Table of Contents


President's Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Selected Consolidated Financial Information  . . . . . . . . . . . . .  . . . .3

Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . .5

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . .16

Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . .. .17

Stockholder Information . . . . . . . . . . . . . . . . . . . .  . . . . . . .45

Corporate Information . . . .. . . . . . . . . . . . . . . . . . . . . . . . .47


                                       1
<PAGE>
President's Message
To Our Stockholders

On behalf of the Board of  Directors,  Officers and  Employees of AMB  Financial
Corp. (the Company), and its wholly owned subsidiary, American Savings, FSB (the
Bank), I am pleased to present our 1999 Annual Report.

As we enter the new  millennium  and our 90th year of  servicing  the  financial
needs of the people and businesses in Northwest  Indiana we are pleased with our
progress in 1999.  Our  primary  goals are to remain an  independent  and viable
community  bank and to take the  necessary  steps to increase  the value of your
investment in our company.

In the last year our total  assets grew 9.3% or $10.9  Million,  our total loans
increased 18% or $16.1 Million and our deposits increased 12.6% or $9.9 Million.
The Bank had net income of $793,577.  Primarily due to unrealized  losses in our
trading portfolio in the amount of $123,773, the Holding Company reported a loss
of  $96,736.  On a  consolidated  basis,  the Company had net income of $696,841
representing $.96 per diluted share. The 1999 return on average assets was .58%,
the return on average equity 5.68%.

During 1999 the Company embarked on an aggressive stock repurchase program.  The
Company  repurchased  166,500  shares.  As of  December  31,  1999 the number of
outstanding shares was 703,329, with book value per share of $16.41.

Our  strategy  for the year  2000  continues  to  emphasize  strong  growth  and
aggressive  stock  repurchases.  I  believe  that this  strategy  is in the best
interests of both the Bank and the stockholders.

Our financial  performance  and our stock  performance  are available on our web
site at  http://www.ambfinancial.com.  I urge you to visit our site to view this
information and utilize its other services.

The entire staff of the Bank and the Company  appreciates  your  commitment  and
support, and we look forward to a long and profitable relationship.

Sincerely,


/s/Clement B. Knapp, Jr.
------------------------
Clement B. Knapp, Jr.
President



                                       2
<PAGE>
<TABLE>
<CAPTION>
                                    SELECTED CONSOLIDATED FINANCIAL INFORMATION
                                   (Dollars in thousands except per share data)

                                                                     For the Year Ended December 31
                                                       ----------------------------------------------------------
                                                         1999         1998         1997        1996        1995
                                                        ---------------------------------------------------------
SELECTED OPERATING DATA:
<S>                                                     <C>          <C>          <C>         <C>         <C>
Total interest income                                   $ 8,252      $ 7,969      $ 7,120     $ 5,957     $ 5,222
Total interest expense                                    4,904        4,570        3,793       2,955       2,686
                                                        -------      -------      -------     -------     -------
     Net interest income                                  3,348        3,399        3,327       3,002       2,536
Provision for loan losses                                   119          102           74           0          39
                                                        -------      -------      -------     -------     -------
Net interest income after provision for loan losses       3,229        3,297        3,253       3,002       2,497
                                                        -------      -------      -------     -------     -------

Non-interest income:
Fees and service charges                                    450          450          349         263         203
Commission income                                            46           55           78          57          59
Gain on sale of securities                                  116           68           58          53       - - -
Unrealized gain (loss) on trading securities               (124)        (771)         561          46       - - -
Gain on sale of deposits                                  - - -           27        - - -       - - -       - - -
Gain (loss) on sale of real estate owned                     10           (2)           5          28           2
Loss from investment in joint venture                       (54)         (11)       - - -       - - -       - - -
Other                                                       168          123           81          64          76
                                                        -------      -------      -------     -------     -------
       Total non-interest income                            612          (61)       1,132         511         340
                                                        -------      -------      -------     -------     -------

Non-interest expense:
Compensation and benefits                                 1,345        1,377        1,294       1,129         909
Office occupancy and equipment expenses                     311          309          353         334         328
Data processing                                             398          368          336         295         248
Federal deposit insurance premiums                           47           45           41         130         134
SAIF special assessment                                   - - -        - - -        - - -         389       - - -
Loss on disposition of fixed assets                       - - -           29        - - -       - - -       - - -
Other                                                       715          751          662         580         595
                                                        -------      -------      -------     -------     -------
      Total non-interest expense                          2,816        2,879        2,686       2,857       2,214
                                                        -------      -------      -------     -------     -------

Income before income taxes                                1,025          357        1,698         656         623
Income tax provision                                        328          152          675         214         236
                                                        -------      -------      -------     -------     -------
Net income                                                  697          205        1,023         442         387
                                                        -------      -------      -------     -------     -------

Basic earnings per share                                $  0.97      $  0.24      $  1.12     $  0.43          NM
Diluted earnings per share                              $  0.96      $  0.24      $  1.10     $  0.43          NM

</TABLE>
NM-Earnings per share  information  for the year ended  December 31, 1995 is not
       meaningful  becaue the Company was not a public  company  until March 26,
       1996.

                                        3
<PAGE>
<TABLE>
<CAPTION>
                        SELECTED CONSOLIDATED FINANCIAL INFORMATION
                                  (Dollars in thousands)

                                                     At December 31,
                               ------------------------------------------------------------
                                 1999         1998         1997          1996        1995
                               --------     --------     --------     --------     --------
<S>                            <C>          <C>          <C>          <C>          <C>
SELECTED FINANCIAL DATA:

Total assets                   $127,786     $116,913     $ 99,796     $ 86,102     $ 69,788
Loans receivable, net           105,910       89,762       77,093       67,366       54,639
Investment securities             5,352        6,137        8,214        8,939        7,017
Mortgage-backed securities        1,868        2,649        3,494        4,019        1,479
Trading securities                1,909        2,394        2,413          539        - - -
Deposits                         88,945       78,997       71,700       60,411       59,588
Borrowed funds                   26,009       23,074       12,000        9,500        3,000
Stockholder's equity             11,539       13,413       14,770       15,170        6,314

<CAPTION>
                                                             At or For the Year Ended December 31,
                                                     ---------------------------------------------------
                                                       1999      1998       1997       1996       1995
                                                     --------  --------   --------   --------   --------
<S>                                                  <C>       <C>        <C>        <C>        <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA:

Return on average assets (1)                           0.58 %    0.18 %     1.07 %     0.84 %     0.57 %
Return on average stockholders' equity (1)             5.68      1.46       7.06       5.02       6.40
Average stockholders' equity to
   average assets                                     10.14      12.61      15.10      16.78      8.76
Stockholders' equity to total assets                   9.03      11.47      14.80      17.62      9.05
Interest rate spread during period                     2.70       2.86       3.10       3.37      3.84
Net interest margin                                    2.98       3.29       3.67       3.97      4.03
Operating expenses to average assets (1)               2.33       2.59       2.80       3.07      3.29
Efficiency ratio (1)                                  71.11      87.41      60.28      70.23     76.99
Non-performing assets to total assets                  0.73       0.43       0.34       0.35      0.53
Allowance for loan losses to non-
   performing loans                                   59.32     104.87     133.12     116.27     97.43
Allowance for loan losses to loans
   receivable, net                                     0.56       0.56       0.53       0.53      0.66
Ratio of  average interest-earning
assets to average interest-bearing liabilities        1.06x      1.10x      1.14x      1.16x      1.04x
Number of full-service offices                            3          3          4          4         4
</TABLE>

(1) Excludes the effect of the special SAIF charge in 1996.



                                        4

<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

      General

      AMB Financial  Corp. (the "Company") is the unitary thrift holding company
      for American Savings FSB, (the "Bank"), a federally chartered savings bank
      and a wholly owned  subsidiary of the Holding Company.  Collectively,  the
      Holding  Company and the Bank are referred to herein as the  "Company." On
      March 29, 1996,  the Bank  converted from a mutual savings bank to a stock
      savings  bank (the  "Conversion").  Concurrent  with the  Conversion,  the
      Company sold 1,124,125  shares of its common stock in a  subscription  and
      community offering at a price of $10.00 per share.

      The Company's  primary  market area  consists of the northwest  portion of
      Lake County,  Indiana.  Business is conducted from its main office at 8230
      Hohman  Avenue,  Munster,  Indiana,  as well as two  full-service  banking
      offices   located  in  Dyer,   and  Hammond,   Indiana.   The  Bank  is  a
      community-oriented  savings  institution whose business primarily consists
      of accepting  deposits from customers within its market area and investing
      those funds in mortgage loans secured by one-to-four-family residences. To
      a lesser  extent,  funds are  invested in  multi-family,  commercial  real
      estate,  consumer,  commercial business,  construction and land loans. The
      Company also invests in mortgage-backed and other investment securities.

      The  Company's  results  of  operations  are  primarily  dependent  on net
      interest  income,  which is the difference  between the interest income on
      its  interest-earning  assets,  such  as  loans  and  securities,  and the
      interest expense on its interest-bearing liabilities, such as deposits and
      borrowings and to a lesser degree,  non-interest  income and  non-interest
      expense.  Net interest income depends upon the volume of  interest-earning
      assets and  interest-bearing  liabilities  and the interest rate earned or
      paid on them, respectively.  Non-interest income (loss) primarily consists
      of service  charges,  fees on deposit and loan  products and, on occasion,
      securities gains or losses. The Company's  non-interest expenses primarily
      consist of employee  compensation  and  benefits,  occupancy and equipment
      expenses,  federal deposit insurance costs,  data processing  service fees
      and other operating expenses.

      The Company's results of operations are significantly  affected by general
      economic  and  competitive  conditions  (particularly  changes  in  market
      interest rates), government policies,  changes in accounting standards and
      actions  of  regulatory  agencies.  Future  changes  in  applicable  laws,
      regulations  or  government  policies  may have a  material  impact on the
      Company. Lending activities are influenced by the demand for and supply of
      housing,  competition  among lenders,  the level of interest rates and the
      availability of funds.  Deposit flows and costs of funds are influenced by
      prevailing   market  interest  rates   (including   rates  on  non-deposit
      investment alternatives),  account maturities,  and the levels of personal
      income and savings in the Company's market area.

      Operating Strategy

      The  Company's  basic  mission is to  maintain  its focus as  independent,
      community-oriented financial  institution-serving customers in its primary
      market area. The Board of Directors has sought to accomplish  this mission
      through an operating  strategy  designed to maintain  capital in excess of
      regulatory requirements and manage, to the extent practical, the Company's
<PAGE>
     loan delinquencies and vulnerability to changes in interest rates. The key
      components  of the  Company's  operating  strategy  are to:  (i) focus its
      lending    operations   on   the   origination   of   loans   secured   by
      one-to-four-family   residential   real  estate;   (ii)   supplement   its
      one-to-four-family   residential   lending   activities   with   consumer,
      commercial business,  commercial real estate, construction and land loans;
      (iii) augment its lending  activities with investments in purchased loans,
      mortgage-backed  and other  securities;  (iv)  emphasize  adjustable  rate
      and/or short and medium duration assets when market  conditions permit (v)
      build and maintain its regular savings, transaction, money market and club
      accounts;  and  (vi)  increase,  at a  managed  pace,  the  volume  of the
      Company's assets and liabilities.


                                       5
<PAGE>
Comparison of Financial Condition at December 31, 1999 and 1998.

Total assets of the Company  increased $10.9 million in the year ending December
31, 1999,  from $116.9 million in 1998 to $127.8 million in 1999.  This increase
of 9.3% was primarily  attributable to the Company's  continued loan growth. The
Company's  asset  growth was funded by an increase  in savings  deposits of $9.9
million and additional  advances from the FHLB of  Indianapolis in the amount of
$3.0 million.

Cash and cash  equivalents  amounted  to $5.5  million at  December  31, 1999 as
compared to $9.1 million at December 31, 1998.  The Company used $2.4 million to
purchase  166,500 shares of common stock into treasury during the year. The Bank
used the remaining available cash to fund increased loan origination volume.

Investment  securities  available for sale decreased by $785,000 to $5.4 million
at December 31, 1999  primarily due to maturities of $500,000 which were used to
fund mortgage loans and a decline in the market value of these securities. Gross
unrealized  losses in the available for sale portfolio were $120,000 at December
31, 1999 compared to gross unrealized gains of $138,000 at December 31, 1998

Mortgage  backed  securities  available  for sale  decreased by $781,000 to $1.9
million at December 31, 1999 primarily due to prepayments and amortization.

Trading securities decreased by $485,000 at December 31, 1999 to $1.9 million as
a result of sale activity of $554,000  exceeding  purchase  activity of $94,000,
recognized  gains of $99,000 and an  unrealized  loss on trading  securities  of
$124,000 recorded during the current year.

Loans  receivable  increased  to $105.9  million at December  31,  1999, a $16.1
million or 18.0%  increase,  as new loan  originations  of both  residential and
non-residential  loans of $24.6  million  and loan  purchases  of $24.0  million
exceeded  loan  repayments  of $32.3  million.  The Company  continues to remain
focused on an  aggressive  lending  effort as  evidenced  by the better that 37%
increase in loans receivable over the last two years.

Total deposits at December 31, 1999 increased by $9.9 million, or 12.6% to $88.9
million,  due to net deposits  receipts of $7.0 million and interest credited of
$2.9 million.  The deposit  growth was primarily  attributable  to the Company's
continued  aggressive  advertising and competitive rates with regards to special
certificate promotions (primarily 15, 18 and 30 month terms) during 1999.

Borrowed funds, which consist of FHLB of Indianapolis  advances,  increased $3.0
million to $24.7  million at December 31, 1999.  The increase in borrowed  funds
was utilized to fund loan  originations  and purchases  during the year. The new
advances were at maturity terms of one year or less.

Total  stockholders'  equity  decreased  by $1.9  million  to $11.5  million  at
December 31, 1999 from $13.4  million at December 31,  1998.  This  decrease was
primarily  due to the  repurchase of common stock in the amount of $2.4 million,
the payment of dividends on common stock of $234,000, and a decrease of $194,000
in the unrealized gain on securities available for sale, which was offset by net
income of $697,000 and normal amortization of RRP and ESOP benefits of $233,000.
The Company is no longer subject to regulatory  limitations on stock repurchases
and intends to continue modest repurchases of stock.


                                       6
<PAGE>
   Analysis of Net Interest Income

   Net interest  income  represents the difference  between  interest  earned on
   interest-earning  assets and interest paid on  interest-bearing  liabilities.
   Net interest income is affected by the relative  amounts of  interest-earning
   assets and  interest-bearing  liabilities,  and the interest  rates earned or
   paid on them.

   The following table  presents,  for the periods  indicated,  the total dollar
   amounts of  interest  income  from  average  interest-earning  assets and the
   resultant yields, as well as the interest expense on average interest-bearing
   liabilities,   expressed  both  in  dollars  and  rates.  No  tax  equivalent
   adjustments  were made. All average balances are monthly average balances and
   include  non-accruing  loans.  Management  does not  believe  that the use of
   month-end  balances instead of daily average balances has caused any material
   differences in the information presented.

<TABLE>
<CAPTION>
                                                                    For the Year Ended December 31
                                                                        (Dollars in thousands)
                                           --------------------------------------------------------------------------
                                                              1999                                   1998
                                           ---------------------------------------  ---------------------------------
                                             Average         Interest                 Average       Interest
                                           Outstanding       Earned/        Yield/  Outstanding     Earned/    Yield/
                                             Balance          Paid          Rate      Balance        Paid      Rate
                                           ---------       ---------        ----      ---------   ---------    ----
<S>                                        <C>             <C>             <C>         <C>        <C>         <C>
Interest-Earning Assets
   Loans receivable (1)                       96,000           7,420        7.73%        86,033       7,027    8.17%
   Mortgage-backed securities                  2,277             153        6.72%         3,033         204    6.73%
   Investment securities                       8,335             371        4.45%         9,198         444    4.83%
   Interest-bearing deposits                   4,226             200        4.73%         4,072         213    5.23%
   FHLB stock                                  1,347             108        8.02%         1,013          81    8.00%
                                           ---------       ---------        ----      ---------   ---------    ----
  Total interet-earning assets             $ 112,185       $   8,252        7.36%     $ 103,349   $   7,969    7.71%

Interest-Bearing Liabilities
  Passbook accounts                           15,361             420        2.73%        15,841         453    2.86%
  Demand and NOW accounts                     10,853             226        2.08%        10,028         221    2.20%
  Certificate accounts                        56,075           2,929        5.22%        49,707       2,800    5.63%
  Borrowings                                  23,051           1,329        5.77%        18,663       1,096    5.87%
                                           ---------       ---------        ----      ---------   ---------    ----
 Total interest-bearing liabilities        $ 105,340       $   4,904        4.66%     $  94,239   $   4,570    4.85%
                                           ---------       ---------        ----      ---------   ---------    ----
Net interest income                                        $   3,348                              $   3,399
                                                           =========                              =========
Net interest rate spread                                                    2.70%                              2.86%
                                                                            ====                               ====
Net earning assets                         $   6,845                                  $   9,110
                                           =========                                  =========
Net yield on average
  interest-earning assets                                                   2.98%                              3.29%
                                                                            ====                               ====
Average interest-earning assets to
  average interest-bearing liabilities                         1.06x                                  1.10x
                                                               ====                                   ====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                             1997
                                                                            -------
                                                  Average       Interest
                                               Outstanding      Earned/              Yield/
                                                 Balance          Paid                Rate
                                                 ---------      ---------             ----
<S>                                            <C>             <C>                <C>
Interest-Earning Assets

   Loans receivable (1)                           71,473          6,003              8.40%
   Mortgage-backed securities                      3,783            258              6.82%
   Investment securities                          10,494            583              5.56%
   Interest-bearing deposits                       4,135            223              5.39%
   FHLB stock                                        658             53              8.05%
                                               ---------      ---------              ----

  Total interet-earning assets                 $  90,543      $   7,120              7.86%

Interest-Bearing Liabilities

  Passbook accounts                               16,407            489              2.98%
  Demand and NOW accounts                          9,642            233              2.42%
  Certificate accounts                            42,051          2,378              5.66%
  Borrowings                                      11,629            693              5.96%
                                               ---------      ---------              ----

 Total interest-bearing liabilities            $  79,729      $   3,793              4.76%
                                               ---------      ---------              ----

Net interest income                                           $   3,327
                                                              =========
Net interest rate spread                                                             3.10%
                                                                                     ====
Net earning assets                             $  10,814
                                               =========

Net yield on average
  interest-earning assets                                                            3.67%
                                                                                     ====
Average interest-earning assets to
  average interest-bearing liabilities                            1.14x
                                                                  ====

</TABLE>
       (1)  Calculated  net of  deferred  loan fees,  loan  discounts,  loans in
       process and allowance for losses.

                                        7

<PAGE>
        The table below  presents the extent to which changes in interest  rates
        and  changes  in the  volume of  interest-earning  assets  and  interest
        bearing  liabilities  have  affected the Company's  interest  income and
        interest expense during the period indicated. Information is provided in
        each  category  with respect to (i) changes  attributable  to changes in
        rate  (changes  in  rate  multiplied  by  prior  volume),  (ii)  changes
        attributable to changes in volume (changes in volume multiplied by prior
        rate),  (iii) changes  attributable to the combined impact of volume and
        rate (changes in the rate multiplied by the changes in the volume),  and
        (iv) the net change. The changes  attributable to the combined impact of
        volume and rate have been allocated  proportionately  to the changes due
        to volume and the changes due to rate.
<TABLE>
<CAPTION>
                                                For the Year Ended
                                                ------------------
                                                   December 31,
                                                   ------------


                                  1999 Compared to 1998                         1998 Compared to 1997
                                   Increase (Decrease)                            Increase (Decrease)
                                         Due to                                         Due to
                                   ------------------ (Dollar in Thousands)       -----------------
                                                           Rate/                                           Rate/
                                   Rate       Volume       Volume        Net        Rate      Volume       Volume        Net
                                   ----       ------       ------        ---        ----      ------       ------        ---
<S>                                 <C>          <C>         <C>         <C>        <C>        <C>           <C>       <C>
Interest-earning assets:
Loans receivable, net               (377)        814         (44)        393        (165)      1,223         (34)      1,024
Mortgage-backed
   securities                                    (51)                    (51)         (4)        (51)          1         (54)
Investment securities                (34)        (42)          3         (73)        (76)        (72)          9        (139)
Interest-bearing deposit             (20)          8          (1)        (13)         (7)         (3)                    (10)
FHLB Stock                                        27                      27                      28                      28
                                  ------      ------      ------      ------      ------      ------      ------      ------
      Totals                        (431)        756         (42)        283        (252)      1,125         (24)        849
                                  ------      ------      ------      ------      ------      ------      ------      ------

Interest-bearing liabilities:
Passbook accounts                    (20)        (14)          1         (33)        (20)        (17)          1         (36)
Demand and Now
   accounts                          (12)         18          (1)          5         (20)          9          (1)        (12)
Certificate accounts                (204)        359         (26)        129          (9)        433          (2)        422
Borrowed funds                       (20)        258          (5)        233         (10)        419          (6)        403
                                  ------      ------      ------      ------      ------      ------      ------      ------
     Totals                         (256)        621         (31)        334         (59)        844          (8)        777
                                  ------      ------      ------      ------      ------      ------      ------      ------

Net change in net
   interest income                                                       (51)                                             72
                                                                      ------                                          ------

</TABLE>
                                        8


<PAGE>
Comparison of Operating Results for the Years Ended December 31, 1999 and 1998.

Net Income.  The Company's  net income for the year ended  December 31, 1999 was
$697,000 as compared  to  $205,000  for the same period in 1998,  an increase of
$492,000.  The Company's  prior year's period was affected by an unrealized loss
on trading  securities of $771,000 as compared to the current year's  unrealized
loss on trading securities of $124,000.

Interest Income.  Interest income for the year ended December 31, 1999 increased
$283,000 or 3.6%, as compared to the prior year. The increase in interest income
was the  result  of an  increase  in  average  interest-earning  assets  of $8.8
million, partially offset by a decrease in the average asset yield to 7.36% from
7.71%.  Interest  income  on loans  increased  $392,000  as a result  of a $10.0
million  increase  in  average  loans  receivable,  offset  by a 44 basis  point
decrease in the average  yield of the loan  portfolio.  Interest  income on both
mortgage-backed  and investment  securities declined as a result of decreases in
the average balance of both securities as well as declines in the average yield.
The lack of  additional  purchase  activity in these types of  investments  is a
result of the Company's strategy and ability to originate and purchase loans for
its own investment portfolio.

Interest  Expense.  Interest  expense  for the  year  ended  December  31,  1999
increased  $334,000,  or 7.3% to $4.9 million as compared to $4.6 million in the
prior year. Deposit interest increased by $101,000, primarily as a result of the
$6.7 million  increase in the average balance of deposit accounts offset by a 26
basis point decrease in the average cost of deposits. The average certificate of
deposit  base  increased  by $6.4  million in 1999 as the Bank  offered  special
certificate  promotions.  Interest expense on borrowed funds increased $233,000,
to $1.3 million as the average  balance of borrowed funds increased $4.4 million
to $23.1  million  for the year ended  December  31,  1999.  This  increase  was
primarily due to funding  requirements  for new mortgage loan  originations  and
purchases.

Provision for Loan Losses.  The  determination  of the allowance for loan losses
involves  material  estimates that are susceptible to significant  change in the
near  term.  The  allowance  for loan  losses is  maintained  at a level  deemed
adequate  to  provide  for losses  through  charges to  operating  expense.  The
allowance  is based  upon past loss  experience  and other  factors,  which,  in
management's  judgment,  deserve current  recognition in estimating losses. Such
other factors  considered by management  include  growth and  composition of the
loan  portfolio,  the  relationship  of the allowance for losses to  outstanding
loans, and economic conditions.

A provision  of $119,000 was  recorded  during the year ended  December 31, 1999
while a provision of $102,000 was recorded in the  comparable  1998 period.  The
increase in the provision for losses on loans was due to the  continuing  growth
in the  loan  portfolio  and is  based  upon  management's  review  of the  loan
portfolio by property type and  delinquency  status.  There were no  significant
individual loans, which contributed to the increase in the allowance,  and there
were no regulatory requests for additional provisions for loan losses during the
years  ended  December  31 1999 or 1998.  Net  charge  offs  for the year  ended
December 31, 1999 amounted to $35,000.
<PAGE>
Non-performing  assets  increased to $928,000 at December 31, 1999 from $506,000
at December 31, 1998.  The increase in  non-performing  loans from  December 31,
1998 is attributable to a $500,000  non-residential  participation  construction
loan,  which became  delinquent  during the second quarter of 1999 and has since
been  foreclosed.  The Bank has established a $40,000  specific  reserve against
this loan and has classified the balance as substandard.  The Bank will continue
to review its allowance  for loan losses and make future  provisions as economic
and regulatory conditions dictate. Although the Bank maintains its allowance for
loan losses at a level that it  considers  to be adequate to provide for losses,
there can be no assurance that

                                       9
<PAGE>
future losses will not exceed  estimated  amounts or that additional  provisions
for loan losses will not be required in future periods.

Non-Interest  Income. The Company's  non-interest  income increased $672,000 for
the year ended  December 31, 1999 compared with the previous  year. The increase
was directly  related to an increase in  unrealized  gains and losses on trading
securities.  For the year ended  December  31,  1999,  the  Company  recorded an
unrealized loss on trading securities of $124,000 compared to an unrealized loss
of $771,000 recorded in the prior year. The Company's trading  portfolio,  which
consists  primarily of equity  investments  in community and regional  financial
institutions,  although  at  times  appears  to  have  stabilized,  has  yet  to
experience  any sustained  turnaround  from the  devastating  declines  suffered
during the second half of 1998.  Non-interest  income,  exclusive of  unrealized
losses on  trading  securities,  increased  during  the year 1999 by  $25,000 to
$736,000 from $710,000 in the 1998 year. This increase resulted from an increase
of $48,000 in gains on the sale of trading  securities and securities  available
for sale,  a $12,000  increase  in gain on the sale of real  estate  owned,  and
$36,000 in increased other operating  income  primarily from an increase in cash
surrender  value  from  insurance  policies.  This  increase  was  offset  by an
additional $43,000 loss from investment in low-income housing joint venture, and
a $27,000  profit from the sale of the East  Chicago  deposit  accounts in 1998,
which did not occur in 1999.

Non-Interest  Expense.  The Company's  non-interest expense decreased $63,000 to
$2.8 million for the year ended  December 31, 1999  compared to $2.9 million for
the previous year.  The decrease was primarily the result of decreased  staffing
costs of $32,000, due in part to $44,000 of bonuses paid and expensed during the
first  quarter of 1998 that did not occur  during  1999,  a $29,000  loss on the
disposition of the Bank's East Chicago  facility in 1998, and a $51,000 decrease
in other non-interest expense,  primarily in decreased professional service fees
and  increased  efficiencies  in  operations.  This  decrease  was  offset by an
increase in data  processing  costs of  $29,000,  due to  increased  transaction
charges andY2K  expenditures,  and increased  advertising  costs of $19,000 as a
result of special  promotions of certificate  and loan products,  and PC banking
services.

Provision for Income Taxes.  Income tax expense for the year ended  December 31,
1999  increased  $176,000  to $328,000  compared to $152,000  for the 1998 year.
Income taxes  increased  primarily as a result of an increase in pre-tax income.
The Company's  effective tax rate,  however,  did decline  during the year ended
December  31, 1999 to 32.0% from 42.6% in the prior year due to the  recognition
of $54,000 in low income housing tax credits provided through an investment in a
limited  partnership  organized  to build,  own and operate a 56 unit low income
apartment complex.

Comparison of Operating Results for the Years Ended December 31, 1998 and 1997.

Net Income.  The Company's  net income for the year ended  December 31, 1998 was
$205,000 as compared to $1.0  million for the same period in 1997, a decrease of
$818,000.  This decrease was due primarily to a decrease in non-interest  income
of $1.2  million,  an  increase  in  non-interest  expense of  $193,000,  and an
increase  in loan  loss  provision  of  $28,000,  offset by an  increase  in net
interest income of $72,000, and a decrease in income taxes of $523,000.
<PAGE>
Interest  Income.  Total  interest  income for the year ended  December 31, 1998
increased  $849,000 or 11.9%,  as compared  to the prior year.  The  increase in
interest income was the result of an increase in average interest-earning assets
of $12.8 million,  partially  offset by a decrease in the average asset yield to
7.71% from 7.86%. Interest income on loans increased $1.0 million as a result of
a $14.6 million  increase in average loan  receivable,  offset by 23 basis point
decrease in the average  yield of the loan  portfolio.  Interest  income on both
mortgage-backed  and investment  securities declined as a result of decreases in
the average balance of both securities as well as declines in the average yield.
The lack of additional purchase activity in these investments is a result of the
Company's  ability and  strategy to  originate  and  purchase  loans for its own
investment portfolio.


                                       10
<PAGE>
Interest  Expense.  Total interest  expense for the year ended December 31, 1998
increased $777,000,  or 20.5% to $4.6 million as compared to $3.8 million in the
prior year. Deposit interest increased by $374,000, primarily as a result of the
$7.5 million increase in the average balance of deposit accounts and to a lesser
extent, by a 5 basis point increase in the average cost of deposits. The average
certificate  of  deposit  base  increased  by $7.7  million  in 1998 as the Bank
offered  special  certificate  promotions.  Interest  expense on borrowed  funds
increased  $393,000,  to $1.1 million as the average  balance of borrowed  funds
increased  $7.0 million to $18.7  million for the year ended  December 31, 1998.
This increase was primarily due to funding  requirements  for new mortgage loans
and to a lesser extent for normal operating liquidity.

Provision for Loan Losses.  The  determination  of the allowance for loan losses
involves  material  estimates that are susceptible to significant  change in the
near  term.  The  allowance  for loan  losses is  maintained  at a level  deemed
adequate  to  provide  for losses  through  charges to  operating  expense.  The
allowance  is based  upon past loss  experience  and other  factors,  which,  in
management's  judgment,  deserve current  recognition in estimating losses. Such
other factors  considered by management  include  growth and  composition of the
loan  portfolio,  the  relationship  of the allowance for losses to  outstanding
loans, and economic conditions.

A provision  of $102,000 was  recorded  during the year ended  December 31, 1998
while a provision of $74,000 was  recorded in the  comparable  1997 period.  The
increase in the provision for losses on loans was due to the  continuing  growth
in the  loan  portfolio  and is  based  upon  management's  review  of the  loan
portfolio by property type and  delinquency  status.  There were no  significant
individual loans, which contributed to the increase in the allowance,  and there
were no regulatory requests for additional provisions for loan losses during the
year ended December 31 1998 or 1997. Net charge offs for the year ended December
31, 1998  amounted  to less than  $5,000.  The Bank will  continue to review its
allowance for loan losses and make future  provisions as economic and regulatory
conditions dictate. Although the Bank maintains its allowance for loan losses at
a level that it considers to be adequate to provide for losses,  there can be no
assurance  that  future  losses  will  not  exceed  estimated  amounts  or  that
additional provisions for loan losses will not be required in future periods.

Non-Interest  Income. The Company's  non-interest  income decreased $1.2 million
for the year ended  December  31, 1998  compared  with the  previous  year.  The
decrease was directly  related to an  unrealized  loss on trading  securities of
$771,000 recorded in 1998 compared to a $561,000 unrealized gain recorded in the
prior year.  The decline in income from  unrealized  gains and losses on trading
securities  is a reflection  of the erosion in the value of  community  bank and
thrift  stock prices  during the second half of 1998.  Although the stock market
appears to have generally recovered from its late summer declines, the Company's
trading  portfolio,  which consists primarily of equity investments in community
and  regional  financial  institutions,  has  yet to  experience  any  sustained
turnaround.  Non-interest  income also  declined due to a decrease of $22,000 in
commissions  from the sale of various  financial  products by the Bank's  wholly
owned  subsidiary  NIFCO,  and an $11,000 loss from  investment  in a low income
housing  joint  venture,  offset by an  increase of $101,000 in loan and deposit
related  fees, a $10,000  increase on the sale of investment  securities,  and a
$27,000 profit from the sale of the East Chicago deposit accounts.
<PAGE>
Non-Interest  Expense. The Company's  non-interest expense increased $193,000 to
$2.9 million for the year ended  December 31, 1998  compared to $2.7 million for
the previous year.  The increase was primarily the result of increased  staffing
costs of $83,000  due in part to normal  salary and  benefit  increases  and the
payment of a bonus in the first quarter of 1998 totaling $44,000, increased data
processing costs of $33,000 due to increased transaction charges and to a lesser
extent Y2K expenditures, a loss of $29,000 on the disposition of the closed East
Chicago branch office,  and an increase in other operating  expenses of $117,000
due to the expanded  product  offerings and growth in customer  activity levels.
Among  the  increased   expenses  were  bank  correspondent  and  courier  fees,
telephone,  insurance,  meetings, and professional service fees. This was offset
by decrease in  advertising  costs of $39,000,  and a decrease in occupancy  and
equipment expense of $44,000.


                                       11
<PAGE>
Provision  for Income  Taxes.  Tax expense for the year ended  December 31, 1998
decreased  $523,000 to $152,000  compared to $675,000 for the comparable year in
1997.  Income  taxes  decreased  primarily  as a result of  decrease  in pre-tax
income.

Qualitative and Quantitative Disclosure of Market Risk

The  principal  objectives  of  the  Company's  interest  rate  risk  management
activities are to: (i) define an acceptable level of risk based on the Company's
business focus, operating environment,  capital and liquidity requirements,  and
performance  objectives;  (ii)  quantify and monitor the amount of interest rate
risk inherent in the asset/liability  structure;  and (iii) modify the Company's
asset/liability  structure,  as  necessary,  to  manage  interest  rate risk and
maintain net interest margins in changing rate environments. Management seeks to
reduce  the  vulnerability  of the  Company's  operating  results  to changes in
interest  rates and to manage the ratio of  interest  rate  sensitive  assets to
interest rate sensitive  liabilities  within  specified  maturities or repricing
periods.  The Company does not currently engage in the use of off-balance  sheet
derivative  instruments to control interest rate risk. Even though such activity
may be permitted  with the approval of the Board of Directors,  management  does
not intend to engage in such activity in the immediate future.

Notwithstanding  the Company's  interest rate risk  management  activities,  the
potential  for  changing  interest  rates is an  uncertainty  that could have an
adverse  effect  on the  earnings  and net  asset  value  of the  Company.  When
interest-bearing    liabilities    mature   or   reprice   more   quickly   than
interest-earning  assets in a given  period,  a  significant  increase in market
interest  rates could  adversely  affect net interest  income.  Similarly,  when
interest-earning  assets  mature or reprice more  quickly than  interest-bearing
liabilities  and net asset  value,  falling  interest  rates  could  result in a
decrease in net interest  income and net asset value.  Finally,  a flattening of
the "yield curve" (i.e.,  a narrowing of the spread between long- and short-term
interest  rates),  could adversely impact net interest income to the extent that
the Company's assets have a longer average term than its liabilities.

In managing the Company's  asset/liability  position,  the Board and  management
attempt to manage the Company's  interest rate risk while enhancing net interest
margins. However, the Board of Directors continues to believe that the increased
net interest  income  resulting from a mismatch in the maturity of the Company's
asset and  liability  portfolios  can,  during  periods of  declining  or stable
interest rates and periods in which there is a substantial  positive  difference
between long- and short-term  interest  rates (i.e., a "positively  sloped yield
curve"),  can provide high enough  returns to justify the increased  exposure to
sudden and unexpected  increases in interest rates.  As a result,  the Company's
results of operations and net portfolio values remain  significantly  vulnerable
to increases in interest rates and to  fluctuations  in the  difference  between
long- and short-term interest rates.

Consistent with its asset/liability management philosophy, the Company has taken
several steps to manage its interest rate risk.  First, the Company  maintains a
portfolio of interest  rate  sensitive  adjustable-rate  loans.  At December 31,
1999,  adjustable-rate  loans represented  $43.2 million,  or 40.0% of the total
loan  portfolio.  Second,  significant  portions  of the  Company's  other  debt
securities    (primarily   U.S.    Government   and   agency   securities)   are
<PAGE>
intermediate-term instruments with $5.2 million of such securities contractually
maturing  within  five years of  December  31,  1999.  Third,  the Company has a
substantial  amount of  regular  savings,  transaction,  money  market  and club
accounts,  which  may be less  sensitive  to  changes  in  interest  rates  than
certificate  accounts.  At December 31, 1999,  the Company had $15.0  million of
regular savings accounts, $3.4 million of money market accounts and $8.6 million
of NOW, checking and club accounts.  Overall,  these accounts comprised 30.3% of
the Company's total deposit base. Fourth, most of the mortgage-backed securities
purchased by the Company in recent years had  adjustable  interest  rates and/or
short or intermediate effective terms to maturity,

                                       12
<PAGE>
One  approach  used by  management  to  qualify  interest  rate  risk is the net
portfolio value ("NPV") analysis.  NPV is generally considered to be the present
value of the difference between expected incoming cash flows on interest-earning
and other assets and expected incoming cash flow on  interest-earning  and other
assets  and  expected  outgoing  cash  flows  on   interest-bearing   and  other
liabilities.  The  application  attempts to quantify  interest  rate risk as the
change in the NPV,  which  would  result form a  theoretical  200 basis point (1
basis point equals .01%) change in market interest rates.

Presented below, as of December  31,1999,  is an analysis of the Bank's interest
rate risk as measured by changes in NPV for instantaneous and sustained parallel
shifts of 100 basis  points in market  interest  rates.  As  illustrated  in the
table, the Company's NPV is more sensitive to rising rates than declining rates.
From an overall  perspective,  such difference in sensitivity occurs principally
because,  as rates rise,  borrowers do not prepay fixed rate loans as quickly as
they do when interest rates are declining.  Also, the interest the Company would
pay on its deposits in the event of a rate increase  would increase more rapidly
than the yield on its assets  because  the  Company's  deposits  generally  have
shorter periods to repricing.
<TABLE>
<CAPTION>
                                      INTEREST RATE SENSITIVITY OF NET PORTFOLIO VALUE

              Assumed                                                                                NPV as % of Present
     Change in Interest Rates                       Net Portfolio Value                                Value of Assets
     ------------------------         -----------------------------------------------               -----------------------
          (Basis Points)              $ Amount            $ Change           % Change               % Ratio       Bp Change
          --------------              --------            --------           --------               -------       ---------
<S>                                    <C>                 <C>                   <C>                  <C>           <C>
            +300                       5,361               -3,549                -40                  4.63          -259
            +200                       6,662               -2,248                -25                  5.63          -159
            +100                       7,866               -1,044                -12                  6.50           -72
                                       8,910                                                          7.22
            -100                       9,589                  680                  8                  7.63           +41
            -200                       9,944                1,034                 12                  7.79           +57
            -300                       9,914                1,004                 11                  7.66           +44

</TABLE>

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

Other types of market risk, such as foreign currency exchange risk and commodity
price  risk,  do not  arise  in the  normal  course  of the  Company's  business
activities.


                                       13
<PAGE>
Liquidity and Capital Resources

The  Company's  primary  sources of funds are  deposits,  principal and interest
payments  on loans  and  securities  and,  to a lesser  extent,  borrowings  and
proceeds from the sale of loans and securities.  While  maturities and scheduled
amortization of loans and securities  provide an indication of the timing of the
receipt of funds,  other sources of funds such as loan  prepayments  and deposit
inflows are less  predictable  due to the effects of changes in interest  rates,
economic conditions and competition.

The primary investing activity of the Company is the origination and purchase of
real estate and other loans. During the years ended December 31, 1999, and 1998,
the Company's  disbursements  for loan originations  totaled $24.6 million,  and
$26.0 million  respectively  and loan purchases  totaled $24.0 million and $14.5
million respectively.

For the years ended  December 31, 1999, and 1998,  the Company  experienced  net
increases  in  deposits  (including  the effect of  interest  credited)  of $9.9
million and $7.3 million  respectively.  The increase in fiscal 1999  reflects a
concerted  effort to increase the deposit base through  marketing  local special
rate  certificates  for  periods of 14 through  24  months.  Proceeds  from FHLB
advances  were $9.0  million in fiscal 1999,  and $15.7  million in fiscal 1998.
FHLB  advances of $6.0  million and $6.0  million were repaid in fiscal 1999 and
1998 respectively.

The Company may borrow  funds from the FHLB of  Indianapolis  subject to certain
limitations.  Based on the level of  qualifying  collateral  available to secure
advances at December 31, 1999,  the Company's  borrowing  limit from the FHLB of
Indianapolis was approximately $52.9 million,  with unused borrowing capacity of
$26.2 million at that date.

The Company is required to maintain an average daily balance of liquid assets as
a percentage of net withdrawable deposit accounts plus short-term  borrowings as
defined by OTS regulations.  The minimum  required  liquidity ratio is currently
4.0%. At December 31, 1999 and 1998,  the Company's  liquidity  ratio was 10.9%,
and 16.1% respectively.

The Company's  most liquid assets are cash and cash  equivalents,  which include
highly liquid  short-term  investments  (such as money market mutual funds) that
are readily  convertible  to known amounts of cash. The level of these assets is
dependent on the Company's operating,  financing and investing activities during
any given  period.  At  December  31, 1999 and 1998,  cash and cash  equivalents
totaled $5.5 million and $9.1 million, respectively.

At December 31, 1999, the Company had outstanding loan  origination  commitments
of $1.1 million,  undisbursed  construction loans in process of $1.5 million and
approved but unused lines of credit  extended to customers of $4.7 million.  The
Company  anticipates  that it will have  sufficient  funds available to meet its
current  loan  origination  and  other  commitments.   Certificates  of  deposit
scheduled to mature in one year or less from  December  31, 1999  totaled  $49.9
million.  Based on the Company's most recent  experience  and pricing  strategy,
management believes that a significant portion of such deposits will remain with
the Company.
<PAGE>
The OTS capital regulations  require savings  institutions to meet three minimum
capital standards:  a 1.5% capital ratio, a 3% leverage (core capital) ratio and
an 8%  risk-based  capital  ratio.  The Bank  satisfied  these  minimum  capital
standards at December 31, 1999 with  tangible  and  leverage  capital  ratios of
6.51% and a total risk-based  capital ratio of 12.44%. In determining the amount
of risk-weighted  assets for purposes of the risk-based capital  requirement,  a
savings bank must compute its risk-based  assets by  multiplying  its assets and
certain  off-balance  sheet items by risk-weights,  which range from 0% for cash
and obligations  issued by the United States  Government or its agencies to 100%
for consumer and commercial  loans, as assigned by the OTS capital  regulations.
These  capital  requirements,  which are  applicable  to the Bank  only,  do not
consider  additional  capital  held at the Company  level,  and require  certain
adjustments to stockholder's  equity to arrive at the various regulatory capital
amounts.


                                       14
<PAGE>
The Bank may not  declare  or pay cash  dividends  on or  repurchase  any of its
shares of common  stock if the effect  thereof  would cause equity to be reduced
below applicable  regulatory  capital  requirements or the amount required to be
maintained  for the  liquidation  account  established  in  connection  with the
Conversion.  The Bank paid a dividend of $1.3 million to the Company  during the
year ended  December  31,  1999  compared  to a $1.9  million  and $2.5  million
dividend  during the years ended  December 31, 1998 and 1997. The dividends have
been primarily used by the Company to repurchase  common stock for the treasury.
Unlike the Bank,  the Company is not subject to OTS regulatory  restrictions  on
the payment of  dividends  to its  shareholders;  however,  it is subject to the
requirements  of Delaware  law.  Delaware law generally  limits  dividends to an
amount equal to the excess of the net assets of the Company (the amount by which
total assets exceed total liabilities) over its statutory  capital,  or if there
is no such excess, to its profits for the current and/or  immediately  preceding
fiscal year.

Impact of Inflation and Changing Prices

The  consolidated  financial  statements and related data presented  herein have
been  prepared  in  accordance  with GAAP,  which  require  the  measurement  of
financial  position and operating results in terms of historical dollars without
considering the changes in the relative  purchasing power of money over time due
to inflation.  The impact of inflation is reflected in the increased cost of the
Company's operations.  Unlike industrial companies, nearly all of the assets and
liabilities of the Company are monetary in nature.  As a result,  interest rates
have a greater  impact  on the  Company's  performance  than do the  effects  of
general levels of inflation.  Interest rates do not necessarily move in the same
direction or to the same extent as the price of goods and services.

Impact of New Accounting Standards

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133, "Accounting for Derivative  Instruments and for Hedging Activities." ("SFAS
No. 133") which is effective for fiscal years beginning after June 15, 1999. The
statement  requires all  derivatives to be recorded on the balance sheet at fair
value.  It also  establishes  "special  accounting" for hedges of changes in the
fair value of assets,  liabilities,  or firm  commitment  (fair  value  hedges),
hedges of the variable cash flows of forecasted transactions (cash flow hedges),
and  hedges  of  foreign  currency  exposures  of  net  investments  in  foreign
operations.  To the extent the hedge is considered  highly  effective,  both the
change in the fair value of the  derivative  and the change in the fair value of
the hedged item are recognized (offset) in earnings in the same period.  Changes
in fair value of derivatives that do not meet the criteria of one of these three
hedge categories are included in income.

In September 1999, the FASB issued  Statement of Financial  Accounting  Standard
No. 137 ("SFAS No. 137"),  entitled  "Accounting  for Derivative  Instruments in
Hedging  Activities--Deferral  of the Effective Date of FASB Statement No. 133".
SFAS No.  137  defers the  effective  date of SFAS No. 133 from years  beginning
after June 15, 1999 to all fiscal  quarters of all fiscal years  beginning after
June 15, 2000.  Management  does not believe that  adoption of SFAS No. 133 will
have a material  impact on the  Company's  consolidated  financial  condition or
results of operations.
<PAGE>
The  foregoing  does not  constitute  a  comprehensive  summary of all  material
changes or  developments  affecting  the manner in which the  Company  keeps its
books and records and performs its financial accounting responsibilities.  It is
intended  only as a summary  of some of the  recent  pronouncements  made by the
FASB, which are of particular interest to financial institutions.

                                       15
<PAGE>
                         Cobitz, Vandenberg & Fennessy



                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
AMB Financial Corp.

         We have audited the consolidated  statements of financial  condition of
AMB Financial  Corp. and  subsidiaries as of December 31, 1999 and 1998, and the
related consolidated  statements of income,  changes in stockholders' equity and
cash flows for each of the three years in the period  ending  December 31, 1999.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

         In our opinion, the consolidated financial statements referred to above
present  fairly,  in  all  material  respects,  the  financial  position  of AMB
Financial Corp. and  subsidiaries at December 31, 1999 and 1998, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period  ending  December  31,  1999,  in  conformity  with  generally   accepted
accounting principles.



                                                /s/Cobitz, Vandenberg & Fennessy
                                                --------------------------------
                                                   Cobitz, Vandenberg & Fennessy


January 19, 2000
Palos Hills, Illinois


                                       16
<PAGE>
<TABLE>
<CAPTION>
                                                   AMB FINANCIAL CORP.

                                                    AND SUBSIDIARIES

                                     Consolidated Statements of Financial Condition
                                                                                                December 31,
                                                                                          -------------------------
                                                                                            1999              1998
                                                                                       -------------      -------------
<S>                                                                                    <C>                    <C>
Assets
------

Cash and amounts due from depository institutions                                      $   4,180,088          3,210,234
Interest-bearing deposits                                                                  1,277,650          5,887,182
                                                                                       -------------      -------------
   Total cash and cash equivalents                                                         5,457,738          9,097,416
Investment securities, available for sale, at fair value (note 2)                          5,352,142          6,137,219
Trading securities (note 3)                                                                1,909,333          2,394,130
Mortgage-backed securities, available for sale, at fair value (note 4)                     1,868,000          2,649,380
Loans receivable (net of allowance for loan losses:
  1999 - $590,701; 1998 - $506,534) (note 5)                                             105,909,909         89,762,417
Real estate owned                                                                               --               23,369
Investment in limited partnership (note 6)                                                 1,327,000          1,380,925
Stock in Federal Home Loan Bank of Indianapolis                                            1,383,500          1,334,200
Office properties and equipment - net (note 7)                                               399,867            427,823
Accrued interest receivable (note 8)                                                         642,111            594,942
Prepaid expenses and other assets (note 9)                                                 3,536,270          3,111,101
                                                                                       -------------      -------------

   Total assets                                                                          127,785,870        116,912,922
                                                                                       =============      =============


Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
-------------

Deposits (note 10)                                                                        88,944,925         78,997,215
Borrowed money (note 11)                                                                  24,675,589         21,683,000
Note payable                                                                               1,333,324          1,391,454
Advance payments by borrowers for taxes and insurance                                        431,676            567,098
Other liabilities (note 12)                                                                  861,087            861,325
                                                                                       -------------      -------------
   Total liabilities                                                                     116,246,601        103,500,092
                                                                                       -------------      -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                    <C>                    <C>
Stockholders' Equity:
-------------

Preferred stock, $.01 par value: authorized  100,000 shares; none outstanding                   --                 --
Common stock, $.01 par value: authorized 1,900,000 shares;  1,124,125
  shares issued and 703,329 shares outstanding at  December 31, 1999 and
  869,829 shares outstanding at  December 31, 1998                                            11,241             11,241
Additional paid-in capital                                                                10,798,674         10,771,799
Retained earnings, substantially restricted                                                7,780,655          7,317,519
Accumulated other comprehensive income,  net of income taxes                                 (79,763)           113,856
Treasury stock, at cost (420,796 and 254,296 shares at December 31, 1999 and 1998)        (6,219,684)        (3,844,015)
Common stock acquired by Employee Stock Ownership Plan                                      (539,580)          (629,510)
Common stock awarded by Recognition and Retention Plan                                      (212,274)          (328,060)
                                                                                       -------------      -------------
   Total stockholders' equity (notes 16 and 17)                                           11,539,269         13,412,830
                                                                                       -------------      -------------

Commitments and contingencies (notes 18 and 19)

   Total liabilities and stockholders' equity                                          $ 127,785,870        116,912,922
                                                                                       =============      =============



</TABLE>

See accompanying notes to consolidated financial statements.

                                       17
<PAGE>
<TABLE>
<CAPTION>
                                                   AMB FINANCIAL CORP.

                                                    AND SUBSIDIARIES

                                            Consolidated Statements of Income

                                                                                        Years Ended December 31,
                                                                          ------------------------------------------------
                                                                                 1999               1998             1997
                                                                          --------------         ---------        ---------
<S>                                                                       <C>                    <C>              <C>
Interest income:
  Interest on loans                                                       $    7,419,764         7,027,445        6,003,470
  Interest on mortgage-backed securities                                         153,111           204,014          257,542
  Interest on investment securities                                              371,083           443,942          583,012
  Interest on interest-bearing deposits                                          200,325           212,488          222,787
  Dividends on Federal Home Loan Bank stock                                      107,719            81,208           52,699
                                                                          --------------         ---------        ---------
     Total interest income                                                     8,252,002         7,969,097        7,119,510
                                                                          --------------         ---------        ---------

Interest expense:
  Interest on deposits                                                         3,574,843         3,474,206        3,099,417
  Interest on borrowings                                                       1,329,235         1,096,056          693,214
                                                                          --------------         ---------        ---------
     Total interest expense                                                    4,904,078         4,570,262        3,792,631
                                                                          --------------         ---------        ---------

     Net interest income before provision for loan losses                      3,347,924         3,398,835        3,326,879
Provision for loan losses (note 5)                                               119,024           102,047           74,243
                                                                          --------------         ---------        ---------
     Net interest income after provision for loan losses                       3,228,900         3,296,788        3,252,636
                                                                          --------------         ---------        ---------

Non-interest income:
  Loan fees and service charges                                                  156,833           143,640           98,180
  Commission income                                                               45,781            55,416           77,811
  Unrealized gain (loss) on trading securities - net                            (123,773)         (771,172)         560,809
  Gain on sale of trading securities                                              99,627            24,086           36,066
  Gain on sale of investment securities                                           15,981            44,204           22,264
  Gain (loss) on sale of real estate owned                                         9,904            (1,696)           4,908
  Gain on sale of deposit accounts                                                  -               27,033             -
  Loss from limited partnership (note 6)                                         (53,925)          (10,529)            -
  Deposit related fees                                                           293,548           305,896          250,788
  Other income                                                                   167,657           122,530           80,994
                                                                          --------------         ---------        ---------
     Total non-interest income                                                   611,633           (60,592)       1,131,820
                                                                          --------------         ---------        ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                       <C>                    <C>              <C>
Non-interest expense:
  Staffing costs (notes 13 and 14)                                             1,345,027         1,376,916        1,294,221
  Advertising                                                                    117,011            98,036          126,016
  Occupancy and equipment expenses (note 7)                                      311,297           309,385          353,116
  Data processing                                                                397,545           368,335          335,555
  Professional fees                                                              134,640           167,386          131,373
  Federal deposit insurance premiums                                              47,150            45,112           41,400
  Loss on disposition of fixed assets                                               -               28,798             -
  Other                                                                          463,128           485,415          404,848
                                                                          --------------         ---------        ---------
     Total non-interest expense                                                2,815,798         2,879,383        2,686,529
                                                                          --------------         ---------        ---------

Income before income taxes                                                     1,024,735           356,813        1,697,927
  Income taxes (note 15)                                                         327,894           152,171          674,874
                                                                          --------------         ---------        ---------

     Net income                                                           $      696,841           204,642        1,023,053
                                                                          ==============           =======        =========

Earnings per share -
     Basic                                                                $          .97               .24             1.12
     Diluted                                                              $          .96               .24             1.10
</TABLE>


See accompanying notes to consolidated financial statements.

                                       18
<PAGE>
<TABLE>
<CAPTION>
                                                         AMB FINANCIAL CORP.
                                                          AND SUBSIDIARIES
                                     Consolidated Statements of Changes in Stockholders' Equity
                                                 Three Years Ended December 31, 1999
                                                                                        Accumulated                 Common
                                                          Additional                       Other                    Stock
                                                Common      Paid-in        Retained     Comprehensive    Treasury   Acquired
                                                Stock      Capital         Earnings       Income         Stock      by ESOP
                                                -----      -------         --------       ------         -----      -------
<S>                                            <C>        <C>              <C>              <C>          <C>        <C>
Balance at December 31, 1996                   $11,241    10,657,746       6,564,204        30,386       (724,718)  (809,370)
                                                ------    ----------       ---------     ---------    -----------    -------
Comprehensive income:
Net income                                                                 1,023,053
 Other comprehensive income, net of tax:
  Unrealized holding gain during the year                                                   54,600
  Less:  reclassification adjustment
    of gains included in net income                                                        (13,925)
                                                                           ---------      --------
Total comprehensive income                                                 1,023,053        40,675
Purchase of treasury stock
   (104,121 shares)                                                                                    (1,498,333)
Tax benefit related to  vested RRP stock                      17,000
Amortization of award of  RRP stock
Contribution to fund ESOP loan                                42,322                                                  89,930
Dividends declared on
   common stock ($.25 per share)                                           (230,007)
                                                ------    ----------      ---------      ---------    -----------    -------
Balance at December 31, 1997                    11,241    10,717,068      7,357,250         71,061     (2,223,051)  (719,440)
                                                ------    ----------      ---------      ---------    -----------    -------
Comprehensive income:
Net income                                                                  204,642
 Other comprehensive income, net of tax:
  Unrealized holding gain during the year                                                   49,076
  Less: reclassification adjustment
    of gains included in net income                                                         (6,281)
                                                                          ---------      ---------
Total comprehensive income                                                  204,642         42,795
Purchase of treasury stock
   (93,969 shares)                                                                                     (1,620,964)
Amortization of award of RRP stock
Contribution to fund ESOP loan                                54,731                                                  89,930
Dividends declared on
   common stock ($.29 per share)                                           (244,373)
                                                ------    ----------      ---------      ---------    -----------    -------
Balance at December 31, 1998                    11,241    10,771,799      7,317,519        113,856     (3,844,015)  (629,510)
                                                ------    ----------      ---------      ---------    -----------    -------
Comprehensive income:
Net income                                                                  696,841
 Other comprehensive income, net of tax:
  Unrealized holding loss during the year                                                 (193,619)
                                                                            -------      ---------
Total comprehensive income                                                  696,841       (193,619)
Purchase of treasury stock
   (166,500 shares)                                                                                    (2,375,669)
Amortization of award of RRP stock
Contribution to fund ESOP loan                                26,875                                                  89,930
Dividends declared on
   common stock ($.32 per share)                                           (233,705)
                                                ------    ----------      ---------      ---------    -----------    -------
Balance at December 31, 1999                   $11,241    10,798,674      7,780,655        (79,763)    (6,219,684)  (539,580)
                                                ------    ----------       ---------     ---------    -----------    -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  Common
                                                                  Stock
                                                                  Awarded
                                                                  by RRP       Total
                                                                  ------       -----
<S>                                                             <C>         <C>
Balance at December 31, 1996                                     (559,632)   15,169,857
                                                                  -------    ----------
Comprehensive income:
Net income                                                                    1,023,053
 Other comprehensive income, net of tax:
  Unrealized holding gain during the year                                        54,600
  Less:  reclassification adjustment
    of gains included in net income                                             (13,925)
                                                                             ----------
Total comprehensive income                                                    1,063,728
Purchase of treasury stock
   (104,121 shares)                                                          (1,498,333)
Tax benefit related to  vested RRP stock                                         17,000
Amortization of award of  RRP stock                               115,786       115,786
Contribution to fund ESOP loan                                                  132,252
Dividends declared on
   common stock ($.25 per share)                                               (230,007)
                                                                  -------    ----------

Balance at December 31, 1997                                     (443,846)   14,770,283
                                                                  -------    ----------
Comprehensive income:
Net income                                                                      204,642
 Other comprehensive income, net of tax:
  Unrealized holding gain during the year                                        49,076
  Less: reclassification adjustment
    of gains included in net income                                             (6,281)
                                                                             ----------
Total comprehensive income                                                      247,437
Purchase of treasury stock
   (93,969 shares)                                                           (1,620,964)
Amortization of award of RRP stock                                115,786       115,786
Contribution to fund ESOP loan                                                  144,661
Dividends declared on
   common stock ($.29 per share)                                               (244,373)
                                                                  -------    ----------
Balance at December 31, 1998                                     (328,060)   13,412,830
                                                                  -------    ----------

Comprehensive income:
Net income                                                                      696,841
 Other comprehensive income, net of tax:
  Unrealized holding loss during the year                                      (193,619)
                                                                             ----------
Total comprehensive income                                                      503,222
Purchase of treasury stock
   (166,500 shares)                                                          (2,375,669)
Amortization of award of RRP stock                                115,786       115,786
Contribution to fund ESOP loan                                                  116,805
Dividends declared on
   common stock ($.32 per share)                                               (233,705)
                                                                  -------    ----------
 Balance at December 31, 1999                                    (212,274)   11,539,269
                                                                  -------    ----------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       19
<PAGE>
<TABLE>
<CAPTION>
                                                     AMB FINANCIAL CORP.

                                                       AND SUBSIDIARIES

                                            Consolidated Statements of Cash Flows

                                                                                         Years Ended December 31,
                                                                         ---------------------------------------------------
                                                                               1999                1998              1997
                                                                        -------------      -------------      -------------
<S>                                                                      <C>                <C>                <C>
 Cash flows from operating activities:

  Net income                                                             $     696,841            204,642          1,023,053
  Items not requiring (providing) cash:
     Depreciation                                                              122,984            136,566            153,426
     Amortization of cost of stock benefit plans                               205,716            205,716            205,716
     Amortization of premiums and accretion of discounts                        30,117             13,773              1,858
     Net gain on sale of securities                                           (115,608)           (68,290)           (58,330)
     Net (gain) loss on sale of real estate owned                               (9,904)             1,696             (4,908)
     Provision for loan losses                                                 119,024            102,047             74,243
     Loss on disposition of fixed assets                                          --               28,798               --
     Loss from limited partnership                                              53,925             10,529               --
     Gain on sale of deposits                                                     --              (27,033)              --
     Unrealized (gain) loss on trading securities                              123,773            771,172           (560,809)
     Purchase of trading securities                                            (93,750)          (852,648)        (1,957,532)
     Proceeds from sale of trading securities                                  554,401            124,399            680,940
     Decrease in deferred income on loans                                       (2,110)           (76,687)           (25,349)
     Increase (decrease) in accrued and deferred income taxes                 (204,645)          (591,282)           347,337
     Increase in accrued interest receivable                                   (47,169)           (61,433)           (80,554)
     Increase (decrease) in accrued interest payable                            (5,350)            24,206             (8,163)
     Increase in deferred compensation                                          76,974             61,581             79,320
     Other, net                                                               (136,430)            (8,354)          (188,048)
                                                                         -------------      -------------      -------------

Net cash provided by (for) operating activities                              1,368,789               (602)          (317,800)
                                                                         -------------      -------------      -------------

Cash flows from investing activities:

     Proceeds from sales of investment securities                               15,981          2,793,760          4,014,689
     Proceeds from maturities of investment securities                         500,000          2,875,000            750,000
     Purchase of investment securities                                          (6,329)        (3,492,968)        (3,996,048)
     Proceeds from repayments of mortgage-backed securities                    719,969            847,014            569,678
     Purchase of Federal Home Loan Bank stock                                  (49,300)          (608,800)          (179,800)
     Purchase of life insurance policies                                          --           (1,515,000)              --
     Purchase of loans                                                     (23,991,209)       (14,487,063)        (6,872,966)
     Loan disbursements                                                    (24,570,680)       (25,987,142)       (19,852,423)
     Loan repayments                                                        32,297,483         27,756,288         16,884,296
     Proceeds from sale of real estate owned                                    33,273             25,785            102,702
     Property and equipment expenditures, net                                  (95,028)          (121,457)          (114,553)
                                                                         -------------      -------------      -------------

Net cash provided for investing activities                                 (15,145,840)       (11,914,583)        (8,694,425)
                                                                         -------------      -------------      -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                      <C>                <C>                <C>
Cash flows from financing activities:

     Deposit receipts                                                      171,721,626        151,006,489        142,882,643
     Deposit withdrawals                                                  (164,715,766)      (143,773,817)      (134,005,401)
     Sale of deposit accounts                                                     --           (2,676,263)              --
     Interest credited to deposits                                           2,941,850          2,767,713          2,411,887
     Proceeds from borrowed money                                            9,000,000         15,683,000          7,000,000
     Repayment of borrowed money                                            (6,007,411)        (6,000,000)        (4,500,000)
     Repayment of note payable                                                 (58,130)              --                 --
     Increase (decrease) in advance payments by borrowers
     for taxes and insurance                                                  (135,422)            83,861             71,024
     Purchase of treasury stock                                             (2,375,669)        (1,620,964)        (1,498,333)
     Dividends paid on common stock                                           (233,705)          (244,373)          (230,007)
                                                                         -------------      -------------      -------------

Net cash provided by financing activities                                   10,137,373         15,325,646         12,131,813
                                                                         -------------      -------------      -------------
Net change in cash and cash equivalents                                     (3,639,678)         3,410,461          3,119,588

Cash and cash equivalents at beginning of year                               9,097,416          5,686,955          2,567,367
                                                                         -------------      -------------      -------------

Cash and cash equivalents at end of year                                 $   5,457,738          9,097,416          5,686,955
                                                                         =============      =============      =============


Supplemental disclosure of cash flow information:
Cash paid during the year for:
    Interest                                                             $   4,909,428          4,546,056          3,800,794
    Income taxes                                                               532,539            739,521            310,609
  Non-cash investing activities:
    Transfer of loans to real estate owned                               $        --               23,369            113,496

</TABLE>

See accompanying notes to consolidated financial statements.

                                       20
<PAGE>
                               AMB FINANCIAL CORP.
                                AND SUBSIDIARIES
                                ----------------

                   Notes to Consolidated Financial Statements

1)     Summary of Significant Accounting Policies
       ------------------------------------------

       AMB  Financial   Corp.   (the   "Company")  is  a  Delaware   corporation
       incorporated on November 23, 1993 for the purpose of becoming the savings
       and loan holding company for American Savings, FSB (the "Bank"). On March
       29, 1996,  the Bank converted from a mutual to a stock form of ownership,
       and the  Company  completed  its initial  public  offering,  and,  with a
       portion of the net proceeds  acquired  all of the issued and  outstanding
       capital stock of the Bank (the "Conversion").

       The accounting and reporting policies of the Company and its subsidiaries
       conform  to  generally  accepted  accounting  principles  and to  general
       practice  within  the  thrift  industry.  The  preparation  of  financial
       statements in conformity with generally  accepted  accounting  principles
       requires  management to make  estimates and  assumptions  that affect the
       reported  amounts of assets and  liabilities and disclosure of contingent
       assets and  liabilities  at the date of the financial  statements and the
       reported  amounts of revenue and expenses  during the  reporting  period.
       Actual  results  could differ from those  estimates.  The  following is a
       description  of the more  significant  policies which the Bank follows in
       preparing and presenting its consolidated financial statements.

       Principles of Consolidation
       ---------------------------

       The  accompanying   consolidated  financial  statements  consist  of  the
       accounts  of the  Company,  and its  wholly  owned  subsidiary,  American
       Savings FSB,  the Bank's  wholly owned  subsidiary,  NIFCO,  Inc. and the
       wholly  owned  subsidiary  of  NIFCO,   Inc.,  Ridge   Management,   Inc.
       Significant  intercompany  balances and transactions have been eliminated
       in consolidation.

       Industry Segments
       -----------------

       The Company  operates  principally  in the banking  industry  through its
       subsidiary bank. As such,  substantially  all of the Company's  revenues,
       net income,  identifiable assets and capital  expenditures are related to
       banking operations.

       Investment Securities and Mortgage-Backed Securities, Available for Sale
       ------------------------------------------------------------------------

       Investment  securities and mortgage-backed  securities available for sale
       are  recorded  in  accordance  with  Statement  of  Financial  Accounting
       Standards  ("SFAS") No. 115 "Accounting  for Certain  Investments in Debt
       and  Equity  Securities".  SFAS No.  115  requires  the use of fair value
       accounting for  securities  available for sale or trading and retains the
       use of the  amortized  cost  method for  investments  the Company has the
       positive intent and ability to hold to maturity.
<PAGE>
       SFAS No. 115 requires the  classification  of debt and equity  securities
       into one of three  categories:  held to maturity,  available for sale, or
       trading.  Held to maturity  securities  are measured at  amortized  cost.
       Unrealized gains and losses on trading securities are included in income.
       Unrealized gains and losses on available for sale securities are excluded
       from  income  and  reported  net of  taxes  as a  separate  component  of
       stockholders' equity.

       The Company has currently designated all of its investment securities and
       mortgage-backed  securities as available for sale, and has recorded these
       investments at their current fair values. Unrealized gains and losses are
       recorded in a valuation  account which is included,  net of income taxes,
       as a separate component of stockholders'  equity. Gains and losses on the
       sale of  securities  are  determined  using the  specific  identification
       method and are reflected in earnings when realized.


                                       21
<PAGE>
1)     Summary of Significant Accounting Policies
       ------------------------------------------

       Trading Securities
       ------------------

       Trading account  securities are carried at fair value, and net unrealized
       gains and losses are reflected in the consolidated statements of income.

       Loans Receivable and Related Fees
       ---------------------------------

       Loans are stated at the  principal  amount  outstanding,  net of loans in
       process, deferred fees and the allowance for losses. Interest on loans is
       credited  to income as earned  and  accrued  only if deemed  collectible.
       Loans are placed on nonaccrual status when, in the opinion of management,
       the full timely  collection  of principal  or interest is in doubt.  As a
       general rule, the accrual of interest is  discontinued  when principal or
       interest  payments  become  90 days  past due or  earlier  if  conditions
       warrant.  When a loan is placed on nonaccrual status,  previously accrued
       but unpaid interest is charged against current income.

       Loan  origination  fees are being deferred in accordance with SFAS No. 91
       "Accounting for Nonrefundable  Fees and Costs Associated with Originating
       or Acquiring  Loans and Initial  Direct Costs of Leases".  This statement
       requires that loan origination fees and direct loan origination costs for
       a completed  loan be netted and then deferred and amortized into interest
       income as an adjustment of yield over the contractual life of the loan.

       The Company has adopted the  provisions  of SFAS No. 114  "Accounting  by
       Creditors  for  Impairment  of a Loan" and SFAS No.  118  "Accounting  by
       Creditors for Impairment of a Loan - Income  Recognition and Disclosures"
       which impose certain  requirements  on the measurement of impaired loans.
       These  statements  apply to all loans that are  identified for evaluation
       except for large  groups of  smaller-balance  homogeneous  loans that are
       collectively  evaluated for impairment.  These loans include, but are not
       limited to, credit card,  residential  mortgage and consumer  installment
       loans.

       Under these  statements,  of the remaining  loans which are evaluated for
       impairment  (a  loan  is  considered  impaired  when,  based  on  current
       information and events,  it is probable that a creditor will be unable to
       collect all amounts due  according to the  contractual  terms of the loan
       agreement),  there  were no  material  amounts  of  loans  which  met the
       definition  of an impaired  loan during the year ended  December 31, 1999
       and one loan to be evaluated for impairment at December 31, 1999.

       Allowance for Loan Losses
       -------------------------

       The  determination  of the  allowance for loan losses  involves  material
       estimates that are  susceptible  to significant  change in the near term.
       The  allowance  for loan  losses is  maintained  at a level  adequate  to
       provide for losses through charges to operating expense. The allowance is
       based upon past loss  experience and other factors which, in management's
       judgement,  deserve current  recognition in estimating losses. Such other
       factors  considered by management  include growth and  composition of the
       loan  portfolio,   the  relationship  of  the  allowance  for  losses  to
       outstanding loans and economic conditions.
<PAGE>
       Management believes that the allowance is adequate. While management uses
       available  information to recognize losses on loans,  future additions to
       the allowance may be necessary  based on changes in economic  conditions.
       In addition,  various regulatory  agencies,  as an integral part of their
       examination process, periodically review the Bank's allowance for losses.
       Such  agencies  may  require  the  Bank  to  recognize  additions  to the
       allowance based on their judgements about  information  available to them
       at the time of their examination.

                                       22
<PAGE>
1)     Summary of Significant Accounting Policies
       ------------------------------------------

       Real Estate Owned
       -----------------

       Real estate acquired  through  foreclosure or deed in lieu of foreclosure
       is carried at the lower of fair value  minus  estimated  costs to sell or
       the  related  loan  balance at the date of  foreclosure.  Valuations  are
       periodically  performed  by  management  and an  allowance  for  loss  is
       established by a charge to operations if the carrying value of a property
       exceeds its fair value minus estimated costs to sell.

       Depreciation and Amortization
       -----------------------------

       Depreciation  of office  properties  and equipment is  accumulated on the
       straight line basis over estimated lives of the various assets.  The cost
       of leasehold  improvements  is amortized  using the straight  line method
       over the term of the lease.

       Investment in Limited Partnership
       ---------------------------------

       The investment in limited partnership is recorded using the equity method
       of  accounting.  Losses  due  to  impairment  are  recorded  when  it  is
       determined  that the  investment no longer has the ability to recover its
       carrying  amount.   The  benefits  of  low  income  housing  tax  credits
       associated with the investment are accrued when earned.

       Income Taxes
       ------------

       The Company files a consolidated federal income tax return with the Bank.
       The  provision for federal and state taxes on income is based on earnings
       reported in the financial  statements.  Deferred  income taxes arise from
       the  recognition  of certain items of income and expense for tax purposes
       in  years  different  from  those in which  they  are  recognized  in the
       consolidated  financial  statements.  Deferred tax assets and liabilities
       are recognized for the estimated future tax consequences  attributable to
       differences  between the financial  statement carrying amount of existing
       assets and  liabilities  and their  respective  tax bases.  Deferred  tax
       assets and  liabilities  are  measured  using tax rates in effect for the
       year in which those temporary differences are expected to be recovered or
       settled. The effect on deferred tax assets and liabilities of a change in
       tax rates is  recognized  in income  for the  period  that  includes  the
       enactment date.

       Consolidated Statements of Cash Flows
       -------------------------------------

       For the  purposes of reporting  cash flows,  the Company has defined cash
       and cash equivalents to include cash on hand, amounts due from depository
       institutions,  interest-bearing  deposits in other financial institutions
       and federal funds sold.


                                       23
<PAGE>
1)     Summary of Significant Accounting Policies
       ------------------------------------------

       Earnings Per Share
       ------------------

       The Company computes its earnings per share (EPS) in accordance with SFAS
       No. 128 "Earnings per Share". This statement simplifies the standards for
       computing EPS previously found in Accounting Principles Board Opinion No.
       5 "Earnings  per Share" and makes them  comparable to  international  EPS
       standards.   It  replaces  the   presentation   of  primary  EPS  with  a
       presentation of basic EPS and fully diluted EPS with diluted EPS.

       Basic EPS,  unlike  primary  EPS,  excludes  dilution  and is computed by
       dividing income available to common stockholders by the  weighted-average
       number of common shares outstanding for the period.  Diluted EPS reflects
       the potential  dilution that could occur if securities or other contracts
       to issue  common stock were  exercised or converted  into common stock or
       resulted in the issuance of common stock that then shared in the earnings
       of the entity.

       The  following   presentation   illustrates  basic  and  diluted  EPS  in
       accordance with the provisions of SFAS No. 128:
<TABLE>
<CAPTION>


                                                                          Years Ended December 31,
                                                             ------------------------------------------------
                                                                   1999               1998                1997
                                                             ------------           -------         ---------
<S>                                                          <C>                    <C>             <C>
         Weighted average number of common shares
           outstanding used in basic EPS calculation              784,822           917,240           995,455
         Reduction for common shares not yet
           released by Employee Stock Ownership Plan              (62,951)          (71,944)          (80,937)
                                                             ------------           -------         ---------
         Total weighted average common shares
           outstanding for basic computation                      721,871           845,296           914,518
         Add common stock equivalents for shares
           issuable under Stock Option Plans                        1,856            20,693            13,206
                                                             ------------           -------         ---------
         Weighted average number of shares outstanding
           adjusted for common stock equivalents                  723,727           865,989           927,724
                                                             ============           =======         =========

         Net income                                          $    696,841           204,642         1,023,053
         Basic earnings per share                            $        .97               .24              1.12
         Diluted earnings per share                          $        .96               .24              1.10

</TABLE>
                                       24
<PAGE>
2)     Investment Securities, Available for Sale
       -----------------------------------------

       Investment  securities  available  for sale are recorded at fair value in
       accordance with SFAS No. 115. This portfolio is summarized as follows:

<TABLE>
<CAPTION>
                                                          Gross          Gross
                                        Amortized      Unrealized     Unrealized        Fair
                                           Cost           Gains          Losses         Value
                                        ----------     ----------     ----------     ----------
<S>                                     <C>            <C>            <C>            <C>
December 31, 1999
-----------------
United States Government securities     $5,236,797          4,656        117,441      5,124,012
Municipal securities                        99,600           --            5,144         94,456
Marketable equity securities               135,416           --            1,742        133,674
                                        ----------     ----------     ----------     ----------

                                        $5,471,813          4,656        124,327      5,352,142
                                        ==========     ==========     ==========     ==========

December 31, 1998
-----------------
United States Government securities     $5,770,284        137,421          7,106      5,900,599
Municipal securities                        99,562          2,684           --          102,246
Marketable equity securities               129,087          5,287           --          134,374
                                        ----------     ----------     ----------     ----------

                                        $5,998,933        145,392          7,106      6,137,219
                                        ==========     ==========     ==========     ==========

</TABLE>

       The  contractual  maturity  of the above  investments  is  summarized  as
       follows:
<TABLE>
<CAPTION>
                                               December 31, 1999            December 31, 1998
                                           ------------------------     -------------------------
                                           Amortized         Fair          Amortized        Fair
       Term to Maturity                      Cost            Value           Cost           Value
       ----------------                   ----------     ----------     ----------     ----------
<S>                                        <C>             <C>              <C>            <C>
Due in one year or less                    $1,150,531      1,151,578        500,000        513,565
Due after one year through five years       4,086,266      3,972,434      4,349,143      4,434,592
Due after five years through ten years           --             --          921,141        952,442
Due after ten years                            99,600         94,456         99,562        102,246
Marketable equity securities                  135,416        133,674        129,087        134,374
                                           ----------     ----------     ----------     ----------

                                           $5,471,813      5,352,142      5,998,933      6,137,219
                                           ==========     ==========     ==========     ==========

</TABLE>
<PAGE>
       During the current  year,  the Company sold  securities  realizing  gross
       proceeds of $15,981, with gross gains of $15,981 realized on those sales.
       Proceeds  from sales of investment  securities  available for sale during
       the years ended December 31, 1998 and 1997 were $2,793,760 and $4,014,689
       with gross  gains of $44,493  and  $26,113  and gross  losses of $289 and
       $3,849  realized on those sales.  The change in net unrealized  gains and
       losses  during the  current  year of  $257,957,  net of the tax effect of
       $103,184, resulted in a $154,773 charge to stockholders' equity.


                                       25
<PAGE>
3)     Trading Securities
       ------------------

       Trading  securities  are  accounted  for at their  current  fair  values.
       Trading  securities  at December 31, 1999  consists of equity  securities
       (thrift  common stock  mutual fund  investment  with a carrying  value of
       $964,614  and common stock with a carrying  value of  $857,219)  and debt
       securities with a carrying value of $87,500.  The common stock investment
       at December  31, 1999 is pledged as  collateral  for a revolving  line of
       credit as discussed in note 11.  Trading  securities at December 31, 1998
       also  consists of equity  securities  (thrift  common  stock  mutual fund
       investment with a carrying value of $963,654,  an equity mutual fund with
       a carrying  value of $57,128  and common  stock with a carrying  value of
       $1,277,098)  and debt  securities  with a carrying value of $96,250.  The
       adjustment of these  securities to their current fair values has resulted
       in a net  unrealized  loss of $123,773  and  $771,172 for the years ended
       December 31, 1999 and 1998 and a net unrealized  gain of $560,809 for the
       year ended December 31, 1997.  Proceeds from sales of trading  securities
       during the years ended  December 31, 1999,  1998 and 1997 were  $554,401,
       $124,399  and $680,940  with gross gains of $99,627,  $24,086 and $37,410
       and gross losses of $-0-, $-0- and $1,344 realized on those sales.

4)     Mortgage-Backed Securities, Available for Sale
       ----------------------------------------------

       Mortgage-backed  securities available for sale are recorded at fair value
       in accordance with SFAS No. 115. This portfolio is summarized as follows:
<TABLE>
<CAPTION>
                                                       Gross          Gross
                                     Amortized      Unrealized     Unrealized        Fair
                                        Cost           Gains          Losses         Value
                                     ----------     ----------     ----------     ----------
<S>                                  <C>             <C>            <C>            <C>
December 31, 1999
-----------------
  Participation Certificates:
   FHLMC - Fixed rate                $1,463,776              33         10,989      1,452,820
   FNMA  - Adjustable rate               40,785              --            109         40,676
   GNMA  - Adjustable rate              376,707             816          3,019        374,504
                                     ----------      ----------     ----------     ----------

                                     $1,881,268             849         14,117      1,868,000
                                     ==========      ==========     ==========     ==========


  Weighted average interest rate           6.73%
                                     ==========

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                  <C>             <C>            <C>            <C>
December 31, 1998
-----------------
  Participation Certificates:
   FHLMC - Fixed rate                $2,057,661          50,070            600      2,107,131
   FNMA  - Adjustable rate               52,356             749           --           53,105
   GNMA  - Adjustable rate              487,888           3,207          1,951        489,144
                                     ----------      ----------     ----------     ----------

                                     $2,597,905          54,026          2,551      2,649,380
                                     ==========      ==========     ==========     ==========


  Weighted average interest rate           6.78%
                                     ==========

</TABLE>

       There  were no sales of  mortgage-backed  securities  available  for sale
       during the years ended  December 31, 1999,  1998 and 1997.  The change in
       net unrealized  gains and losses during the current year of $64,743,  net
       of  the  tax  effect  of  $25,897,   resulted  in  a  $38,846  charge  to
       stockholders' equity.

                                       26
<PAGE>
5)     Loans Receivable
       ----------------

       Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
                                                        December 31,
                                              ---------------------------------
                                                   1999                 1998
                                              -------------       -------------
<S>                                           <C>                    <C>
Mortgage loans:
       One-to-four family                     $  82,210,196          63,368,978
       Multi-family                               2,144,343           2,446,043
       Nonresidential                             8,774,978          10,370,172
       Construction                               4,278,942           2,522,279
       Land                                         631,704           1,226,881
                                              -------------       -------------

   Total mortgage loans                          98,040,163          79,934,353
                                              -------------       -------------

Other loans:
       Loans on deposit accounts                    146,963             171,604
       Equity lines of credit                     3,336,406           3,552,371
       Other consumer                             1,497,930           1,667,732
                                              -------------       -------------

   Total other loans                              4,981,299           5,391,707
                                              -------------       -------------

Commercial business loans                         4,998,619           5,607,204
                                              -------------       -------------

   Total loans receivable                       108,020,081          90,933,264
                                              -------------       -------------

Less:
       Loans in process                           1,522,746             569,028
       Net deferred yield adjustments                (3,275)             95,285
       Allowance for loan losses                    590,701             506,534
                                              -------------       -------------

Loans receivable, net                         $ 105,909,909          89,762,417
                                              =============       =============

Weighted average interest rate                         7.63%               7.77%
                                              =============       =============
</TABLE>
<PAGE>
       Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>

                                                 Years Ended December 31,
                                        ---------------------------------------
                                           1999          1998            1997
                                        ---------      ---------      ---------
<S>                                     <C>              <C>            <C>
         Balance, beginning of year     $ 506,534        410,383        354,631
         Provision for loan losses        119,024        102,047         74,243
         Charge-offs                      (39,845)        (5,896)       (32,942)
         Recoveries                         4,988           --           14,451
                                        ---------      ---------      ---------

         Balance, end of year           $ 590,701        506,534        410,383
                                        =========      =========      =========
</TABLE>

         Delinquent loans (loans having monthly payments past due ninety days or
         more and  non-accruing)  at  December  31,  1999 and 1998  amounted  to
         approximately  $969,000 and $475,000  respectively.  As of December 31,
         1999, the total investment in impaired loans was $519,000. The impaired
         loan at this date was  subject to an  allowance  for  credit  losses of
         $40,000, which is included in the above loan loss allowance.

         For the years ended December 31, 1999 and 1998,  gross interest  income
         which would have been recorded had the non-accruing  loans been current
         in  accordance  with their  original  terms  amounted to  approximately
         $47,000 and $17,000 respectively.

         Loans to directors  and  executive  officers  aggregated  approximately
         $323,000 and $340,000 at December 31, 1999 and 1998 respectively.  Such
         loans are made on substantially  the same terms as those for other loan
         customers.


                                       27
<PAGE>
6)     Investment in Limited Partnership
       ---------------------------------

       The  investment in limited  partnership  of $1,327,000  and $1,380,925 at
       December  31,  1999  and  1998  represents  a  39.60%  equity  in  Pedcor
       Investments 1997 - XXXI ("Pedcor"),  a limited  partnership  organized to
       build, own and operate a 56 unit apartment complex. The Bank has recorded
       its equity in the losses of Pedcor in the amount of $53,925  and  $10,529
       for the year ended  December 31, 1999 and the nine months ended  December
       31, 1998. Condensed financial statements for Pedcor are as follows:



<PAGE>
<TABLE>
<CAPTION>
                       Condensed Statements of Financial Condition
                       -------------------------------------------

                                                                 December 31,
                                                       --------------------------------
                                                           1999               1998
                                                       --------------         ---------
<S>                                                    <C>                <C>
       Assets
       ------

       Cash                                            $      181,985             1,800
       Construction in process                                  -             2,561,817
       Property and equipment                               4,028,104             -
       Land                                                   112,000           112,000
       Other                                                   19,177               501
                                                       --------------         ---------

         Total assets                                       4,341,266         2,676,118
                                                       ==============         =========

       Liabilities
       -----------

       Notes payable - Bank                                   983,000           983,000
       Notes payable - Other                                2,855,115         1,500,191
       Other liabilities                                      312,242           219,516
                                                       --------------         ---------
         Total liabilities                                  4,150,357         2,702,707
                                                       --------------         ---------

       Partners' capital                                      190,909           (26,589)
                                                       --------------         ---------

           Total liabilities and partners' capital     $    4,341,266         2,676,118
                                                       ==============         =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                            Nine Months
                                                          Year Ended            Ended
                                                          December 31,       December 31,
                                                              1999               1998
                                                           ---------          ---------
<S>                                                        <C>                <C>
       Condensed statement of operations

       Total revenues                                        104,027              8,278
       Total expenses                                      $ 240,200             34,867
                                                           ---------          ---------

         Net loss                                          $(136,173)           (26,589)
                                                           =========          =========
</TABLE>

                                       28
<PAGE>
7)     Office Properties and Equipment
       -------------------------------

       Office properties and equipment are summarized as follows:
<TABLE>
<CAPTION>
                                                                   December 31,
                                                         -----------------------------
                                                             1999               1998
                                                           ---------        ----------
<S>                                                      <C>                <C>
       Cost:
           Land  -        Munster                        $    40,669            40,669
                          Hammond                             33,300            33,300
                          East Chicago                         -                 -
           Building  -    Munster                            417,151           417,151
                          Hammond                            243,030           243,030
                          East Chicago                         -                 -
       Leasehold improvements - Dyer                         144,932           148,096
       Furniture and equipment                             1,000,179           905,150
                                                           ---------        ----------
                                                           1,879,261         1,787,396
                                                          ----------        ----------

       Less accumulated depreciation:
           Building  -    Munster                            394,190           385,442
                          Hammond                            233,308           229,916
                          East Chicago                         -                 -
       Leasehold improvements - Dyer                          65,942            61,603
       Furniture and equipment                               785,954           682,612
                                                          ----------        ----------
                                                           1,479,394         1,359,573
                                                          ----------        ----------

       Net book value                                    $   399,867           427,823
                                                          ==========        ==========
</TABLE>

       Depreciation  of office  properties  and  equipment  for the years  ended
       December  31,  1999,  1998 and 1997  amounted to  $122,984,  $136,566 and
       $153,426 respectively.

       The Bank has entered into a lease  agreement  for its office  location in
       Dyer,  Indiana.  The lease,  which expires in 2000,  carries an option to
       extend for three successive  renewals of five years each. Rent is payable
       monthly and adjusted annually based on the consumer price index.  Monthly
       rent at December 31, 1999  amounted to $3,236  including  utilities.  The
       Bank is responsible for its proportionate  share of real estate taxes and
       assessments and for maintaining  public liability  insurance covering the
       premises.  Rent expense for the years ended  December 31, 1999,  1998 and
       1997 amounted to $38,320, $37,372 and $36,815 respectively.

       During the prior year,  the Bank  disposed of its East Chicago  facility.
       The property  was donated at no cost to a local non profit  organization.
       The net book value of the  property at the date of  donation  amounted to
       $28,798 and has been recorded as a loss. All personal property associated
       with the office has been transferred to other office locations.
<PAGE>
8)     Accrued Interest Receivable
       ---------------------------

       Accrued interest receivable is summarized as follows:

<TABLE>
<CAPTION>
                                                        December 31,
                                               -----------------------------
                                                  1999                1998
                                               ---------           ---------
<S>                                            <C>                 <C>
Investment securities                          $  71,284              74,596
Mortgage-backed securities                        10,619              14,796
Loans receivable                                 621,172             529,930
Allowance for uncollected interest               (60,964)            (24,380)
                                               ---------              ------

                                               $ 642,111             594,942
                                               =========           =========
</TABLE>


                                       29
<PAGE>
9)     Prepaid Expenses and Other Assets
       ---------------------------------

       Prepaid expenses and other assets consist of the following:
<TABLE>
<CAPTION>
                                                                   December 31,
                                                            -------------------------
                                                                1999           1998
                                                            ----------     ----------
<S>                                                         <C>            <C>
Prepaid insurance premiums                                  $   40,686         31,853
Prepaid pension cost                                            91,776         58,463
Prepaid federal and state income taxes                          72,579           --
Other prepaid expenses                                          56,173         55,076
Cash surrender value of life insurance policies (a)          2,710,899      2,584,902
Deferred federal and state income tax benefit - net (b)        542,108        322,487
Miscellaneous                                                   22,049         58,320
                                                            ----------     ----------

                                                            $3,536,270      3,111,101
                                                            ==========     ==========
</TABLE>

       (a)    The Board of Directors has approved two  non-qualified  retirement
              income plans which will  provide  pre-retirement  death  benefits,
              post-retirement death benefits,  and retirement benefits to senior
              management and the Board of Directors. The Bank has purchased life
              insurance policies on all individuals covered under the plans. The
              Bank is the owner and beneficiary of each policy.

       (b)    The approximate tax effect of temporary differences that give rise
              to the  Company's  net deferred tax asset at December 31, 1999 and
              1998 under SFAS No. 109 is as follows:

<TABLE>
<CAPTION>

                                                          Assets      Liabilities        Net
                                                          ------      -----------        ---

<S>                                                     <C>            <C>            <C>
December 31, 1999
-----------------

Loan fees deferred for financial reporting purposes     $  16,832           --           16,832
Accelerated book depreciation                              36,492           --           36,492
Deferred compensation                                     183,358           --          183,358
Nondeductible incentive plan expense                       11,934           --           11,934
Bad debt reserves established for
     financial reporting purposes                         236,280           --          236,280
Increases to tax bad debt reserves
     since January 1, 1988                                   --          (76,325)       (76,325)
Unrealized loss on securities available for sale           53,176           --           53,176
Unrealized loss on trading account securities              55,976           --           55,976
Other                                                      24,385           --           24,385
                                                        ---------      ---------      ---------

                                                        $ 618,433        (76,325)       542,108
                                                        =========      =========      =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, 1998
-----------------

<S>                                                     <C>            <C>            <C>
Loan fees deferred for financial reporting purposes     $  24,272           --           24,272
Accelerated book depreciation                              30,818           --           30,818
Deferred compensation                                     152,568           --          152,568
Nondeductible incentive plan expense                        8,176           --            8,176
Bad debt reserves established for
     financial reporting purposes                         202,614           --          202,614
Increases to tax bad debt reserves
     since January 1, 1988                                   --          (95,406)       (95,406)
Unrealized gain on securities available for sale             --          (75,905)       (75,905)
Unrealized loss on trading account securities              65,598           --           65,598
Other                                                       9,752           --            9,752
                                                        ---------      ---------      ---------

                                                        $ 493,798       (171,311)       322,487
                                                        =========      =========      =========

</TABLE>
                                       30
<PAGE>
10)    Deposits
       --------

       Deposit accounts are summarized as follows:

<TABLE>
<CAPTION>
                                                            December 31,
                                                    ----------------------------
                                                        1999            1998
                                                    -----------      -----------
<S>                                                 <C>               <C>
Passbook accounts                                   $14,959,746       15,142,805
Demand deposits and NOW accounts                      8,604,446        7,404,328
Money market accounts                                 3,371,829        3,772,914
                                                    -----------      -----------

                                                     26,936,021       26,320,047
                                                    -----------      -----------

Certificates of deposit by interest rate:

   4.01 - 5.00                                       17,353,680        9,036,391
   5.01 - 6.00                                       42,041,941       39,205,712
   6.01 - 7.00                                        2,507,128        3,821,708
   7.01 - 8.00                                          100,000          607,698
   8.01 - 9.00                                            6,155            5,659
                                                    -----------      -----------

                                                     62,008,904       52,677,168
                                                    -----------      -----------

                                                    $88,944,925       78,997,215
                                                    ===========      ===========
</TABLE>

       The weighted  average  rate on deposit  accounts at December 31, 1999 and
       1998 was 4.43% and 4.48% respectively.

       During the prior year, the Bank closed its East Chicago facility and sold
       the  related  deposit  accounts to Citizens  Financial  Services.  In the
       transaction,  the Bank sold approximately  $2,700,000 of deposit accounts
       at a one percent premium, realizing a profit of $27,033.

       A summary of certificates of deposit by maturity is as follows:
<TABLE>
<CAPTION>
                                                         December 31,
                                                --------------------------------
                                                     1999                1998
                                                -----------          -----------
<S>                                             <C>                   <C>
Within 12 months                                $49,948,679           45,333,909
12 months to 24 months                            5,552,405            5,005,048
24 months to 36 months                            5,658,055            1,072,985
36 months to 48 months                              638,417              882,676
Over 48 months                                      211,348              382,550
                                                -----------          -----------

  Total                                         $62,008,904           52,677,168
                                                ===========          ===========
</TABLE>
<PAGE>
       Interest expense on deposits consists of the following:
<TABLE>
<CAPTION>
                                              Years Ended December 31,
                                    --------------------------------------------
                                       1999              1998            1997
                                    ----------       ----------       ----------
<S>                                 <C>                 <C>              <C>
Passbook accounts                   $  419,474          453,324          488,273
NOW accounts                           128,313          127,794          143,687
Money market accounts                   98,030           93,611           89,355
Certificates of deposit              2,929,026        2,799,477        2,378,102
                                    ----------       ----------       ----------
Total                               $3,574,843        3,474,206        3,099,417
                                    ==========       ==========       ==========
</TABLE>
       The  aggregate  amount of deposit  accounts with a balance of $100,000 or
       greater was approximately  $14,600,000 and $13,100,000,  or approximately
       16.4% and 16.6% of total deposit  balances at December 31, 1999 and 1998,
       respectively.  Deposits  in excess of  $100,000  are not  insured  by the
       Federal Deposit Insurance Corporation.


                                       31
<PAGE>
11)    Borrowed Money
       --------------

       Borrowed  money  consists of advances  from the Federal Home Loan Bank of
       Indianapolis and is summarized as follows:
<TABLE>
<CAPTION>
                                            Interest                      December 31,
       Maturity Date                          Rate                   1999             1998
       --------------                         -----              -----------     ------------
<S>                                           <C>                <C>              <C>
       December 6, 1999                       5.94%              $     -            1,000,000
       December 7, 1999                       5.05                     -            2,000,000
       January 18, 2000                       5.53                 1,000,000        1,000,000
       May 17, 2000                           6.07*                3,000,000        3,000,000
       June 21, 2000                          4.26*                2,000,000             -
       July 25, 2000                          6.11                 2,000,000        2,000,000
       August 16, 2000                        6.09                 3,000,000             -
       August 24, 2000                        6.03                 1,000,000             -
       January 22, 2001                       5.56                 1,000,000        1,000,000
       May 21, 2001                           5.90                 2,000,000        2,000,000
       August 24, 2001                        5.71                 3,000,000        3,000,000
       January 21, 2003                       5.68                 1,000,000        1,000,000
       September 15, 2003                     5.26                 4,000,000        4,000,000
       May 15, 2009                           5.93                   983,000          983,000
       July 15, 2015                          5.91                   692,589          700,000
                                                                  ----------      -----------
                                                                 $24,675,589       21,683,000
                                                                  ==========       ==========
       Weighted average interest rate                                   5.67%            5.65%
                                                                        ====             ====
</TABLE>
       * Variable interest rate

       The Bank is required to maintain  qualifying  collateral  for the Federal
       Home Loan Bank of Indianapolis representing  approximately 170 percent of
       current Bank credit. At December 31, 1999, the Bank met this requirement.
       Assets  which are  eligible  collateral  for  meeting  the 170%  coverage
       requirement include one- to-four family whole mortgage loans,  government
       and agency securities  including  mortgage-backed  securities  insured or
       guaranteed   by  FHLMC,   FNMA  and   GNMA,   and  high   rated   private
       mortgage-backed   securities.   The  mortgage   loans  must  not  include
       participations,  construction  loans,  loans  which  are not in the clear
       title of the institution,  conventional mortgages with more than 30 years
       remaining to  maturity,  loans for more than 90% of the  appraised  value
       unless there is private or federal  insurance,  mortgages  which are more
       than  60 days  delinquent,  or  loans  upon  which  any  employee  of the
       institution or the FHLB is personally liable.
<PAGE>
       During the current  year,  the Company  entered into a revolving  line of
       credit in the maximum  amount of $650,000  with Peoples Bank SB. The loan
       will bear  interest at one half  percent  under the Wall  Street  Journal
       prime rate of  interest.  The  Company may borrow up to 75% of the market
       value of the  collateral  security.  At December  31,  1999,  the Company
       pledged  common  stock with a market value of  approximately  $857,000 as
       collateral  securing  this line of  credit.  The  Company  did not borrow
       against this line of credit during the year ended December 31, 1999.

       In  connection  with the  Company's  initial  public  offering,  the Bank
       established an Employee Stock Ownership Plan (ESOP).  The ESOP was funded
       by the  proceeds  from a loan  from  the  Company.  The loan  carries  an
       interest rate of 6.07% and matures in the year 2006.  The loan is secured
       by the shares of the Company  purchased with the loan proceeds.  The Bank
       has committed to make  contributions  to the ESOP sufficient to allow the
       ESOP to fund the debt service  requirements  of the loan. At December 31,
       1999, the balance of this loan amounted to $539,580.

                                       32
<PAGE>
12)    Other Liabilities
       -----------------

       Other liabilities include the following:
<TABLE>
<CAPTION>
                                                                December 31,
                                                          ----------------------
                                                             1999          1998
                                                          --------      --------
<S>                                                       <C>             <C>
Accrued interest on deposits                              $ 49,679        62,559
Accrued interest on borrowings                              61,982        54,452
Accrued bonus                                               48,015        45,000
Accrued audit and accounting fees                           18,500        15,325
Accrued real estate and personal property taxes             55,500        47,900
Accrued federal and state income tax                          --          41,526
Deferred compensation (see note 13)                        458,394       381,420
Miscellaneous accounts payable                             169,017       213,143
                                                          --------      --------
                                                          $861,087       861,325
                                                          ========      ========
</TABLE>
                                       33
<PAGE>
13)    Benefit Plans
       -------------

       The Bank has a qualified  noncontributory,  defined  benefit pension plan
       which covers all full-time employees having a minimum of twelve months of
       service,  and who are at least  twenty-one years of age. The benefits are
       primarily based on years of service and earnings.

       The following is a summary of the plan as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>

                                                                          1999            1998
                                                                      -----------      -----------
<S>                                                                   <C>                  <C>
Change in Benefit Obligation:
   Benefit obligation at beginning of year                            $ 1,141,297          913,624
   Service cost                                                            46,150           40,233
   Interest cost                                                           82,956           67,636
   Benefits paid                                                          (70,433)         (23,630)
   Other - net                                                             73,394          143,434
                                                                      -----------      -----------
   Benefit obligation at end of year                                    1,273,364        1,141,297
                                                                      -----------      -----------

Change in Plan Assets:
   Plan assets at fair value at beginning of year                       1,156,980        1,000,646
   Actual return on plan assets                                           112,630           98,391
   Benefits paid                                                          (70,433)         (23,630)
   Employer contribution                                                   68,263           81,573
                                                                      -----------      -----------
   Fair value of plan assets at end of year                             1,267,440        1,156,980
                                                                      -----------      -----------

Plan assets in excess of (less than) projected benefit obligation          (5,924)          15,683
Unrecognized net gain from actuarial experience                           (56,961)        (122,261)
Unrecognized prior service cost                                            74,965           79,651
Unrecognized net transition obligation                                     79,696           85,390
                                                                      -----------      -----------

Pension asset included in other assets                                $    91,776           58,463
                                                                      ===========      ===========
</TABLE>

       The  weighted  average  discount  rate and  rate of  increase  in  future
       compensation  levels used in determining  the actuarial  present value of
       the projected benefit obligation were 7.50% and 3.50%, respectively,  for
       the years ended December 31, 1999,  1998 and 1997.  The weighted  average
       expected  long-term  rate  return on assets was 9.00% for the years ended
       December 31, 1999, 1998 and 1997.
<PAGE>
       Net pension cost includes the following components:
<TABLE>
<CAPTION>
                                                 Years Ended December 31,
                                        ----------------------------------------
                                           1999           1998           1997
                                        ---------      ---------      ---------
<S>                                     <C>               <C>            <C>
Service cost                            $  46,150         40,233         30,648
Interest cost on benefit obligation        82,956         67,636         66,579
Expected return on assets                (104,031)       (92,666)       (74,789)
Net amortization and deferral               9,875         (2,945)        30,609
                                        ---------      ---------      ---------

Net periodic pension cost               $  34,950         12,258         53,047
                                        =========      =========      =========
</TABLE>

       The Bank has  established two  non-qualified  401(k) Plan for officers of
       the Bank.  Both Plans provide  participating  officers the opportunity to
       defer up to 6% of  their  salary  into a tax  deferred  accumulation  for
       future retirement. Under the first Plan, the Bank was authorized to match
       up to 50% (3% of salary) of this  deferral.  This Bank match ceased as of
       December  31, 1997 and under the second Plan,  there is no Bank  matching
       contribution.  In  addition,  the Bank has also  established  a  Director
       Deferral Plan which provides participating directors with the opportunity
       to defer all or a portion of their fees over a predetermined  period. All
       deferred  non-qualified  401(k) Plan  contributions and deferred director
       fees  are  credited  with  interest  from the Bank at the rate of 10% per
       year.

       Contributions  by the Bank to the  401(k)  Plan,  including  interest  on
       accumulated  funds, was $41,933,  $34,798 and $36,282 for the years ended
       December 31, 1999, 1998 and 1997 respectively.


                                       34
<PAGE>
14)    Director, Officer and Employee Plans
       ------------------------------------

       STOCK OPTION PLAN. On October 23, 1996, the  stockholders  of the Company
       approved the AMB Financial  Corp.  1996 Stock Option and Incentive  Plan.
       This is an incentive  stock option plan for the benefit of the directors,
       officers and employees of the Company and its  affiliates.  The number of
       options on shares of common stock  authorized  under the Plan is 112,412,
       equal to 10.0% of the total number of shares issued in the Conversion. As
       of October 23,  1996,  100,042  options were granted at $12.75 per share,
       exercisable  at a rate of 20% per year  commencing  October 23, 1997, and
       expiring ten years from the date of grant.  The  following is an analysis
       of the stock  option  activity  for each of the  years in the three  year
       period ended  December 31, 1999 and the stock options  outstanding at the
       end of the respective periods.
<TABLE>
<CAPTION>
                                                                                    Exercise Price
                                                                            --------------------------------
       Options                                         Number of Options        Per Share           Total
       -------                                         -----------------        ---------         ----------
<S>                                                         <C>                 <C>               <C>
Outstanding at December 31, 1996                            100,042             $   12.75         $1,275,535
Granted                                                           0
Exercised                                                         0
Forfeited                                                         0
                                                            -------             ---------         ----------

Outstanding at December 31, 1997                            100,042                 12.75          1,275,535
Granted                                                           0
Exercised                                                         0
Forfeited                                                         0
                                                            -------             ---------         ----------

Outstanding at December 31, 1998                            100,042                 12.75          1,275,535
Granted                                                           0
Exercised                                                         0
Forfeited                                                         0
                                                            -------             ---------         ----------

Outstanding at December 31, 1999                            100,042             $   12.75         $1,275,535
                                                            =======             =========         ==========

Exercisable at December 31, 1999                             60,024             $   12.75         $  765,306
                                                            =======             =========         ==========

Options available for future grants at December 1999         12,370
                                                            =======

</TABLE>

       The Company  accounts for its stock options in accordance with Accounting
       Principles  Board (APB)  Opinion No. 25  "Accounting  for Stock Issued to
       Employees".  Under  APB  25,  as the  exercise  price  of  the  Company's
       employees'  stock options equals the market price of the underlying stock
       on the date of grant, no compensation expense is recognized.
<PAGE>
       The Company has  implemented  SFAS No. 123  "Accounting  for  Stock-Based
       Compensation".  The Company will retain its current accounting method for
       its stock-based  compensation  plans.  This statement will only result in
       additional  disclosures  for the Company,  and as such,  its adoption did
       not,  nor is it  expected  to have,  a material  impact on the  Company's
       financial condition or its results of operations.

                                       35
<PAGE>
14)    Director, Officer and Employee Plans (continued)
       ------------------------------------------------

       The  following  summarizes  the pro forma net income as if the fair value
       method  of  accounting  for  stock-  based  compensation  plans  had been
       utilized:
<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                                    -----------------------------------------------
                                                        1999               1998             1997
                                                    -----------           -------         ---------
<S>                                                 <C>                   <C>             <C>
       Net income (as reported)                     $   696,841           204,642         1,023,053
       Pro forma net income                             630,627           138,428           956,839
       Diluted earnings per share (as reported)             .96               .24              1.10
       Pro forma diluted earnings per share                 .87               .16              1.03
</TABLE>

       The pro forma results  presented above may not be  representative  of the
       effects reported in pro forma net income for future years.

       The fair value of the  option  grants for the years  ended  December  31,
       1999,  1998 and 1997 was  estimated  on the date of grant using the Black
       Scholes  option value model,  with the  following  assumptions:  dividend
       yield of  approximately  2.00%,  expected  volatility  of 20%,  risk free
       interest rate of 6.10% and an expected life of approximately 10 years.

       Employee Stock  Ownership Plan.
       -------------------------------
       In  conjunction  with the  Conversion,  the Bank formed an Employee Stock
       Ownership Plan ("ESOP"). The ESOP covers substantially all employees with
       more than one year of employment and who have attained the age of 18. The
       ESOP  borrowed  $899,300  from the Company and  purchased  89,930  common
       shares  issued  in  the   Conversion.   The  Bank  will  make   scheduled
       discretionary  cash  contributions  to the ESOP sufficient to service the
       amount  borrowed.   In  accordance  with  generally  accepted  accounting
       principles,  the unpaid balance of the ESOP loan,  which is comparable to
       unearned  compensation,  is  reported  as a  reduction  of  stockholders'
       equity.  Total  contributions  by the Bank to the ESOP which were used to
       fund principal and interest  payments on the ESOP debt totaled  $128,672,
       $134,207  and $139,741  for the years ended  December 31, 1999,  1998 and
       1997 respectively.

       Statement of Position No. 93-6, "Employers' Accounting for Employee Stock
       Ownership  Plans" ("SOP 93-6")  provides  guidance for accounting for all
       ESOPs.  SOP 93-6 requires that the issuance or sale of treasury shares to
       the  ESOP  be  reported  when  the  issuance  or  sale  occurs  and  that
       compensation expense be recognized for shares committed to be released to
       directly  compensate  employees  equal  to the fair  value of the  shares
       committed.  In addition,  SOP 93-6 requires that  leveraged ESOP debt and
       related  interest  expense  be  reflected  in  the  employer's  financial
       statements. Prior practice was to recognize compensation expense based on
       the amount of the employer's  contributions  to the ESOP. The application
       of SOP 93-6 results in fluctuations  in compensation  expense as a result
       of changes in the fair value of the Company's common stock;  however, any
       such  compensation  expense  fluctuations  will  result in an  offsetting
       adjustment to additional  paid-in  capital.  For the years ended December
       31,  1999,  1998 and 1997,  additional  compensation  expense of $26,875,
       $54,731 and $42,322 was recognized as a result of  implementation of this
       accounting principle.
<PAGE>
       Recognition and Retention Plan.
       -------------------------------
       On October 23, 1996,  the  stockholders  of the Company  approved the AMB
       Financial  Corp. 1996  Recognition and Retention Plan ("RRP").  This plan
       was  established  to award  shares to  directors  and to employees in key
       management positions in order to provide them with a proprietary interest
       in the Company in a manner designed to encourage such employees to remain
       with the  Company.  The  number  of shares  authorized  under the Plan is
       44,965,  equal  to 4.0% of the  total  number  of  shares  issued  in the
       Conversion.  These  shares were  purchased  in the open market at a total
       cost of $578,929.  As of October 23, 1996, 43,616 shares were awarded and
       will vest at a rate of 20% per year  commencing  October 23, 1997,  while
       1,349 shares were reserved for future awards.

       The $578,929  contributed to the RRP is being  amortized to  compensation
       expense as the plan participants  become vested in those shares.  For the
       years ended  December 31,  1999,  1998 and 1997,  $115,786,  $115,786 and
       $115,786 have been amortized to expense.  The unamortized  cost, which is
       comparable  to deferred  compensation,  is  reflected  as a reduction  of
       stockholders' equity.


                                       36
<PAGE>
15)    Income Taxes
       ------------

       The  Company has  adopted  SFAS No. 109 which  requires a change from the
       deferred  method to the liability  method of accounting for income taxes.
       Under the liability method,  deferred income taxes are recognized for the
       tax  consequences of "temporary  differences"  by applying  statutory tax
       rates  applicable  to future years to  differences  between the financial
       statement   carrying  amounts  and  tax  bases  of  existing  assets  and
       liabilities.

       Among the  provisions  of SFAS No. 109 which will  impact the Bank is the
       tax treatment of bad debt reserves. SFAS No. 109 provides that a deferred
       tax asset is to be recognized  for the bad debt reserve  established  for
       financial  reporting purposes and requires a deferred tax liability to be
       recorded for increase in the tax bad debt reserve  since January 1, 1988,
       to effective  date of certain  changes made by the Tax Reform Act of 1986
       to  the  calculation  of  savings   institutions'   bad  debt  deduction.
       Accordingly,   retained   earnings   at  December   31,   1999   includes
       approximately  $1,950,000  for  which  no  deferred  federal  income  tax
       liability has been recognized.

       The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                                Years Ended December 31,
                                   ---------------------------------------------
                                    1999               1998                1997
                                   ---------         ---------         ---------
<S>                                <C>                 <C>               <C>
Current                            $ 418,434           529,126           551,901
Deferred (benefit)                   (90,540)         (376,955)          122,973
                                   ---------         ---------         ---------

                                   $ 327,894           152,171           674,874
                                   =========         =========         =========
</TABLE>
       A  reconciliation  of the statutory  federal income tax rate to effective
income tax rate is as follows:
<TABLE>
<CAPTION>
                                                       Years Ended December 31,
                                                   -----------------------------
                                                   1999         1998        1997
                                                   ----         ----        ----
<S>                                                <C>          <C>         <C>
Statutory federal income tax rate                  34.0%        34.0%       34.0%
State income taxes                                  4.9          6.0         5.9
Low income housing credit                          (5.3)          --          --
Other                                              (1.6)         2.6         (.2)
                                                   ----         ----        ----

Effective income tax rate                          32.0%        42.6%       39.7%
                                                   ====         ====        ====
</TABLE>
<PAGE>
       Deferred  income tax  expense  (benefit)  consists of the  following  tax
effects of timing differences:
<TABLE>
<CAPTION>
                                                                  Years Ended December 31,
                                                         ---------------------------------------
                                                            1999          1998           1997
                                                         ---------      ---------      ---------
<S>                                                      <C>            <C>            <C>
Loan fees                                                $   7,440         21,203         (3,775)
Depreciation                                                (5,674)       (13,918)       (15,400)
Deferred compensation                                      (34,548)       (25,089)       (31,745)
Book loan loss provision in excess of tax deduction        (33,666)       (38,459)       (33,765)
Recapture of bad debt reserve                              (19,081)       (19,084)          --
Unrealized gain (loss) on trading account securities         9,622       (296,671)       212,473
Other, net                                                 (14,633)        (4,937)        (4,815)
                                                         ---------      ---------      ---------

                                                         $ (90,540)      (376,955)       122,973
                                                         =========      =========      =========
</TABLE>

                                       37
<PAGE>
16)    Regulatory Capital Requirements
       -------------------------------

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

       Quantitative   measures  established  by  regulation  to  ensure  capital
       adequacy  require the Bank to maintain  minimum  amounts and ratios,  set
       forth in the  table  below of the  total  risk-based,  tangible  and core
       capital,  as  defined  in the  regulations.  Management  believes,  as of
       December 31, 1999, that the Bank meets all capital adequacy  requirements
       to which it is subject.

       The Bank, according to federal regulatory standards,  is well-capitalized
       under the  regulatory  framework  for  prompt  corrective  action.  To be
       categorized  as adequately  capitalized,  the Bank must maintain  minimum
       total  risk-based,  tangible,  and core ratios as set forth in the table.
       There are no conditions or events since that notification that management
       believes have changed the institution's category.

       At December 31, 1999 and 1998, the Bank's  regulatory  equity capital was
       as follows:
<TABLE>
<CAPTION>
                                                                                          To Be Well-
                                                                                      Capitalized Under
                                                           For Capital                Prompt Corrective
                               Actual                   Adequacy Purposes             Action Provisions
                      -----------------------        -----------------------      -----------------------
                         Amount        Ratio          Amount          Ratio          Amount         Ratio
                         ------        -----          ------          -----          ------         -----
<S>                   <C>               <C>          <C>               <C>        <C>               <C>
December 31, 1999
-----------------
Tangible              $8,090,945         6.51%       $1,865,000        1.50%      $     N/A           N/A %
Core                   8,090,945         6.51         3,730,000        3.00        6,217,000         5.00
Risk-based             8,626,646        12.44         5,547,000        8.00        6,934,000        10.00

December 31, 1998
-----------------
Tangible              $8,481,608         7.52%       $1,691,000        1.50%      $     N/A          N/A %
Core                   8,481,608         7.52         3,383,000        3.00        5,638,000         5.00
Risk-based             8,973,142        14.06         5,104,000        8.00        6,380,000        10.00
</TABLE>


                                       38
<PAGE>
16)    Regulatory Capital Requirements (continued)
       -------------------------------------------
<TABLE>
<CAPTION>
                                                       Tangible        Core          Risk-based
                                                        Capital        Capital         Capital
                                                        -------        -------         -------
<S>                                                   <C>             <C>            <C>
December 31, 1999
-----------------
Stockholders' equity                                  $8,012,227      8,012,227      8,012,227
Unrealized loss on securities available for sale,
   net of taxes                                           78,718         78,718         78,718
General loss allowances                                     --             --          550,701
Direct equity investments                                   --             --          (15,000)
                                                      ----------     ----------     ----------

Regulatory capital computed                           $8,090,945      8,090,945      8,626,646
                                                      ==========     ==========     ==========
</TABLE>

       A reconciliation  of the Bank's equity capital at December 31, 1999 is as
       follows:


<TABLE>
<CAPTION>
<S>                                                                <C>
Stockholders' equity                                               $ 11,539,269
Less Company stockholders' equity not available
   for regulatory capital                                            (3,527,042)
                                                                   ------------

Stockholders' equity of the Bank                                   $  8,012,227
                                                                   ============



<CAPTION>
                                          Tangible          Core           Risk-based
                                          Capital          Capital           Capital
                                          -------          -------           -------
December 31, 1998
-----------------
<S>                                     <C>                <C>              <C>
Stockholders' equity                    $ 8,595,464        8,595,464        8,595,464
Unrealized gain on securities
   available for sale, net of taxes        (113,856)        (113,856)        (113,856)
General loss allowances                        --               --            506,534
Direct equity investments                      --               --            (15,000)
                                        -----------      -----------      -----------

Regulatory capital computed             $ 8,481,608        8,481,608        8,973,142
                                        ===========      ===========      ===========

</TABLE>
<PAGE>
       A reconciliation  of the Bank's equity capital at December 31, 1998 is as
       follows:



<TABLE>
<CAPTION>
<S>                                                                <C>
Stockholders' equity                                               $ 13,412,830
Less Company stockholders' equity not available
   for regulatory capital                                            (4,817,366)
                                                                   ------------

Stockholders' equity of the Bank                                   $  8,595,464
                                                                   ============

</TABLE>
                                       39
<PAGE>
17)    Stockholders' Equity
       --------------------

       As part of the Conversion, the Bank established a liquidation account for
       the benefit of all eligible  depositors  who  continue to maintain  their
       deposit accounts in the Bank after conversion. In the unlikely event of a
       complete  liquidation  of the  Bank,  each  eligible  depositor  will  be
       entitled  to  receive a  liquidation  distribution  from the  liquidation
       account, in the proportionate amount of the then current adjusted balance
       for deposit accounts held,  before  distribution may be made with respect
       to the  Bank's  capital  stock.  The Bank may not  declare  or pay a cash
       dividend to the Company on, or  repurchase  any of, its capital  stock if
       the effect  thereof  would cause the retained  earnings of the Bank to be
       reduced below the amount required for the liquidation account. Except for
       such  restrictions,  the  existence of the  liquidation  account does not
       restrict the use or application of retained earnings.

       In  addition,  the  Bank may not  declare  or pay  cash  dividends  on or
       repurchase  any of its shares of common stock if the effect thereof would
       cause  stockholders'  equity to be reduced  below  applicable  regulatory
       capital maintenance requirements or if such declaration and payment would
       otherwise violate regulatory requirements.

       Unlike  the  Bank,  the  Company  is  not  subject  to  these  regulatory
       restrictions  on the payment of dividends to its  stockholders.  However,
       the  Company's  source of funds for  future  dividends  may  depend  upon
       dividends received by the Company from the Bank.

18)    Financial Instruments with Off-Balance Sheet Risk
       -------------------------------------------------

       The Bank is a party to various  transactions  with off-balance sheet risk
       in the  normal  course of  business.  These  transactions  are  primarily
       commitments  to  originate  loans  and to  extend  credit  on  previously
       approved  unused  lines of  credit.  These  financial  instruments  carry
       varying  degrees of credit and  interest-  rate risk in excess of amounts
       recorded in the consolidated financial statements.

       Commitments  to originate  mortgage  loans of  $1,141,200 at December 31,
       1999  represent  amounts  which the Bank plans to fund  within the normal
       commitment period of 60 to 90 days. Of this amount, $797,300 are in fixed
       rate commitments with rates ranging from 7.00% to 8.375% and $343,900 are
       in adjustable  rate  commitments.  Because the credit  worthiness of each
       customer is  reviewed  prior to  extension  of the  commitment,  the Bank
       adequately controls its credit risk on these commitments,  as it does for
       loans recorded on the balance sheet. The Bank conducts all of its lending
       activities in the Northwest  Indiana area.  Management  believes the Bank
       has a  diversified  loan  portfolio  and  the  concentration  of  lending
       activities  in  these  local  communities  does  not  result  in an acute
       dependency upon economic conditions of the lending region.
<PAGE>
       The Bank has  approved,  but  unused,  home  equity  lines of  credit  of
       approximately  $2,660,000  at  December  31,  1999.  Approval of lines of
       credit is based upon  underwriting  standards that generally do not allow
       total  borrowings,  including  the line of  credit,  to exceed 75% of the
       estimated  fair value of the customer's  home. In addition,  the Bank has
       approved but unused  equity lines of credit on various  construction  and
       commercial projects of approximately $1,160,000 at December 31, 1999. The
       Bank  also has  approved  but  unused  credit  card  lines of  credit  of
       approximately $850,000.

       The  Bank  is  currently   participating  with  several  local  financial
       institutions   in   credit    enhancement    agreements   with   in-state
       municipalities to guarantee the repayment on municipal revenue bonds. The
       Bank has accepted credit risk on these various municipal  projects in the
       amount of $1,000,000.  These credit  enhancements are in cooperation with
       the Federal Home Loan Bank of  Indianapolis  ("FHLB")  and have  pledging
       requirements as part of the qualifying collateral agreement with FHLB.



                                       40
<PAGE>
19)    Contingencies
       -------------

       The Bank is,  from  time to time,  a party  to  certain  lawsuits  in the
       ordinary  course  of its  business,  wherein  it  enforces  its  security
       interest. Management, based upon discussions with legal counsel, believes
       that the Company and the Bank are not engaged in any legal proceedings of
       a material nature at the present time.

20)    Subsequent Event
       ----------------

       On January 26, 2000,  the Company  declared a quarterly  cash dividend of
       $.08  per  share,   totaling  $54,442,   payable  February  25,  2000  to
       shareholders of record as of February 11, 2000.

21)    Disclosures About the Fair Value of Financial Instruments
       ---------------------------------------------------------

       The  following  methods and  assumptions  were used to estimate  the fair
       value of each class of financial  instruments for which it is practicable
       to estimate that value:

       Cash and cash equivalents:
       --------------------------
       For  cash  and  interest-bearing  deposits,  the  carrying  amount  is  a
       reasonable estimate of fair value.

       Investment  securities:
       -----------------------
       Fair values for securities  held to maturity,  available for sale or held
       for trade are based on quoted  market  prices as  published  in financial
       publications or on quotes from third-party brokers.

       Mortgage-backed  securities:
       ----------------------------
       Fair values for mortgage-backed securities
       are  based on the  lower of  quotes  received  from  various  third-party
       brokers.

       Loans  receivable:
       ------------------
       The fair values of fixed-rate  one-to-four  family  residential  mortgage
       loans  are  based on  quoted  market  prices  of  similar  loans  sold in
       conjunction with securitization  transactions.  The fair values for other
       fixed and adjustable rate mortgage loans are estimated  using  discounted
       cash flow  analyses,  using interest  rates  currently  being offered for
       loans with similar terms and  collateral  to borrowers of similar  credit
       quality.

       Deposit liabilities:
       --------------------
       The fair value of demand  deposits,  savings  accounts  and money  market
       deposits is the amount payable on demand at the reporting  date. The fair
       value  of  fixed  maturity   certificates  of  deposit  is  estimated  by
       discounting the future cash flows using the rates  currently  offered for
       deposits of similar original maturities.

       Borrowed money:
       ---------------
       Rates currently  available to the Company for debt with similar terms and
       remaining maturities are used to estimate fair value of existing debt.

                                       41
<PAGE>
21)    Disclosures About the Fair Value of Financial Instruments (continued)
       ---------------------------------------------------------------------

       The estimated  fair value of the Company's  financial  instruments  as of
       December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
                                                            December 31, 1999
                                                      -----------------------------
                                                         Carrying            Fair
                                                          Amount            Value
                                                      ------------        ---------
<S>                                                   <C>                 <C>
Financial assets:
   Cash and cash equivalents                          $  5,457,738        5,457,738
   Investment securities, available for sale             5,352,142        5,352,142
   Trading securities                                    1,909,333        1,909,333
   Mortgage-backed securities, available for sale        1,868,000        1,868,000
   Loans receivable                                    105,909,909      104,015,000

Financial liabilities:
   Deposits                                           $ 88,944,925       88,551,000
   Borrowed money                                       24,675,589       23,259,000

<CAPTION>
                                                            December 31, 1998
                                                      -----------------------------
                                                         Carrying            Fair
                                                          Amount            Value
                                                      ------------        ---------
<S>                                                   <C>                 <C>
Financial assets:
   Cash and cash equivalents                          $ 9,097,416       9,097,416
   Investment securities, available for sale            6,137,219       6,137,219
   Trading securities                                   2,394,130       2,394,130
   Mortgage-backed securities, available for sale       2,649,380       2,649,380
   Loans receivable                                    89,762,417      91,079,000

Financial liabilities:
   Deposits                                           $78,997,215      79,302,000
   Borrowed money                                      21,683,000      21,854,490

</TABLE>
                                       42
<PAGE>
22)    Condensed Parent Company Only Financial Statements
       --------------------------------------------------

       The following condensed statement of financial condition,  as of December
       31, 1999 and 1998 and  condensed  statements of income and cash flows for
       the years ended December 31, 1999,  1998 and 1997 for AMB Financial Corp.
       should be read in conjunction with the consolidated  financial statements
       and the notes thereto.



<TABLE>
<CAPTION>
                   Condensed Statements of Financial Condition
                   -------------------------------------------

                                                          December 31,
                                                  ----------------------------
                                                     1999               1998
                                                  ----------         ---------
<S>                                             <C>                <C>
Assets
------
Cash and cash equivalents                       $    574,929            406,803
Trading securities                                 1,909,333          2,394,130
Loans receivable                                     620,118          1,723,471
Equity investment in the Bank                      8,482,502          8,988,925
Prepaid expenses and other assets                    469,600            335,245
                                                ------------       ------------

                                                  12,056,482         13,848,574
                                                ============       ============

Liabilities and Stockholders' Equity
------------------------------------

Liabilities:
------------
Accrued taxes and other liabilities                   46,938             42,283
                                                ------------       ------------

Stockholders' Equity:
---------------------
Common stock                                          11,241             11,241
Additional paid-in capital                        10,649,606         10,649,606
Retained earnings                                  7,780,655          7,317,519
Treasury stock                                    (6,219,684)        (3,844,015)
Common stock awarded by RRP                         (212,274)          (328,060)
                                                ------------       ------------

  Total stockholders' equity                      12,009,544         13,806,291
                                                ------------       ------------

                                                $ 12,056,482         13,848,574
                                                ============       ============

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                              Condensed Statements of Income
                              ------------------------------



                                                            Years Ended December 31,
                                                 -----------------------------------------
                                                     1999            1998            1997
                                                 ----------      ----------      ----------

<S>                                              <C>             <C>             <C>
Net interest income                              $  114,740         152,693         161,293
Gain on sale of trading securities                   99,627          24,086          36,066
Unrealized gain (loss) on trading securities       (123,773)       (771,172)        560,809
Non-interest expense                               (242,094)       (270,859)       (201,164)
                                                 ----------      ----------      ----------

Net income (loss) before income taxes
  and equity in earnings of subsidiaries           (151,500)       (865,252)        557,004
Benefit from (provision for) income taxes            54,764         325,292        (217,815)
                                                 ----------      ----------      ----------

Net income (loss) before equity
   in earnings of subsidiaries                      (96,736)       (539,960)        339,189
Equity in earnings of subsidiaries                  793,577         744,602         683,864
                                                 ----------      ----------      ----------

  Net income                                     $  696,841         204,642       1,023,053
                                                 ==========      ==========      ==========

</TABLE>

                                       43
<PAGE>
22)      Condensed Parent Company Only Financial Statements (continued)
         --------------------------------------------------------------

<TABLE>
<CAPTION>
                                       Statement of Cash Flows
                                       -----------------------

                                                                     Years Ended December 31,
                                                         ---------------------------------------------
                                                             1999            1998              1997
                                                         -----------      -----------      -----------
<S>                                                      <C>                  <C>            <C>
Operating activities:
  Net income                                             $   696,841          204,642        1,023,053
  Equity in earnings of the Bank                            (793,577)        (744,602)        (683,864)
  Amortization of cost of stock benefit plan                 115,786          115,786          115,786
  Gain on sale of trading securities                         (99,627)         (24,086)         (36,066)
  Unrealized (gain) loss on trading
     securities held for trade                               123,773          771,172         (560,809)
  Purchase of trading securities                             (93,750)        (852,648)      (1,957,532)
  Proceeds from sale of trading securities                   554,401          124,399          680,940
  Increase in other assets                                  (134,355)        (333,787)          (1,458)
  Increase (decrease) in accrued
    taxes and other liabilities                                4,655         (179,467)         180,944
                                                         -----------      -----------      -----------

Net cash provided by (for) operating activities              374,147         (918,591)      (1,239,006)
                                                         -----------      -----------      -----------

Investing activities:
  Loan disbursements                                      (4,000,000)      (4,000,000)      (2,000,000)
  Loan repayments                                          5,103,353        5,003,353        2,203,353
                                                         -----------      -----------      -----------

Net cash provided by investing activities                  1,103,353        1,003,353          203,353
                                                         -----------      -----------      -----------

Financing activities:
  Purchase of treasury stock                              (2,375,669)      (1,620,964)      (1,498,333)
  Dividends received from Bank                             1,300,000        1,900,000        2,500,000
  Dividends paid on common stock                            (233,705)        (244,373)        (230,007)
                                                         -----------      -----------      -----------

Net cash provided by (for) investing activities           (1,309,374)          34,663          771,660
                                                         -----------      -----------      -----------

Net increase (decrease) in cash and cash equivalents         168,126          119,425         (263,993)
Cash and cash equivalents at beginning of year               406,803          287,378          551,371
                                                         -----------      -----------      -----------

Cash and cash equivalents at end of year                 $   574,929          406,803          287,378
                                                         ===========      ===========      ===========

</TABLE>
                                       44
<PAGE>

                               AMB Financial Corp.

                             Stockholder Information

        Annual Meeting

        The annual meeting of stockholders  will be held at 10:30 a.m., on April
        26, 2000,  at the  Company's  corporate  office,  located at 8230 Hohman
        Avenue, Munster, Indiana.

        Stock Listing

        The Company's stock is trading over the counter, on the NASDAQ Small Cap
        Market under the symbol "AMFC".

        Price Range of Common Stock and Dividends

        The table below shows the range of high and low bid prices and dividends
        paid in fiscal 1999. These prices do not represent  actual  transactions
        and do not include retail markups, markdowns or commissions.

<TABLE>
<CAPTION>
               Quarter Ended                High          Low          Dividends
               -------------                ----          ---          ---------

<S>                                        <C>          <C>              <C>
              March 31, 1999               13.750       10.375           $0.08
              June 30, 1999                14.250       11.250           $0.08
              September 30, 1999           15.375       13.000           $0.08
              December 31, 1999            13.875       11.750           $0.08
</TABLE>

        The  Board of  Directors  will  consider  the  payment  of  future  cash
        dividends based on the results of operations and financial  condition of
        the  Company,   tax   considerations,   industry   standards,   economic
        conditions,  regulatory  restrictions,  general  business  practices and
        other factors.  See Note 17 of the Notes to the  Consolidated  Financial
        Statements for information  regarding  limitations of the Bank's ability
        to pay dividends to the Company.

        As of December 31, 1999, the Company had 360  stockholders of record and
        703,329 outstanding shares of common stock.

        Shareholder General Inquiries                        Transfer Agent

        Clement B. Knapp, Jr., President              Registrar & Transfer Co.
        AMB Financial Corp.                           10 Commerce Drive
        8230 Hohman Ave.                              Cranford, New Jersey 07016
        Munster, Indiana  46321                       (800) 456-0596
        (219) 836-5870


                                       45
<PAGE>

                               AMB Financial Corp.

                              Corporate Information

        Corporate Office

        AMB Financial Corp.                        Telephone (219) 836-5870
        8230 Hohman Avenue                         Fax       (219) 836-5883
        Munster, IN  46321                         Web site  ambfinancial.com

        Directors of the Board                     AMB Financial Corp.
                                                        Officers

        Clement B. Knapp, Jr.                      Clement B. Knapp, Jr.
        President since 1977.                      Chairman of the Board,
        Chief Executive Officer


        Ronald W. Borto                            Louis A. Green
        Director since 1986.                       Senior Vice-President

        Donald L. Harle                            Daniel T. Poludniak
        Director since 1995.                       Vice-President, Treasurer and
                                                   Chief Financial Officer

        John C. McLaughlin
        Director since 1979.                       Denise L. Knapp
                                                   Corporate Secretary

        John G. Pastrick
        Director since 1979.

        Robert E. Tolley
        Director since 1987.

        Independent Auditors                  Corporate Counsel / Local
        Cobitz, VandenBerg & Fennessy         Abrahamson, Reed & Adley.
        9944 S. Roberts Road Suite 202        Attorneys at Law
        Palos Hills, IL  60465                200 Russell Street
                                              Hammond, IN 46320

                                              Corporate Counsel / Washington DC
                                              Silver, Freedman & Taff, L.L.P.
                                              1100 New York Ave., N.W.
                                              Washington, DC  20005-3934





                                       46
<PAGE>

Annual and Other Report

The  Company  is  required  to file an  annual  report on Form  10-KSB  with the
Securities and Exchange Commission. Copies of the Form 10-KSB, annual report and
the Company's quarterly reports may be obtained without charge by contacting:

        Sara E. Meeks
        AMB Financial Corp.
        8230 Hohman Avenue
        Munster, Indiana 46321
        (219) 836-5870




                                       47