     111,800
PS Financial, Inc.                        8,200                      96,350

</TABLE>

         Mortgage-Backed   Securities.  The  Company  purchases  mortgage-backed
securities from time to time to supplement residential loan production. The type
of  securities  purchased  is based upon the Bank's  asset/liability  management
strategy and balance sheet objectives. See "Management's Discussion and Analysis
of Financial  Condition and Results of Operations - Asset/Liability  Management"
in the Annual Report.  In connection  with the adoption of SFAS 115 in 1994, the
Bank's mortgage-backed securities were moved to its available for sale portfolio
in order to retain  investment  flexibility  and accordingly are included in its
financial statements at fair value.

         All of the Company's  mortgage-backed  securities at December 31, 1996,
are  backed  by  federal  agencies  or  government  corporations.   Accordingly,
management believes that the Company's mortgage-backed  securities are generally
resistant to credit problems.
<PAGE>

         The  following  table  sets  forth  the  composition  of the  Company's
mortgage-backed securities at the dates indicated.
<TABLE>
<CAPTION>


                                                                          December 31,
                                             ---------------------------------------------------------------------
                                                     1996                    1995                    1994
                                             ---------------------------------------------- ----------------------
                                              Book          % of       Book        % of       Book        % of
                                              Value         Total      Value       Total      Value       Total
                                              -----         -----      -----       -----      -----       -----
                                                                     (Dollars in Thousands)
<S>                                           <C>           <C>      <C>          <C>        <C>          <C>
Mortgage-backed securities available
 for sale:
  GNMA...................................     $  762         18.96%  $   932        63.02%   $  986         61.89%
  FNMA...................................         82          2.04        98         6.63       100          6.28
  FHLMC..................................      3,175         79.00       449        30.35       507         31.83
                                              ------        ------   -------       ------    ------        ------

     Total mortgage-backed
       securities........................     $4,019        100.00%   $1,479       100.00%   $1,593        100.00%
                                              ======        ======    ======       ======    ======        ======

</TABLE>

         The  following  table  shows  mortgage-backed  and  related  securities
purchase,  sale  and  repayment  activities  of  the  Company  for  the  periods
indicated.
<TABLE>
<CAPTION>


                                                             Year Ended December 31,
                                                        1996          1995       1994
                                                        ----          ----       ----
                                                              (In Thousands)
<S>                                                    <C>            <C>        <C>
Purchases:
  Adjustable-rate................................      $   ---         $ ---      $   ---
  Fixed-rate.....................................        3,034           ---          ---
                                                        ------         -----      -------
         Total purchases.........................        3,034           ---          ---
                                                        ------         -----      -------

Sales and Repayments:
         Total sales.............................          ---           ---          ---
                                                     ---------         -----      -------
  Principal repayments...........................          482           208          682
                                                       -------          ----        -----
         Total reductions........................          482           208          682
  Increase (decrease) in other items, net........          (12)           94          (87)
                                                      ---------         ----       ------
         Net increase (decrease).................       $2,540         $(114)       $(769)
                                                        ======         ======       =====
</TABLE>
<PAGE>
         The  following  table  sets  forth the  contractual  maturities  of the
Company's mortgage-backed  securities at December 31, 1996. These securities are
anticipated to be repaid in advance of their contractual  maturities as a result
of mortgage  loan  payments.  The amounts  set forth below  represent  principal
balances only and do not include premiums, discounts and fair value adjustments.
<TABLE>
<CAPTION>

                                                                                      December 31,
                                                                                                                           1996
                                                          1 to        3 to 5        5 to 10     10 to 20       Over 20     Balance
                                                        3 Years       Years         Years        Years         Years    Outstanding
                                                                                      (In Thousands)
<S>                                                        <C>       <C>            <C>        <C>            <C>           <C>


Federal Home Loan Mortgage Corporation............         $46        $ ---          $519       $2,628         $ ---          $3,193

Federal National Mortgage Association.............         ---          ---           ---          ---            82              82

Government National Mortgage Association..........         ---          ---           ---          ---           746             746
                                                         -----        -----         -----     --------          ----         -------

     Total........................................        $ 46        $ ---          $519       $2,628          $828          $4,021
                                                          ====        =====          ====       ======          ====          ======

</TABLE>

Sources of Funds

         General. The Bank's primary sources of funds are deposits,  borrowings,
amortization  and  prepayment  of  loan  principal,   maturities  of  investment
securities, short-term investments and funds provided from operations.

         Deposits.  American Savings offers a variety of deposit accounts having
a wide  range of  interest  rates and  terms.  The  Bank's  deposits  consist of
passbook  accounts,  demand and NOW accounts,  and money market and  certificate
accounts. The Bank relies primarily on advertising, competitive pricing policies
and customer service to attract and retain these deposits.

         The flow of deposits is influenced  significantly  by general  economic
conditions,   changes  in  money  market  and  prevailing   interest  rates  and
competition.

         The variety of deposit  accounts  offered by the Bank has allowed it to
be competitive in obtaining funds and to respond with  flexibility to changes in
consumer demand. The Bank has become more susceptible to short-term fluctuations
in deposit  flows,  as customers have become more interest rate  conscious.  The
Bank  manages the pricing of its  deposits in keeping  with its  asset/liability
management,  profitability and growth objectives.  Based on its experience,  the
Bank believes that its passbook,  demand and NOW accounts are relatively  stable
sources of deposits as compared to certificate deposits. However, the ability of
the Bank to  attract  and  maintain  all  deposits,  and the rates paid on these
deposits,  has been and will  continue  to be  significantly  affected by market
conditions.
<PAGE>
         The following table sets forth the savings flows at the Bank during the
periods indicated.

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                                    1996         1995          1994
                                                      (Dollars in Thousands)

<S>                                               <C>          <C>          <C>
Opening balance.............................      $ 59,588     $ 58,281     $  59,086
Deposits....................................       122,369      108,637       102,605
Withdrawals.................................      (123,874)    (109,462)     (105,070)
Interest credited...........................         2,328        2,132         1,660
                                                  --------     ---------     ---------

Ending balance..............................      $ 60,411     $ 59,588      $ 58,281
                                                  ========     ========      ========

Net increase (decrease).....................      $    823    $   1,307     $    (805)
                                                 =========    =========     =========


Percent increase (decrease).................         1.38%        2.24%       (1.36)%
                                                     =====        =====        =====

</TABLE>
<PAGE>
         The following table sets forth the dollar amount of savings deposits in
the  various  types of  deposit  programs  offered  by the Bank as of the  dates
indicated.
<TABLE>
<CAPTION>
                                                                                 December 31,
                                                 ---------------------------------------------------------------------------
                                                        1996                     1995                    1994
                                                 ---------------------------------------------------------------------------
                                                                 Percent                   Percent                  Percent
                                                  Amount        of Total      Amount      of Total     Amount      of Total
                                                  ------        --------      ------      --------     ------      --------
                                                                           (Dollars in Thousands)
<S>                                               <C>            <C>      <C>               <C>     <C>             <C>

Transactions and Savings Deposits:

Commercial Demand 0.00%(1)..................      $   731           1.21% $    821            1.38% $    722           1.24%
Passbook Accounts 3.00%(1)..................       16,311          27.00    16,798           28.19    17,935          30.77
NOW Accounts 2.25%(1).......................        5,981           9.90     5,801            9.74     5,476           9.40
Money Market Accounts 3.25%(1)..............        2,454           4.06     2,678            4.49     2,719           4.66
                                                  -------        -------  --------          ------   -------         ------

Total Non-Certificates......................       25,477          42.17    26,098           43.80    26,852          46.07
                                                  -------        -------    ------          ------   -------         ------

Certificates:

 2.00 -  3.99%..............................          416            .69     1,399            2.35     5,415           9.29
 4.00 -  5.99%..............................       29,691          49.15    21,952           36.83    24,218          41.55
 6.00 -  7.99%..............................        4,822           7.98    10,094           16.94     1,734           2.98
 8.00 -  9.99%..............................            5            .01        45             .08        62            .11
                                                ---------       -------- ---------         -------   -------         ------

Total Certificates..........................       34,934          57.83    33,490           56.20    31,429          53.93
                                                  -------        -------  --------          ------   -------         ------
Total Deposits..............................      $60,411         100.00%  $59,588          100.00%  $58,281         100.00%
                                                  =======         ======   =======          ======   =======         ======


------------------------
(1)  Rates in effect at December 31, 1996.

</TABLE>
<PAGE>
         The following table shows rate and maturity  information for the Bank's
certificates of deposit as of December 31, 1996
<TABLE>
<CAPTION>

                                        2.00-        4.00-        6.00-       8.00-                   Percent
                                        3.99%        5.99%        7.99%       9.99%     Total        of Total
                                        -----        -----        -----       -----     -----        --------
                                                                 (Dollars in Thousands)
<S>                                      <C>      <C>           <C>          <C>       <C>            <C>
Certificate account maturing
 in quarter ending:

March 31, 1997.................          $ 52     $10,138       $  785       $ ---     $10,975          31.42%
June 30, 1997..................            85       6,592          165         ---       6,842          19.59
September 30, 1997.............             4       3,563          694         ---       4,261          12.20
December 31, 1997..............           105       3,253          257         ---       3,615          10.35
March 31, 1998.................           170       1,673          362         ---       2,205           6.31
June 30, 1998..................           ---       1,838          164         ---       2,002           5.73
September 30, 1998.............           ---         824          805         ---       1,629           4.66
December 31, 1998..............           ---         586          235         ---         821           2.35
March 31, 1999.................           ---         452          163         ---         615           1.76
June 30, 1999..................           ---         315           84         ---         399           1.14
September 30, 1999.............           ---          59          478         ---         537           1.54
December 31, 1999..............           ---         165          310         ---         475           1.36
Thereafter.....................           ---         233          320           5         558          1.59
                                       ------    --------       ------        ----     -------        ------

   Total.......................          $416     $29,691       $4,822        $  5     $34,934        100.00%
                                         ====     =======       ======        ====     =======        ======

   Percent of total............         1.19%      85.00%       13.80%        .01%
                                        =====       =====        =====         ===
</TABLE>
         The following table indicates the amount of the Bank's  certificates of
deposit and other deposits by time  remaining  until maturity as of December 31,
1996.
<TABLE>
<CAPTION>
                                                                                 Maturity
                                                                     Over         Over
                                                      3 Months       3 to 6       6 to 12        Over
                                                      or Less       Months       Months       12 months      Total
                                                                            (In Thousands)
<S>                                                   <C>             <C>          <C>           <C>         <C>

Certificates of deposit less than $100,000.......     $  8,026        $6,132       $6,479        $8,600      $29,237

Certificates of deposit of $100,000 or more......        2,949           710        1,397           641        5,697
                                                      --------       -------       ------       -------     --------

Total certificates of deposit....................      $10,975        $6,842       $7,876        $9,241      $34,934
                                                       =======        ======       ======        ======      =======

</TABLE>
<PAGE>
         Borrowings.  American Savings' other available sources of funds include
advances from the FHLB of Indianapolis and other borrowings.  As a member of the
FHLB of  Indianapolis,  the Bank is required to own capital stock in the FHLB of
Indianapolis  and  is  authorized  to  apply  for  advances  from  the  FHLB  of
Indianapolis.  Each FHLB credit program has its own interest rate,  which may be
fixed or  variable,  and  range of  maturities.  The  FHLB of  Indianapolis  may
prescribe the acceptable uses for these advances,  as well as limitations on the
size  of  the  advances  and  repayment   provisions.   During  1996,  the  Bank
substantially increased short-term borrowings in order to fund loan demand.

         The  following  table  sets forth the  maximum  month-end  balance  and
average balance of FHLB advances, securities sold under agreements to repurchase
and other borrowings for the periods indicated.
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                 -------------------------------------------------
                                                                  1996          1995         1994          1993
                                                                  ----          ----         ----          ----
                                                                                 (In Thousands)
<S>                                                              <C>           <C>         <C>            <C>
Maximum Balance:
  FHLB advances...........................................       $9,500        $3,000      $ 1,000        $   ---
  Securities sold under agreements to repurchase..........          ---           ---          ---            ---
  Other borrowings........................................          ---           ---          ---            ---

Average Balance:
  FHLB advances...........................................       $3,186        $1,567     $     13        $   ---
  Securities sold under agreements to repurchase..........          ---           ---          ---            ---
  Other borrowings........................................          ---           ---          ---            ---

</TABLE>

         The  following  table sets forth certain  information  as to the Bank's
borrowings at the dates indicated.
<TABLE>
<CAPTION>
                                                                              December 31,
                                                              ----------------------------------------------
                                                                 1996        1995        1994          1993
                                                              --------     --------  ----------     --------
                                                                        (Dollars in Thousands)
<S>                                                           <C>          <C>        <C>           <C>

FHLB advances.............................................      $9,500       $3,000     $ 1,000     $    ---
Securities sold under agreements to repurchase............                      ---         ---          ---
Other borrowings..........................................         ---          ---         ---          ---
                                                              --------     --------  ----------     --------

     Total borrowings.....................................      $9,500       $3,000     $ 1,000     $    ---
                                                                ======       ======     =======     ========

Weighted average interest rate of FHLB advances...........       5.91%        6.16%       6.26%         ---%

Weighted average interest rate of securities sold
 under agreements to repurchase...........................        ---%         ---%        ---%         ---%

Weighted average interest rate of other borrowings........        ---%         ---%        ---%         ---%

</TABLE>
<PAGE>
Service Corporations

         As a  federally  chartered  savings  association,  American  Savings is
permitted by OTS  regulations to invest up to 2% of its assets,  or $1.7 million
at  December  31,  1996,  in the  stock of,  or loans  to,  service  corporation
subsidiaries.  As of  such  date,  the  net  book  value  of  American  Savings'
investment  in its service  corporations  was  approximately  $43,000.  American
Savings may invest an additional 1% of its assets in service  corporations where
such additional funds are used for inner-city or community development purposes.
In addition to investments in service  corporations,  federal  institutions  are
permitted to invest an unlimited amount in operating subsidiaries engaged solely
in activities which a federal association may engage in directly.

         American Savings has one wholly owned subsidiary  service  corporation,
NIFCO, Inc. ("NIFCO"), and one second tier subsidiary service corporation, Ridge
Management,  Inc.  ("Ridge  Management")  which is owned by NIFCO.  NIFCO  sells
annuities and securities to the Bank's  customers and to the general public.  At
December 31, 1996,  the Bank had an equity  investment in NIFCO of $43,000.  For
the year ended December 31, 1996,  NIFCO  recorded net income of $2,000.  In the
past, Ridge Management engaged in lending and investment  activity,  although it
is currently essentially  inactive.  For the year ended December 31, 1996, Ridge
Management had no activity.

Competition

         American  Savings faces strong  competition  both in  originating  real
estate loans and in attracting deposits.  Competition in originating loans comes
primarily from other savings institutions,  credit unions,  commercial banks and
mortgage  bankers  who also make  loans  secured by real  estate  located in the
Bank's primary market area. The Bank competes for loans principally on the basis
of the interest rates and loan fees it charges, the types of loans it originates
and the quality of services it provides to borrowers.

         The Bank  attracts  all of its  deposits  through  its branch  offices,
primarily  from the  communities  in which those  branch  offices  are  located;
therefore,  competition  for those  deposits is  principally  from other savings
institutions,  commercial banks, securities firms, money market and mutual funds
and credit unions  located in the same  communities.  The ability of the Bank to
attract  and retain  deposits  depends on its  ability to provide an  investment
opportunity  that satisfies the  requirements of investors as to rate of return,
liquidity,  risk,  convenient locations and other factors. The Bank competes for
these deposits by offering a variety of deposit  accounts at competitive  rates,
convenient  business hours and a customer oriented staff. The Bank estimates its
market  share  of  savings  deposits  in  the  Lake  County  market  area  to be
approximately 1.2%.

         The authority to offer money market deposits,  and expanded lending and
other powers  authorized for savings  institutions  by federal  legislation  has
resulted in increased  competition  for both deposits and loans between  savings
institutions and other financial institutions such as commercial banks.
<PAGE>
Regulation

         General. American Savings is a federally chartered savings association,
the deposits of which are insured by the FDIC,  which insurance is backed by the
full faith and credit of the United  States  Government.  Accordingly,  American
Savings is subject to broad federal  regulation  and oversight  extending to all
its operations.  American Savings is a member of the FHLB of Indianapolis and is
subject to certain  limited  regulation by the Board of Governors of the Federal
Reserve  System  ("Federal  Reserve  Board").  As the savings  and loan  holding
company of American Savings,  the Company also is subject to federal  regulation
and  oversight.  The purpose of the  regulation of the Company and other holding
companies is to protect subsidiary savings  associations.  American Savings is a
member of the Savings Association  Insurance Fund ("SAIF"),  which together with
the  Bank  Insurance  Fund  (the  "BIF")  are the two  deposit  insurance  funds
administered  by the FDIC,  and the deposits of American  Savings are insured by
the FDIC. As a result, the FDIC has certain regulatory and examination authority
over American Savings.

         Certain of these regulatory requirements and restrictions are discussed
below or elsewhere in this document.

Federal Regulation of Savings Associations

         The  OTS  has  extensive  authority  over  the  operations  of  savings
associations.  As part of this authority,  American  Savings is required to file
periodic reports with the OTS and is subject to periodic examinations by the OTS
and the FDIC. The last regular OTS and FDIC  examinations of the Bank were as of
August,  1996 and November,  1991,  respectively.  When these  examinations  are
conducted by the OTS and the FDIC, the examiners may require the Bank to provide
for higher general or specific loan loss reserves.  All savings associations are
subject to semi-annual  assessments,  based upon the savings association's total
assets,  to fund the operations of the OTS. American Savings' OTS assessment for
the fiscal year ended December 31, 1996, was $25,000.

         The OTS also  has  extensive  enforcement  authority  over all  savings
associations  and their holding  companies,  including  American Savings and the
Company. This enforcement authority includes, among other things, the ability to
assess civil money penalties, to issue cease-and-desist or removal orders and to
initiate  injunctive  actions.  In  general,  these  enforcement  actions may be
initiated  for  violations  of  laws  and  regulations  and  unsafe  or  unsound
practices.  Other  actions or  inactions  may provide the basis for  enforcement
action,  including  misleading or untimely  reports  filed with the OTS.  Except
under certain  circumstances,  public disclosure of final enforcement actions by
the OTS is required.

         In  addition,  the  investment,  lending  and  branching  authority  of
American  Savings  is  prescribed  by  federal  laws and it is  prohibited  from
engaging in any activities not permitted by such laws. For instance,  no savings
institution may invest in  non-investment  grade corporate debt  securities.  In
addition,  the permissible level of investment by federal  associations in loans
secured by  non-residential  real property may not exceed 400% of total capital,
except with approval of the OTS. Federal savings associations are also generally
authorized to branch  nationwide.  American  Savings is in  compliance  with the
noted restrictions.
<PAGE>
         The Bank's general permissible lending limit for  loans-to-one-borrower
is equal to the  greater of $500,000  or 15% of  unimpaired  capital and surplus
(except for loans fully secured by certain  readily  marketable  collateral,  in
which case this limit is increased to 25% of unimpaired capital and surplus). At
December 31, 1996,  the Bank's  lending  limit under this  restriction  was $1.7
million.  American  Savings  is in  compliance  with  the  loans-to-one-borrower
limitation.

         The OTS, as well as the other  federal  banking  agencies,  has adopted
guidelines  establishing  safety and soundness standards on such matters as loan
underwriting and  documentation,  asset quality,  earnings  standards,  internal
controls and audit  systems,  interest rate risk exposure and  compensation  and
other  employee  benefits.  Any  institution  which  fails to comply  with these
standards must submit a compliance plan. A failure to submit a plan or to comply
with an  approved  plan will  subject  the  institution  to further  enforcement
action.

Insurance of Accounts and Regulation by the FDIC

         American  Savings is a member of the SAIF, which is administered by the
FDIC.  Deposits  are  insured  up to  applicable  limits  by the  FDIC  and such
insurance  is  backed  by  the  full  faith  and  credit  of the  United  States
Government.  As insurer,  the FDIC  imposes  deposit  insurance  premiums and is
authorized to conduct  examinations of and to require  reporting by FDIC-insured
institutions. It also may prohibit any FDIC-insured institution from engaging in
any activity the FDIC  determines  by regulation or order to pose a serious risk
to the SAIF or the BIF. The FDIC also has the authority to initiate  enforcement
actions  against  savings  associations,  after giving the OTS an opportunity to
take such action,  and may terminate the deposit insurance if it determines that
the institution has engaged in unsafe or unsound practices or is in an unsafe or
unsound condition.

         The FDIC's deposit insurance premiums are assessed through a risk-based
system under which all insured  depository  institutions  are placed into one of
nine  categories  and  assessed  insurance  premiums,  based upon their level of
capital and supervisory evaluation. Under the system, institutions classified as
well  capitalized  (i.e., a core capital ratio of at least 5%, a ratio of Tier 1
or core capital to  risk-weighted  assets  ("Tier 1  risk-based  capital") of at
least 6% and a risk-based  capital ratio of at least 10%) and considered healthy
pay the  lowest  premium  while  institutions  that  are  less  than  adequately
capitalized (i.e., core or Tier 1 risk-based capital ratios of less than 4% or a
risk-based  capital  ratio  of less  than  8%)  and  considered  of  substantial
supervisory concern pay the highest premium.  Risk classification of all insured
institutions will be made by the FDIC for each semi-annual assessment period.

         The FDIC is authorized to increase  assessment  rates,  on a semiannual
basis, if it determines that the reserve ratio of the SAIF will be less than the
designated  reserve  ratio of 1.25% of SAIF insured  deposits.  In setting these
increased  assessments,  the FDIC must seek to restore the reserve ratio to that
designated  reserve  level,  or such higher  reserve ratio as established by the
FDIC.  The FDIC may also impose  special  assessments  on SAIF  members to repay
amounts  borrowed from the United States Treasury or for any other reason deemed
necessary by the FDIC.
<PAGE>
           For the first six months of 1995,  the  assessment  schedule  for BIF
members and SAIF members  ranged from .23% to .31% of  deposits.  As is the case
with the SAIF, the FDIC is authorized to adjust the insurance  premium rates for
banks that are insured by the BIF of the FDIC in order to  maintain  the reserve
ratio of the BIF at  1.25%  of BIF  insured  deposits.  As a  result  of the BIF
reaching its statutory  reserve ratio the FDIC revised the premium  schedule for
BIF insured  institutions  to provide a range of .04% to .31% of  deposits.  The
revisions  became  effective in the third quarter of 1995. In addition,  the BIF
rates were further revised,  effective January 1996, to provide a range of 0% to
 .27%. The SAIF rates, however, were not adjusted.

At the time the FDIC  revised the BIF premium  schedule,  it noted that,  absent
legislative  action  (as  discussed  below),  the  SAIF  would  not  attain  its
designated reserve ratio until the year 2002. As a result,  SAIF insured members
would continue to be generally subject to higher deposit insurance premiums than
BIF insured  institutions  until,  all things being equal, the SAIF attained its
required reserve ratio.

         In order to eliminate this disparity and any  competitive  disadvantage
between  BIF and SAIF  member  institutions  with  respect to deposit  insurance
premiums,  legislation to  recapitalize  the SAIF was enacted in September 1996.
The legislation provides for a one-time assessment to be imposed on all deposits
assessed at the SAIF rates, as of March 31, 1995, in order to  recapitalize  the
SAIF. It also provides for the merger of the BIF and the SAIF on January 1, 1999
if no savings  associations  then exist.  The special  assessment  rate has been
established  at .657% of deposits by the FDIC and the  resulting  assessment  of
$389,000  was paid in  November  1996.  This  special  assessment  significantly
increased  noninterest  expense and  adversely  affected  the Bank's  results of
operations for the year ended December 31, 1996.

         Prior  to the  enactment  of the  legislation,  a  portion  of the SAIF
assessment imposed on savings  associations was used to repay obligations issued
by a federally chartered corporation to provide financing ("FICO") for resolving
the thrift  crisis in the 1980s.  Although the FDIC has  proposed  that the SAIF
assessment be equalized with the BIF assessment  schedule,  effective October 1,
1996, SAIF-insured institutions will continue to be subject to a FICO assessment
as a result of this continuing  obligation.  Although the  legislation  also now
requires  assessments  to be made on  BIF-assessable  deposits for this purpose,
effective  January 1, 1997,  that  assessment will be limited to 20% of the rate
imposed on SAIF  assessable  deposits  until the earlier of December 31, 1999 or
when no  savings  association  continues  to exist,  thereby  imposing a greater
burden  on SAIF  member  institutions  such as the  Bank.  Thereafter,  however,
assessments  on  BIF-member  institutions  will  be made on the  same  basis  as
SAIF-member  institutions.  The rates  established by the FDIC to implement this
requirement  for  all  FDIC-  insured  institutions  are  a  6.5%  basis  points
assessment  on SAIF  deposits  and 1.3 basis  points on BIF  deposits  until BIF
insured institutions participate fully in the assessment.

Regulatory Capital Requirements

         Federally insured savings associations,  such as the Bank, are required
to  maintain a minimum  level of  regulatory  capital.  The OTS has  established
capital standards,  including a tangible capital  requirement,  a leverage ratio
(or core capital) requirement and a risk-based capital requirement applicable to
such  savings  associations.  These  capital  requirements  must be generally as
stringent as the comparable capital  requirements for national banks. The OTS is
also  authorized to impose capital  requirements in excess of these standards on
individual associations on a case-by-case basis.
<PAGE>
         The capital  regulations  require  tangible capital of at least 1.5% of
adjusted total assets (as defined by  regulation).  Tangible  capital  generally
includes  common   stockholders'   equity  and  retained  income,   and  certain
noncumulative  perpetual  preferred stock and related income.  In addition,  all
intangible  assets,  other than a limited amount of purchased mortgage servicing
rights,  must be deducted from tangible capital for calculating  compliance with
the requirement.

         The OTS regulations establish special  capitalization  requirements for
savings associations that own subsidiaries.  In determining  compliance with the
capital requirements,  all subsidiaries engaged solely in activities permissible
for national  banks or engaged in certain other  activities  solely as agent for
its customers are  "includable"  subsidiaries  that are consolidated for capital
purposes in proportion to the association's  level of ownership.  For excludable
subsidiaries the debt and equity  investments in such  subsidiaries are deducted
from assets and capital.

         At December 31, 1996,  American  Savings had tangible  capital of $11.2
million, or 13.08% of adjusted total assets, which is approximately $9.9 million
above the minimum requirement of 1.5% of adjusted total assets in effect on that
date.

         The capital standards also require core capital equal to at least 3% of
adjusted total assets.  Core capital generally consists of tangible capital plus
certain intangible  assets,  including a limited amount of purchased credit card
relationships.  As a result of the prompt corrective action provisions discussed
below,  however, a savings  association must maintain a core capital ratio of at
least  4%  to  be  considered  adequately  capitalized  unless  its  supervisory
condition is such to allow it to maintain a 3% ratio.

         At December 31, 1996,  American Savings had core capital equal to $11.2
million,  or 13.08% of adjusted  total  assets,  which is $8.6 million above the
minimum leverage ratio requirement of 3% as in effect on that date.

          The OTS risk-based  requirement  requires savings associations to have
total capital of at least 8% of risk-weighted  assets. Total capital consists of
core capital, as defined above, and supplementary capital. Supplementary capital
consists of certain  permanent  and  maturing  capital  instruments  that do not
qualify as core capital and general  valuation loan and lease loss allowances up
to a maximum of 1.25% of risk-weighted assets. Supplementary capital may be used
to satisfy the risk-based  requirement  only to the extent of core capital.  The
OTS is  also  authorized  to  require  a  savings  association  to  maintain  an
additional  amount of total capital to account for  concentration of credit risk
and the risk of  non-traditional  activities.  At December  31,  1996,  American
Savings had no capital  instruments  that qualify as  supplementary  capital and
$355,000 of general valuation loan loss allowances, which was less than 1.25% of
risk-weighted assets.

         Certain  exclusions from capital and assets are required to be made for
the purpose of calculating  total  capital.  Such  exclusions  consist of equity
investments  (as  defined  by  regulation)  and that  portion  of land loans and
nonresidential  construction  loans in excess of an 80% loan-to-value  ratio and
reciprocal  holdings of qualifying  capital  instruments.  American  Savings had
$15,000 of such exclusions from capital and assets at December 31, 1996.
<PAGE>
         In  determining  the  amount  of  risk-weighted   assets,  all  assets,
including certain  off-balance sheet items, will be multiplied by a risk weight,
ranging from 0% to 100%,  based on the risk  inherent in the type of asset.  For
example,  the OTS has assigned a risk weight of 50% for  prudently  underwritten
permanent  one- to  four-family  first lien mortgage loans not more than 90 days
delinquent  and having a loan to value ratio of not more than 80% at origination
unless insured to such ratio by an insurer approved by the FNMA or FHLMC.

         OTS regulations  also require that every savings  association with more
than normal  interest rate risk exposure to deduct from its total  capital,  for
purposes of determining compliance with such requirement, an amount equal to 50%
of its  interest-rate  risk  exposure  multiplied  by the  present  value of its
assets. This exposure is a measure of the potential decline in the net portfolio
value of a savings  association,  greater  than 2% of the  present  value of its
assets,  based upon a  hypothetical  200 basis  point  increase  or  decrease in
interest rates (whichever results in a greater decline).  Net portfolio value is
the  present  value  of  expected  cash  flows  from  assets,   liabilities  and
off-balance  sheet  contracts.  The rule will not become effective until the OTS
evaluates the process by which savings  associations may appeal an interest rate
risk deduction determination.  It is uncertain as to when this evaluation may be
completed.  Any savings  association,  such as American Savings,  with less than
$300 million in assets and a total capital ratio in excess of 12% is exempt from
this requirement unless the OTS determines otherwise.

         On December  31,  1996,  American  Savings  had total  capital of $11.5
million  (including  $11.2  million in core capital and  $355,000 in  qualifying
supplementary  capital)  and risk-  weighted  assets of $46.3  million  or total
capital of 24.86% of  risk-weighted  assets.  This amount was $7.8 million above
the 8% requirement in effect on that date.

         The OTS and the FDIC are authorized  and,  under certain  circumstances
required, to take certain actions against savings associations that fail to meet
their  capital  requirements.  The OTS is  generally  required to take action to
restrict the activities of an "undercapitalized  association" (generally defined
to be one with less than  either a 4% core  capital  ratio,  a 4% Tier 1 risked-
based capital ratio or an 8% risk-based  capital  ratio).  Any such  association
must  submit a capital  restoration  plan and until such plan is approved by the
OTS may not increase its assets, acquire another institution, establish a branch
or  engage  in  any  new   activities,   and  generally  may  not  make  capital
distributions.  The OTS is authorized to impose the additional restrictions that
are applicable to significantly undercapitalized associations.

          As a condition to the approval of the capital  restoration  plan,  any
company  controlling  an  undercapitalized  association  must agree that it will
enter  into  a  limited  capital  maintenance  guarantee  with  respect  to  the
institution's achievement of its capital requirements.

         Any savings  association  that fails to comply with its capital plan or
is  "significantly  undercapitalized"  (i.e.,  Tier 1 risk-based or core capital
ratios of less than 3% or a  risk-based  capital  ratio of less than 6%) must be
made  subject  to one or more of  additional  specified  actions  and  operating
restrictions  which may cover all aspects of its operations and include a forced
merger  or  acquisition  of  the   association.   An  association  that  becomes
"critically  undercapitalized" (i.e., a tangible capital ratio of 2% or less) is
<PAGE>
subject to further mandatory restrictions on its activities in addition to those
applicable to significantly  undercapitalized associations. In addition, the OTS
must appoint a receiver (or conservator  with the concurrence of the FDIC) for a
savings  association,  with certain limited exceptions,  within 90 days after it
becomes critically  undercapitalized.  Any undercapitalized  association is also
subject to the general enforcement  authority of the OTS and the FDIC, including
the appointment of a conservator or a receiver.

         The OTS is also generally  authorized to reclassify an association into
a lower capital category and impose the restrictions applicable to such category
if the institution is engaged in unsafe or unsound  practices or is in an unsafe
or unsound condition.

         The  imposition by the OTS or the FDIC of any of these  measures on the
Bank may have a substantial  adverse effect on American Savings'  operations and
profitability.   Company   shareholders  do  not  have  preemptive  rights,  and
therefore, if the Company is directed by the OTS or the FDIC to issue additional
shares of  Common  Stock,  such  issuance  may  result  in the  dilution  in the
percentage of ownership of the Company.

Limitations on Dividends and Other Capital Distributions

         OTS regulations  impose various  restrictions  on savings  associations
with  respect  to their  ability to make  distributions  of  capital,  including
dividends,  stock  redemptions  or  repurchases,   cash-out  mergers  and  other
transactions  charged to the capital  account.  OTS regulations  also prohibit a
savings  association from declaring or paying any dividends or from repurchasing
any of its stock if, as a result,  the  regulatory  capital  of the  association
would be reduced below the amount  required to be maintained for the liquidation
account established in connection with its mutual to stock conversion.

         Generally,  savings  associations,  such as the Bank,  that  before and
after the  proposed  distribution  meet  their  capital  requirements,  may make
capital  distributions  during any calendar year equal to the greater of 100% of
net  income for the  year-to-date  plus 50% of the amount by which the lesser of
the  association's  tangible,  core or  risk-based  capital  exceeds its capital
requirement  for such  capital  component,  as measured at the  beginning of the
calendar year, or 75% of its net income for the most recent four quarter period.
However,  an association deemed to be in need of more than normal supervision by
the OTS may have its dividend authority restricted by the OTS.

         Savings  associations  proposing to make any capital  distribution need
only  submit  written  notice  to the OTS 30 days  prior  to such  distribution.
Savings  associations  that do not,  or would  not meet  their  current  minimum
capital requirements  following a proposed capital  distribution,  however, must
obtain OTS approval prior to making such distribution. The OTS may object to the
distribution  during that 30-day  notice  period  based on safety and  soundness
concerns. See "- Regulatory Capital Requirements."

         The OTS has proposed  regulations that would revise the current capital
distribution  restrictions.  Under the proposal a savings association may make a
capital  distribution  without notice to the OTS (unless it is a subsidiary of a
holding  company)  provided  that  it  has a  CAMEL  1 or 2  rating,  is  not of
supervisory concern, and would remain adequately  capitalized (as defined in the
OTS prompt corrective action regulations)  following the proposed  distribution.
Savings  associations  that would remain  adequately  capitalized  following the
proposed  distribution but do not meet the other noted  requirements must notify
<PAGE>
the OTS 30 days prior to  declaring  a capital  distribution.  The OTS stated it
will generally regard as permissible that amount of capital  distributions  that
do not exceed 50% of the institution's excess regulatory capital plus net income
to date during the calendar year. A savings  association  may not make a capital
distribution  without  prior  approval  of  the  OTS  and  the  FDIC  if  it  is
undercapitalized  before,  or as a result of, such a distribution.  As under the
current  rule,  the  OTS  may  object  to a  capital  distribution  if it  would
constitute  an unsafe  or  unsound  practice.  No  assurance  may be given as to
whether or in what form the regulations may be adopted.

Liquidity

         All savings  associations,  including American Savings, are required to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings  payable  in one  year or  less.  For a  discussion  of what the Bank
includes  in  liquid  assets,  see  "Management's  Discussion  and  Analysis  of
Financial  Condition  and Results of  Operations - Liquidity and Capital" in the
Annual Report.  This liquid asset ratio  requirement  may vary from time to time
(between 4% and 10%) depending upon economic conditions and savings flows of all
savings associations. At the present time, the minimum liquid asset ratio is 5%.

         In  addition,  short-term  liquid  assets  (e.g.,  cash,  certain  time
deposits,  certain  bankers  acceptances  and short-term  United States Treasury
obligations)  currently must constitute at least 1% of the association's average
daily  balance of net  withdrawable  deposit  accounts  and current  borrowings.
Penalties may be imposed upon associations for violations of either liquid asset
ratio  requirement.  At December 31, 1996, the Bank was in compliance  with both
requirements,  with an  overall  liquid  asset  ratio of 15.4% and a  short-term
liquid assets ratio of 4.7%.

Qualified Thrift Lender Test

         All savings  associations,  including American Savings, are required to
meet a qualified  thrift lender  ("QTL") test to avoid certain  restrictions  on
their operations.  This test requires a savings association to have at least 65%
of  its  portfolio  assets  (as  defined  by  regulation)  in  qualified  thrift
investments  on a monthly  average  for nine out of every 12 months on a rolling
basis. As an alternative, the savings association may maintain 60% of its assets
in those assets  specified in Section  7701(a)(19) of the Internal Revenue Code.
Under either test, such assets primarily consist of residential  housing related
loans and  investments.  At  December  31,  1996,  the Bank met the test and has
always met the test since its effectiveness.

         Any savings association that fails to meet the QTL test must convert to
a national bank charter, unless it requalifies as a QTL and thereafter remains a
QTL. If an  association  does not  requalify  and  converts  to a national  bank
charter,  it must remain  SAIF-insured  until the FDIC permits it to transfer to
the BIF.  If such an  association  has not yet  requalified  or  converted  to a
national  bank,  its  new  investments  and  activities  are  limited  to  those
permissible  for both a  savings  association  and a  national  bank,  and it is
limited to national bank branching  rights in its home state.  In addition,  the
association is immediately  ineligible to receive any new FHLB borrowings and is
subject to national  bank limits for payment of dividends.  If such  association
has not requalified or converted to a national bank within three years after the
failure,  it must divest itself of all  investments and cease all activities not
<PAGE>
permissible  for a  national  bank.  In  addition,  it must repay  promptly  any
outstanding FHLB borrowings,  which may result in prepayment  penalties.  If any
association  that fails the QTL test is  controlled by a holding  company,  then
within one year after the failure,  the holding  company must register as a bank
holding  company  and  become  subject  to  all  restrictions  on  bank  holding
companies. See "- Holding Company Regulation."

Community Reinvestment Act

         Under the  Community  Reinvestment  Act  ("CRA"),  every  FDIC  insured
institution has a continuing and affirmative obligation consistent with safe and
sound banking  practices to help meet the credit needs of its entire  community,
including  low and moderate  income  neighborhoods.  The CRA does not  establish
specific lending requirements or programs for financial institutions nor does it
limit an institution's  discretion to develop the types of products and services
that it believes are best suited to its particular  community,  consistent  with
the CRA.  The CRA  requires  the OTS,  in  connection  with the  examination  of
American Savings, to assess the institution's record of meeting the credit needs
of its  community  and to take such record  into  account in its  evaluation  of
certain applications,  such as a merger or the establishment of a branch, by the
Bank.  An  unsatisfactory  rating  may be used as the basis for the denial of an
application by the OTS.

         The federal banking agencies,  including the OTS, have recently revised
the CRA  regulations  and  the  methodology  for  determining  an  institution's
compliance with the CRA. Due to the heightened  attention being given to the CRA
in the past few years,  the Bank may be required to devote  additional funds for
investment  and lending in its local  community.  The Bank was  examined for CRA
compliance in December 1995 and received a rating of satisfactory.

Transactions with Affiliates

         Generally,   transactions   between  a  savings   association   or  its
subsidiaries  and its affiliates are required to be on terms as favorable to the
association as transactions with non-affiliates.  In addition,  certain of these
transactions,  such as loans to an affiliate,  are restricted to a percentage of
the  association's  capital.  Affiliates of American Savings include the Holding
Company  and any  company  which is under  common  control  with  the  Bank.  In
addition,  a  savings  association  may not  lend to any  affiliate  engaged  in
activities not  permissible for a bank holding company or acquire the securities
of most affiliates. The Bank's subsidiaries are not deemed affiliates,  however;
the OTS has the  discretion to treat  subsidiaries  of savings  associations  as
affiliates on a case by case basis.

         Certain  transactions with directors,  officers or controlling  persons
are also subject to conflict of interest  regulations enforced by the OTS. These
conflict of interest  regulations and other statutes also impose restrictions on
loans to such persons and their  related  interests.  Among other  things,  such
loans must be made on terms  substantially the same as for loans to unaffiliated
individuals.
<PAGE>
Holding Company Regulation

         The  Holding  Company is a unitary  savings  and loan  holding  company
subject to  regulatory  oversight  by the OTS. As such,  the Holding  Company is
required to register and file reports with the OTS and is subject to  regulation
and examination by the OTS. In addition,  the OTS has enforcement authority over
the Holding  Company and its  non-savings  association  subsidiaries  which also
permits the OTS to restrict or prohibit  activities  that are determined to be a
serious risk to the subsidiary savings association.

         As a unitary  savings and loan  holding  company,  the Holding  Company
generally  is not  subject to  activity  restrictions.  If the  Holding  Company
acquires  control of another savings  association as a separate  subsidiary,  it
would become a multiple savings and loan holding company,  and the activities of
the Holding Company and any of its subsidiaries  (other than American Savings or
any  other   SAIF-insured   savings   association)  would  be  subject  to  such
restrictions  unless  such  other  associations  each  qualify as a QTL and were
acquired in a supervisory acquisition.

         If American Savings fails the QTL test, the Holding Company must obtain
the  approval of the OTS prior to  continuing  after such  failure,  directly or
through its other subsidiaries,  any business activity other than those approved
for  multiple  savings and loan  holding  companies  or their  subsidiaries.  In
addition,  within one year of such failure the Holding Company must register as,
and  will  become  subject  to,  the  restrictions  applicable  to bank  holding
companies. The activities authorized for a bank holding company are more limited
than are the activities  authorized  for a unitary or multiple  savings and loan
holding company. See "- Qualified Thrift Lender Test."

         The Holding Company must obtain approval from the OTS before  acquiring
control of any other SAIF-insured  association.  Such acquisitions are generally
prohibited  if they  result  in a  multiple  savings  and loan  holding  company
controlling  savings  associations  in  more  than  one  state.   However,  such
interstate  acquisitions are permitted based on specific state  authorization or
in a supervisory acquisition of a failing savings association.

Federal Securities Law

         The stock of the Holding  Company is registered  with the SEC under the
Securities  Exchange Act of 1934, as amended (the "Exchange  Act").  The Holding
Company is subject  to the  information,  proxy  solicitation,  insider  trading
restrictions and other requirements of the SEC under the Exchange Act.

         Holding  Company  stock held by persons who are  affiliates  (generally
officers,  directors and principal  stockholders) of the Holding Company may not
be resold without  registration or unless sold in accordance with certain resale
restrictions.  If the Holding Company meets specified current public information
requirements,  each  affiliate  of the  Holding  Company  is able to sell in the
public  market,  without  registration,  a  limited  number  of  shares  in  any
three-month period.
<PAGE>
Federal Reserve System

         The Federal  Reserve  Board  requires all  depository  institutions  to
maintain  non-interest  bearing  reserves  at  specified  levels  against  their
transaction accounts (primarily checking,  NOW and Super NOW checking accounts).
At December 31, 1996,  American  Savings was in  compliance  with these  reserve
requirements.  The balances maintained to meet the reserve  requirements imposed
by the Federal Reserve Board may be used to satisfy liquidity  requirements that
may be imposed by the OTS. See "- Liquidity."

         Savings  associations are authorized to borrow from the Federal Reserve
Bank  "discount   window,"  but  Federal  Reserve  Board   regulations   require
associations to exhaust other reasonable alternative sources of funds, including
FHLB borrowings, before borrowing from the Federal Reserve Bank.

Federal Home Loan Bank System

         American Savings is a member of the FHLB of Indianapolis,  which is one
of 12 regional FHLBs,  that  administers  the home financing  credit function of
savings  associations.  Each FHLB  serves as a reserve or  central  bank for its
members within its assigned region. It is funded primarily from proceeds derived
from the sale of consolidated  obligations of the FHLB System. It makes loans to
members (i.e., advances) in accordance with policies and procedures, established
by the board of directors of the FHLB, which are subject to the oversight of the
Federal  Housing  Finance  Board.  All advances from the FHLB are required to be
fully secured by  sufficient  collateral as determined by the FHLB. In addition,
all  long-term  advances  are  required to provide  funds for  residential  home
financing.

         As a member,  American  Savings is required to  purchase  and  maintain
stock in the FHLB of  Indianapolis.  At December 31, 1996,  American Savings had
$546,000 in FHLB stock,  which was in compliance with this requirement.  In past
years,  American Savings has received  substantial  dividends on its FHLB stock.
Over the past five calendar  years such  dividends  have averaged 8.24% and were
7.83% for calendar year 1996.

         Under  federal  law the FHLBs are  required  to  provide  funds for the
resolution  of  troubled  savings  associations  and to  contribute  to low- and
moderately priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income  housing
projects.  These  contributions  have  affected  adversely  the  level  of  FHLB
dividends  paid and could continue to do so in the future.  These  contributions
could also have an adverse  effect on the value of FHLB stock in the  future.  A
reduction in value of American Savings' FHLB stock may result in a corresponding
reduction in its capital.

         For the year ended  December  31, 1996,  dividends  paid by the FHLB of
Indianapolis  to American  Savings  totaled  $42,700,  which  constitutes a $300
decrease  from the amount of  dividends  received  in  calendar  year 1995.  The
$10,800  dividend  received  for the year ended  December  31, 1996  reflects an
annualized rate of 7.85%, or .02% above the average rate for calendar 1996.
<PAGE>
Federal and State Taxation

         Savings  associations  such as the Bank  that meet  certain  conditions
prescribed by the Internal  Revenue Code of 1986,  as amended (the "Code"),  are
permitted  to  establish  reserves  for bad debts and to make  annual  additions
thereto which may, within specified  formula limits,  be taken as a deduction in
computing taxable income for federal income tax purposes.  The amount of the bad
debt  reserve  deduction  is computed  under the  experience  method.  Under the
experience  method, the bad debt reserve deduction is an amount determined under
a formula based  generally upon the bad debts actually  sustained by the savings
association over a period of years.

         In August 1996, legislation was enacted that repealed the percentage of
taxable  income  method used by many  thrifts,  including the Bank, to calculate
their bad debt  reserve  for federal  income tax  purposes.  As a result,  small
thrifts such as the Bank must recapture that portion of the reserve that exceeds
the amount that could have been taken under the experience  method for tax years
beginning  after  December 31, 1987.  The  recapture  will occur over a six-year
period,  the  commencement of which will be delayed until the first taxable year
beginning  after  December 31,  1997,  provided the  institution  meets  certain
residential   lending   requirements.   At  December  31,  1996,  the  Bank  had
approximately  $315,000 in bad debt  reserves  subject to recapture  for federal
income tax  purposes.  The deferred tax  liability  related to the recapture has
been previously established so there will be no effect on future net income.

         In addition to the regular income tax, corporations,  including savings
banks such as  American  Savings,  generally  are  subject to a minimum  tax. An
alternative  minimum tax is imposed at a minimum tax rate of 20% on  alternative
minimum  taxable  income,  which is the sum of a  corporation's  regular taxable
income (with certain  adjustments) and tax preference  items, less any available
exemption.  The alternative  minimum tax is imposed to the extent it exceeds the
corporation's  regular  income tax and net  operating  losses can offset no more
than 90% of alternative minimum taxable income.

         A portion of the Bank's  reserves for losses on loans may not,  without
adverse tax consequences, be utilized for the payment of cash dividends or other
distributions   to  a  shareholder   (including   distributions  on  redemption,
dissolution or  liquidation) or for any other purpose (except to absorb bad debt
losses).  As of December 31,  1996,  the portion of American  Savings'  reserves
subject to this treatment for tax purposes totaled approximately $2.2 million.

         The Bank and its  subsidiaries  file  consolidated  federal  income tax
returns on a fiscal  year basis  using the  accrual  method of  accounting.  The
Holding Company intends to file consolidated federal income tax returns with the
Bank and its  subsidiaries.  Savings  associations,  such as the Bank, that file
federal  income tax  returns as part of a  consolidated  group are  required  by
applicable  Treasury  regulations to reduce their taxable income for purposes of
computing  the  percentage  bad  debt  deduction  for  losses   attributable  to
activities of the non-savings association members of the consolidated group that
are functionally related to the activities of the savings association member.

         The Bank and its consolidated subsidiaries have been audited by the IRS
with  respect to  consolidated  federal  income tax  returns for the years ended
December 31, 1995 and 1994.
<PAGE>
         Indiana Taxation. The State of Indiana imposes an 8.5% franchise tax on
the net income of financial (including thrift) institutions.  Taxable income for
franchise  tax  purposes  will  constitute  federal  taxable  income  before net
operating loss  deductions and special  deductions,  adjusted for certain items,
including  the addition of Indiana  income  taxes,  property  taxes,  tax exempt
interest and bad debts.  Other  applicable  Indiana taxes include sales, use and
property taxes.

         Delaware Taxation.  As a Delaware holding company,  the Holding Company
is exempt from Delaware  corporate  income tax but is required to file an annual
report with and pay an annual fee to the State of Delaware.  The Holding Company
is also subject to an annual franchise tax imposed by the State of Delaware.

Executive Officers

         The following information as to the business experience during the past
five years is supplied with respect to executive officers of the Company. Except
as otherwise indicated, the persons named have served as officers of the Company
since it  became  the  holding  company  of the  Association  and all  positions
described  below  are  with  the  Association.  There  are  no  arrangements  or
understandings  between the persons named and any other person pursuant to which
such officers were selected.

         Clement B. Knapp,  Jr. Mr. Knapp, age 54, has served as Chairman of the
Board,  President  and Chief  Executive  Officer  of the Bank since 1977 and has
acted in all of such capacities with the Holding Company since its incorporation
in 1993. Since joining the Bank in 1968 he has served in various  capacities and
attended  many  banking  schools and  seminars.  He is a graduate of  Georgetown
University and Indiana  University  Indianapolis  Law School.  Mr. Knapp is also
active in several community organizations. Mr. Knapp is the husband of Denise L.
Knapp, Secretary of the Bank.

         Louis A. Green.  Mr. Green, age 53, joined the Bank in 1967. He has had
various  positions  including  Controller  and Vice  President.  Mr.  Green  was
appointed  as  Senior  Vice  President  of the Bank in 1985  and of the  Holding
Company in 1993 and is responsible for  coordinating the Bank's loan activities.
Prior to joining the Bank,  Mr. Green was an accountant in the Chicago Office of
Ernst and  Ernst.  He is also an active  member in several  trade and  community
organizations.

         Daniel T. Poludniak.  Mr.  Poludniak,  age 55, has been Vice President,
Treasurer  and Chief  Financial  Officer of the Bank since 1983 and the  Holding
Company since 1993. As Chief  Financial  Officer of the Bank,  Mr.  Poludniak is
responsible  for the  establishment  and  supervision of the accounting and data
processing  activities of the Bank.  Prior to joining  American Savings in 1983,
Mr. Poludniak had twenty years experience in both local and Chicago banks.

         Denise L. Knapp.  Mrs. Knapp, age 49, was appointed as the Secretary of
the Bank in 1987 and of the  Holding  Company in 1993.  She has also served as a
loan officer since 1985 and as the Dyer branch manager since 1989. Since joining
the Bank in 1975, Mrs. Knapp has served in various capacities and is a member of
several  executive  committees of the Bank. Mrs. Knapp is also active in several
charitable organizations in the area. Mrs. Knapp is the wife of President Knapp.
<PAGE>
Employees

         At  December  31,  1996,  the  Company  had a  total  of 31  employees,
including six part-time employee. The Company's employees are not represented by
any collective bargaining group.
Management considers its employee relations to be good.

Item 2. Description of Property

         The  Company  conducts  its  business  at its main  office  located  in
Munster, Indiana. The following table sets forth information relating to each of
the Company's properties as of December 31, 1996.
<TABLE>
<CAPTION>


                                                             Total
                                              Owned       Approximate          December 31,
                               Year            or            Square             1996 Book
Location                     Acquired        Leased         Footage               Value
--------                     --------        ------         -------               -----
                                                   (In Thousands)
<S>                           <C>           <C>               <C>               <C>
Main Office:
8230 Hohman Avenue             1963           Owned           8,400             $ 83,000
Munster, Indiana
Branch Offices:
1001 Main Street               1990          Leased           2,800              101,000
Dyer, Indiana
3801 Main Street               1994           Owned           2,900               33,000
East Chicago, Indiana
4521 Hohman Avenue             1983           Owned           1,600               70,000
Hammond, Indiana

</TABLE>

         The Company  believes that its current  facilities are adequate to meet
the present and foreseeable needs of the Association and the Company, subject to
possible future expansion.

         The  Company  maintains  an  on-line  data base  with a service  bureau
servicing financial institutions.  The net book value of the data processing and
computer equipment utilized by the Company at December 31, 1996 was $111,000.

Item 3.  Legal Proceedings

         The Company is involved  from time to time as plaintiff or defendant in
various  legal  actions  arising in the  normal  course of  business.  While the
ultimate outcome of these proceedings cannot be predicted with certainty,  it is
the opinion of management,  after  consultation  with counsel  representing  the
Company in the proceedings,  that the resolution of these proceedings should not
have a material effect on the Company's results of operations.

Item  4.  Submission of Matters to a Vote of Security Holders

         During the quarter  ended  December  31,  1996,  the Company  submitted
matters to a vote of  security  holders,  through the  solicitation  of proxies.
These matters were the ratification of the adoption of the 1996 Stock Option and
Incentive Plan and the Recognition and Retention Plan.
<PAGE>

                                     PART II


Item  5.  Market for Common Equity and Related Stockholder Matters

         Page 42 of the Company's 1996 Annual Report to  Stockholders  is herein
incorporated by reference.


Item  6.  Management's Discussion and Analysis or Plan of Operation

         Pages 5 through 15 of the Company's 1996 Annual Report to  Stockholders
is herein incorporated by reference.


Item  7.  Financial Statements

         Pages 17 through 41 of the Company's 1996 Annual Report to Stockholders
are herein incorporated by reference.


Item  8.  Changes in and Disagreements With Accountants on Accounting
            and Financial Disclosure

         There has been no  Current  Report  on Form 8-K filed  within 24 months
prior to the date of the most recent financial  statements reporting a change in
accountants and/or reporting disagreements on any matter of accounting principle
or financial statement disclosure.
<PAGE>



                                    PART III

Item 9.  Directors and Executive Officers, Promoters and Control
           Persons; Compliance with Section 16(a) of the Exchange Act

         Information  concerning  directors of the  Registrant  is  incorporated
herein by reference from the Company's  definitive  Proxy Statement for the 1997
Annual Meeting of Stockholders, a copy of which will be filed not later than 120
days after the close of the fiscal year.

Item 10.  Executive Compensation

         Information concerning executive compensation is incorporated herein by
reference  from the  Company's  definitive  Proxy  Statement for the 1997 Annual
Meeting of  Stockholders,  a copy of which will be filed not later than 120 days
after the close of the fiscal year.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         Information  concerning security ownership of certain beneficial owners
and management is incorporated herein by reference from the Company's definitive
Proxy  Statement for the 1997 Annual  Meeting of  Stockholders,  a copy of which
will be filed not later than 120 days after the close of the fiscal year.

Item 12.  Certain Relationships and Related Transactions

         Information   concerning  certain  relationships  and  transactions  is
incorporated  herein by reference from the Company's  definitive Proxy Statement
for the 1997 Annual Meeting of  Stockholders,  a copy of which will be filed not
later than 120 days after the close of the fiscal year.
<PAGE>
                                     PART IV


Item 13.  Exhibits and Reports on 8-K

         (a) Exhibits:

<TABLE>
<CAPTION>


                                                                                              Reference to
                                                                                              Prior Filing
      Regulation                                                                               or Exhibit
      S-K Exhibit                                                                            Number Attached
        Number                                     Document                                      Hereto
<S>                   <C>                                                                    <C>
           3          Articles of Incorporation and Bylaws..............................            *
           4          Instruments defining the rights of security holders,
                      including indentures:
                       Common Stock Certificate.........................................            *
          10          Material contracts:
                      1996 Stock Option and Incentive Plan..............................           ***
                      Recognition and Retention Plan....................................           ***
                      Employee Stock Ownership Plan.....................................            *
                      Employee Severance Compensation Plan..............................            *
                      Employment Agreements.............................................           **
          11          Statement re computation of per share earnings....................          None
          13          Annual Report to Security Holders for the last fiscal year, Form
                      10-Q or 10QSB or quarterly report to security holders.............           13
          16          Letter on change in certifying accountant.........................            *
          21          Subsidiaries of Registrant........................................           21
          23          Consent of Experts and Counsel....................................           23
          24          Power of Attorney.................................................      Not required
          27          Financial Data Schedule...........................................           27
          99          Additional Exhibits...............................................          None

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

*        Filed on December 29, 1995 as exhibits to the Registrant's Registration
         Statement  No.  33-80991  on Form  S-1.  All of such  previously  filed
         documents  are hereby  incorporated  herein by reference in  accordance
         with Item 601 of Regulation S-B.
**       Filed  on  December  29,  1995  as  Exhibits   10.2  and  10.3  to  the
         Registrant's  Registration  Statement No. 33- 80991 on Form S-1. All of
         such previously filed documents are hereby incorporated by reference in
         accordance with Item 601 of Regulation S-B.
***      Filed on September  12, 1996,  under  Schedule 14A, as  appendicies  to
         definitive proxy materials.  All of such previously filed documents are
         hereby  incorporated herein by reference in accordance with Item 601 of
         Regulation S-B.


         (b)  Reports on Form 8-K:

         No reports on Form 8-K have been filed  during the  three-month  period
ended December 31, 1996.
</TABLE>
<PAGE>



                                                    SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  Report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                         AMB FINANCIAL CORPORATION


Date:  March 31, 1997
                                         By: /s/Clement B. Knapp, Jr.,
                                             -------------------------
                                              Clement B. Knapp, Jr.,
                                              Chairman of the Board
                                              President and Chief Executive
                                              Officer
                                              (Duly Authorized Representative)

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.



/s/Clement B. Knapp                              /s/Ronald W. Borto
-------------------                              ----------------------------
Clement B. Knapp                                 Ronald W. Borto
President and Chief Executive Officer            Director
(Principal Executive and Operating Officer)

Date: March 31, 1997                             Date:  March 31, 1997


/s/Donald L. Harle                              /s/John C. McLaughlin
------------------                              ---------------------
Donald L. Harle                                 John C. McLaughlin
Director                                        Director

Date: March 31, 1997                            Date: March 31, 1997



/s/John G. Pastrick                             /s/Robert E. Tolley
-------------------                             --------------------
John G. Pastrick                                John G. Pastrick
Director                                        Director

Date:  March 31, 1997                           Date: March 31, 1997


/s/Daniel T. Poludniak
----------------------
Daniel T. Poludniak
Vice President, Treasurer
and Chief Financial Officer
(Principal Financial and Accounting Officer)

Date:  March 31, 1997
<PAGE>



                                  Exhibit Index




   Exhibit No.             Document
     13                Annual Report
     21                Subsidiaries of the Registrant
     23                Consent of Cobitz, VandenBerg & Fennessy
     27                Financial Data Schedule