Exhibit 13

                                                   Annual Report


<PAGE>


                                Table of Contents




           President's Message

           Selected Consolidated Financial Information

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

           Independent Auditors' Report

           Consolidated Financial Statements

           Stockholder Information

           Corporate Information
<PAGE>
President's Message
to Our Stockholders

On behalf of the Board of  Directors,  Officers and  Employees of AMB  Financial
Corp., and its wholly owned subsidiary,  American Savings, FSB., I am pleased to
present our first Annual report as a public corporation.

AMB Financial Corp.  successfully  completed its initial stock offering on March
31, 1996, and started trading on the NASDAQ (Small Cap) Stock Market on April 1,
1996 under the symbol  "AMFC".  Initially  offered at $10.00 per share the stock
closed at $13.25 on December 31, 1996.  Earnings for the year ended December 31,
were $442,153 or $.43 per share.  Our return on average  assets for the year was
0.55%  with a return on  average  equity of 3.28%.  These  figures  include  the
one-time  SAIF  special  assessment  of $389,000.  Without the one-time  special
assessment  earnings  for the year  ended  December  31,  1996  would  have been
$676,000 or $.65 per share,  the return on assets 0.84% and the return on equity
5.02%.

The Bank experienced  strong loan growth of $12.7 million in 1996 as a result of
increased loan  originations as well as purchases of  non-residential  loans and
equipment leases.

Since the  completion  of our stock  offering,  we are  continually  working  to
develop goals and long-term strategies to increase profitability, minimize risk,
control expenses and enhance  shareholder  value. Our primary focus continues to
be directed  towards  enhancing  shareholders  value  while  remaining a viable,
independent  banking concern,  serving the needs of the residents and businesses
in Northwest Indiana.

The entire staff of AMB Financial Corp. 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
<PAGE>
<TABLE>
<CAPTION>
                                 SELECTED CONSOLIDATED FINANCIAL INFORMATION

                                                                          At December 31,
                                                     -------------------------------------------------------
                                                       1996        1995        1994        1993        1992
                                                       ----        ----        ----        ----        ----
                                                                        (in thousands)
<S>                                                  <C>         <C>         <C>         <C>         <C>
Selected Financial Data:

Total Assets .....................................   $86,102     $69,788     $65,536     $65,130     $64,197
Loans receivable, net ............................    67,366      54,639      51,849      48,602      46,415
Investment securities ............................     8,939       7,017       6,316       7,281       7,187
Mortgage-backed securities .......................     4,019       1,479       1,593       2,362       2,963
Trading account securities .......................       539        --          --          --          --
Deposits .........................................    60,411      59,588      58,281       59,08      58,458
Borrowed Funds ...................................     9,500       3,000       1,000        --          --
Stockholders' equity .............................    15,170       6,314       5,633       5,393       5,043
<CAPTION>
                                                                      Year Ended December 31,
                                                                          (in thousands)
                                                     -------------------------------------------------------
Selected Operating Data:

Total interest income ............................   $ 5,957     $ 5,222     $ 4,837     $ 4,915     $ 5,318
Total interest expense ...........................     2,955       2,686       2,209       2,240       2,786
                                                     -------     -------     -------     -------     -------

    Net interest income ..........................     3,002       2,536       2,628       2,675       2,532

Provision for loan losses ........................      --            39          62         169          58
                                                     -------     -------     -------     -------     -------
Net interest income after provision
  for loan losses ................................     3,002       2,497       2,566       2,506       2,474
                                                     -------     -------     -------     -------     -------
    Non-interest income:
Fees and service charges .........................       263         203         224         199         202
Commission income ................................        57          59          23          69          58
Gain on sale of securities .......................        99        --            59          19          29
Gain on sale of real estate owned ................        28           2         178        --             1
Other ............................................        64          76          89          93          94
                                                     -------     -------     -------     -------     -------

    Total non-interest income ....................       511         340         573         380         384
                                                     -------     -------     -------     -------     -------
Non-interest expense:
Compensation and benefits ........................     1,129         909         886         880         813
Office occupancy and equipment expense ...........       334         328         347         340         319
Data processing ..................................       295         248         210         207         170
Federal deposit insurance ........................       130         134         134         116         124
SAIF special assessment ..........................       389        --          --          --          --
Write-off stock conversion expenses ..............      --          --           332        --          --
Provision for loss on REO ........................      --          --          --           147        --
Other ............................................       580         595         608         588         509
                                                     -------     -------     -------     -------     -------
    Total non-interest expense ...................     2,857       2,214       2,517       2,278       1,935
                                                     -------     -------     -------     -------     -------
<PAGE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL INFORMATION (continued)

                                                                       Year Ended December 31,
                                                                          (in thousands)
                                                     -------------------------------------------------------
                                                       1996        1995        1994        1993        1992
                                                       ----        ----        ----        ----        ----
<S>                                                  <C>         <C>         <C>         <C>         <C>
Income before income taxes and
  extraordinary items ............................       656         623         622         608         923
Income tax provision .............................       214         236         239         228         340
                                                     -------     -------     -------     -------     -------
Income before extraordinary items ................       442         387         383         380         583
Prepayment fee incurred from early
  extinguishment of debt-net .....................      --          --          --          --
                                                        --          --          --          --            84

Net income .......................................       442         387         383         380         499
                                                     -------     -------     -------     -------     -------
<CAPTION>
                                                                  At or For the Year Ended December 31,
                                                     -------------------------------------------------------
                                                       1996        1995        1994        1993        1992
                                                       ----        ----        ----        ----        ----
                                                                          (in thousands)
<S>                                                  <C>         <C>         <C>         <C>         <C>
Selected Financial Ratios and Other Data:

Return on average assets (1) .....................       .55%        .57%        .58%        .59%        .79%
Return on average stockholders' equity(2)               3.28        6.40        6.74        7.24       10.53
Average stockholders' equity to
   average assets ................................     16.78        8.76        8.61        8.20        7.54
Stockholders' equity to total assets .............     17.62        9.05        8.60        8.28        7.86
Interest rate spread during period ...............      3.37        3.84        4.11        4.30        4.07
Net interest margin (3) ..........................      3.97        4.03        4.25        4.45        4.26
Operating expenses to average assets (4)                3.56        3.29        3.31        3.33        3.09
Efficiency ratio (5) .............................     70.23       76.99       73.72       70.19       67.02
Non-performing assets to total assets ............       .35         .53         .76         .88         .99
Allowance for loan losses to non-
   performing loans ..............................    116.27       97.43       66.00       52.15      101.15
Allowance for loan losses to loans
   receivable, net ...............................       .53         .66         .62         .59         .93
Ratio of average interest-earning assets to
average interest-bearing liabilities .............      1.16x       1.04x      1.04x       1.04x        1.04x
Number of full-service offices ...................         4           4          4           4            4

</TABLE>
<PAGE>

(1)  Return on average  assets for 1996  would have been .84%  without  the SAIF
     special assessment.

(2)  Return on  average  stockholders'  equity  for 1996  would  have been 5.02%
     without the SAIF special assessment.

(3)  Calculation  is based upon net interest  income  before  provision for loan
     losses divided by interest- earning assets.

(4)  For purposes of calculating this ratio, operating expenses for 1993 exclude
     the  provision  for losses on real  estate  owned and for 1994  exclude the
     write-off  of stock  conversion  expenses.  The 1996 ratio  would have been
     3.07% without the SAIF special assessment.

(5)  Non-interest expense, excluding the provision for loss on real estate owned
     in 1993,  the write-off of stock  conversion  expenses in 1994 and the SAIF
     special  assessment  in 1996,  divided by net  interest  income  plus other
     income except for gains and losses on securities available for sale.
<PAGE>
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
              RESULTS OF  OPERATIONS



General

         AMB Financial Corp. (the "Company") is the unitary savings bank 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 Holding 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 three full-service banking offices located
in Dyer,  East Chicago 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  and commercial real estate,  construction,  land,  consumer and
commercial business loans. The Company also invests in mortgage-backed and other
securities. The Company's business activities have been limited to its ownership
of the Bank and certain short-term and other investments.

         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.  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 primarily consists of service charges and fees
on deposit and loan  products.  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.
<PAGE>
Operating Strategy

         The Company's basic mission is to maintain its focus as an 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  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
multi-family,  commercial real estate,  consumer,  construction  and land loans;
(iii) augment its lending  activities with  investments in  mortgage-backed  and
other  securities;  (iv)  emphasize  adjustable  rate  and/or  short and  medium
duration assets; (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.

Comparison of Financial Condition at December 31, 1996 and 1995.

         Total  consolidated  assets of the Company increased $16.3 million,  or
23.4% to $86.1  million  at  December  31,  1996  compared  to $69.8  million at
December  31, 1995.  This  increase was  primarily  due to the $10.7  million in
proceeds from the Bank's mutual to stock conversion completed on March 29, 1996,
as well  as  growth  in  loans  receivable,  which  was  partially  funded  with
additional advances from FHLB of Indianapolis in the amount of $6.5 million.

         Investment  securities  classified as available for sale increased $1.9
million to $8.9 million at December 31, 1996,  from $7.0 million at December 31,
1995 as excess funds  generated in the  conversion  were invested in medium term
U.S.  Government  securities.  At December 31, 1996, net unrealized gains in the
available for sale portfolio were $47,000. Mortgage-backed securities classified
as available for sale increase $2.5 million to $4.0 million at December 31, 1996
from $1.5  million at  December  31,  1995.  The  increase is  primarily  due to
purchases  of  additional  securities  to deploy  excess  liquidity  into higher
yielding  investments.  At  December  31,  1996,  net  unrealized  gains  in the
available for sale portfolio were $4,000.

         Loan  receivable  increased by 23.3%, or $12.7 million to $67.4 million
at December  31, 1996  primarily  due to  increased  loan  originations  and the
purchase of $4.6 million of  commercial  mortgage  participation  and  equipment
lease financing loans.  The overall increase in net loans reflects  increases of
$5.6   million  in   one-to-four-family   mortgage   loans,   $4.7   million  in
non-residential  loans,  $1.1 million in  commercial  business  loans,  and $1.0
million in consumer loans.  The loan portfolio  represents 78.2% of total assets
at December 31, 1996.

         Total deposits increased $800,000 to $60.4 million at December 31, 1996
due to interest  credited  exceeding  net  withdrawals  of $1.5  million.  Total
borrowings  of $9.5  million at  December  31,  1996  reflected  a $6.5  million
increase in FHLB  advances,  compared to $3.0 million at December 31, 1995.  The
additional borrowings were used to fund increased loan demand.
<PAGE>
         Stockholders'  equity  increased  $8.9  million  to  $15.2  million  at
December  31, 1996 from $6.3 million at December  31,  1995.  This  increase was
primarily  due to net  proceeds  from the sale of the  Company's  stock of $10.7
million less $899,000 of stock  acquired by the Employee Stock  Ownership  Plan,
("ESOP") the acquisition of stock for the Recognition and Retention Plan ("RRP")
which  was  implemented  in the first  quarter,  at a cost of  $579,000  and the
purchase of treasury stock of $725,000. In addition, the increase was due to net
income for the year of $442,000 partially offset by a decrease in net unrealized
gains on  investments  available  for sale of  $40,000,  net of  taxes,  and the
payment  of  Company  dividends  in  the  amount  of  $132,000.   The  ratio  of
stockholders'  equity to total  assets  at  December  31,  1996 was  17.62%,  as
compared  to  9.05% at  December  31,  1995.  The book  value  per  share of the
Company's common stock on December 31, 1996 was $14.21.

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.
<PAGE>
<TABLE>
<CAPTION>

                                                                   Year Ended December 31
                               ----------------------------------------------------------------------------------------------
                                             1996                            1995                           1994
                               ---------------------------- -------------------------------  --------------------------------
                                 Average   Interest           Average      Interest            Average     Interest
                               Outstanding  Earned/  Yield/  Outstanding     Earned/  Yield/  Outstanding    Earned/   Yield/
                                 Balance    Paid      Rate     Balance       Paid      Rate     Balance       Paid      Rate
                                 -------    ----      ----     -------       ----      ----     -------       ----      ----
                                                                    (Dollars in thousands)
<S>                               <C>       <C>        <C>      <C>          <C>        <C>      <C>          <C>       <C>
Interest-Earning Assets
   Loans receivable(1).......     59,165    4,949      8.36     53,107       4,570      8.61     50,009       4,128      8.25
   Mortgage-backed securities      3,396      230      6.77      1,587         106      6.68      1,939         117      6.03
   Investment securities ....      8,565      521      6.08      6,383         418      6.55      7,330         484      6.60
   Interest-bearing deposits       3,876      214      5.52      1,369          85      6.21      1,964          77      3.92
   FHLB stock ...............        546       43      7.88        546          43      7.88        546          31      5.68
                                  ------    -----      ----     ------       -----      ----     ------       -----      ----
   Total interest-earning
   assets....................     75,548    5,957      7.89     62,992       5,222      8.29     61,788       4,837      7.83
                                  ------    -----      ----     ------       -----      ----     ------       -----      ----

Interest-Bearing Liabilities
  Passbook accounts .........     16,490      510      3.09     16,597         544      3.28     18,244         613      3.36
  Demand and NOW accounts ...      9,258      226      2.44      8,969         245      2.73      9,198         228      2.48
  Certificate accounts ......     36,389    2,025      5.56     33,240       1,799      5.41     31,920       1,367      4.28
  Borrowings ................      3,186      194      6.09      1,567          98      6.25         13           1      7.69
                                  ------    -----      ----     ------       -----      ----     ------       -----      ----
  Total interest-bearing
  liabilities................     65,323    2,955      4.52     60,373       2,686      4.45     59,375       2,209      3.72
                                  -----     -----      ----     ------       -----      ----     ------       -----      ----
Net interest income .........               3,002                            2,536                            2,628
                                            =====                            =====                            =====

Net interest rate spread ....                          3.37                             3.84                             4.11
                                                       ====                             ====                             ====

Net earning assets ..........     10,225                         2,619                            2,413
                                  ======                         =====                            =====

Net yield on average
  interest-earning assets ...                          3.97                             4.03                             4.25
                                                       ====                             ====                             ====
Average interest-earning
  assets to averaage
  interest-bearing
    liabilities..............                1.16                             1.04                 1.04
                                             ====                             ====                 ====

(1) Calculated net of deferred loan fees, loan  discounts,  loans in process and
allowance for losses.
</TABLE>
<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>
     `                                                       Year Ended December 31,
                                 ----------------------------------------------------------------------------
                                         1996 Compared to 1995                  1995 Compared to 1994
                                         Increase (Decrease) Due to             Increase (Decrease) Due to
                                 -----------------------------------      -----------------------------------
                                                      Rate/                                   Rate/
                                   Rate     Volume    Volume     Net      Rate     Volume      Volume     Net
                                   ----     ------    ------     ---      ----     ------      ------     ---
                                                              Dollars in Thousands
<S>                               <C>        <C>       <C>       <C>       <C>       <C>      <C>        <C>
Interest-earning assets:
Loans Receivable, net .......     (128)      522       (15)      379       175       256        11       442
Mortgage-backed
   securities ...............        1       121         2       124        12       (21)       (2)      (11)
Investment securities .......      (30)      143       (10)      103        (4)      (62)       --       (66)
Interest-bearing deposits ...      (10)      156       (17)      129        45       (23)      (14)        8
FHLB Stock ..................                                      0        12                            12
                                  ----      ----      ----      ----      ----      ----      ----      ----
    Totals ..................     (167)      942       (40)      735       240       150        (5)      385
                                  ----      ----      ----      ----      ----      ----      ----      ----

Interest-bearing liabilities:
Passbook accounts ...........      (31)       (3)                (34)      (15)      (55)        1       (69)
Demand and Now
   accounts .................      (26)        8        (1)      (19)       23        (6)                 17
Certificate accounts ........       51       170         5       226       361        56        15       432
Borrowed funds ..............       (2)      101        (3)       96                 119       (22)       97
                                  ----      ----      ----      ----      ----      ----      ----      ----
    Totals ..................       (8)      276         1       269       396       114        (6)      477
                                  ----      ----      ----      ----      ----      ----      ----      ----
Net change in net
   interest income ..........                                              466                           (92)
                                                                          ----                          ----
</TABLE>
Comparison of Operating Results for the Years Ended December 31, 1996 and 1995.

Net Income.  The Company's  net income for the year ended  December 31, 1996 was
$442,000 as compared  to  $387,000  for the same period in 1995,  an increase of
$55,000.  This increase was due primarily to an increase in net interest  income
of $465,000, and an increase in non-interest income of $171,000,  offset in part
by an  increase in  non-interest  expense of  $642,000.  Net income for the year
ended December 31, 1996 was reduced by a one-time special assessment of $389,000
($234,000  after  taxes)  imposed by federal  legislation  to  recapitalize  the
Savings Association Insurance Fund ("SAIF").
<PAGE>
Interest  Income.  Total  interest  income for the year ended  December 31, 1996
increased  $735,000,  or 14.1%,  as compared to the prior year.  The increase in
interest income was the result of an increase in average interest-earning assets
of $12.6 million. The increase in average interest-earning assets was the result
of a $6.1 million  increase in the average balance of loans  receivable,  a $1.8
million increase in the average balance of  mortgage-backed  securities,  a $2.2
million  increase in the average  balance of  investment  securities  and a $2.5
million  increase in the average  balance of  interest-bearing  deposits.  These
increases  reflect the Company's  investment  of net proceeds  received from the
stock  conversion  as well  as  from  an  increase  in the  average  balance  of
interest-bearing  liabilities.  During the year ended  December  31,  1996,  the
average yield on interest-earning assets declined to 7.89% from 8.29% during the
year ended December 31, 1995.  The decline in yield on average  interest-earning
assets was due primarily to a higher  proportion of lower  yielding  investments
acquired as a result of investing the stock conversion proceeds.

Interest  Expense.  Total interest  expense for the year ended December 31, 1996
increased  $270,000,  or 10% to $3.0  million as compared to $2.7 million in the
prior year. Deposit interest increased by $173,000, primarily as a result of the
$3.3 million  increase in the average  balance of deposit  accounts and the .04%
increase in the cost of savings.  The average certificate deposit base increased
by $3.1 million in 1996 as the Bank offered  limited  special  premium rates and
solicited  new public  funds.  Interest  expense  on  borrowed  funds  increased
$97,000, or double to $194,000 for the year ended December 31, 1996. The average
balance of borrowed  funds  increased  $1.6 million to $3.2 million for the year
ended December 31, 1996. This increase was 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.

No  provision  for loan losses was recorded  during the year ended  December 31,
1996 while a $39,000  provision was recorded in the comparable 1995 period.  The
decrease in the provision for losses on loans was due to the continued low level
of past due and problem  loans.  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 increased $173,000 to
$511,000  for the year ended  December  31, 1996  compared  to $340,000  for the
previous  year.  The increase  was due  primarily to an increase in loan fees of
$29,000  resulting from higher loan volume,  an increase in deposit related fees
of $30,000 due to general increases in many service fee categories, gains on the
sale of investment  securities available for sale of $53,000, an unrealized gain
on securities  held for trade of $46,000,  and gain on sale of real estate owned
of $26,000, offset by a decrease in other operating income of $12,000.
<PAGE>
Non-Interest  Expense. The Company's  non-interest expense increased $642,000 to
$2.8 million for the year ended  December 31, 1996  compared to $2.2 million for
the previous year. The increase  primarily  resulted from a $389,000  charge for
the  amount  of the  special  insurance  assessment  to  recapitalize  the SAIF.
Staffing costs also increased $220,000 during the year due to salary and benefit
increases of $103,000,  the expense  recognition of the ESOP of $101,000 and the
RRP of  $16,000.  In  addition,  there was  approximately  $94,000  of  expenses
relating to operations  as a public  company which did not occur in the previous
year.

Provision  for Income  Taxes.  Tax expense for the year ended  December 31, 1996
decreased  $22,000 to $214,000  compared to $236,000 for the comparable  year in
1995.  Income taxes decreased by $32,000  primarily as a result of a decrease in
the effective tax rates between the periods.

Comparison of Operating Results for the Years Ended December 31, 1995 and 1994.

Net  Income.  The Bank's net income  for the year ended  December  31,  1995 was
$387,000 as compared  to  $383,000  for the same period in 1994,  an increase of
$4,000.  The  increase  was the result of a decrease in the  provision  for loan
losses of $23,000 and a decrease in non-interest expense of $303,000,  partially
offset by a  decrease  in net  interest  income of  $92,000  and a  decrease  in
non-interest income of $233,000.

Interest Income.  Total interest income increased by $385,000 for the year ended
December 31, 1995, as compared to the previous year ended  December 31, 1994 due
primarily  to increases in the average  balances of interest  earning  assets of
$1.2 million for the year ended  December 31, 1995,  and  increases in yields on
average interest-earning assets from 7.83% for the year ending December 31, 1994
to 8.29% for the year ended December 31, 1995. The increase in  interest-earning
assets and average  yields during the year ended December 31, 1995 was primarily
caused by an increase in loans receivable due to the Bank's  diversification  of
its  loan  portfolio  and  purchases  of  commercial  business  leases  and loan
participations coupled with generally higher market interest rates in 1995.

Interest Expense.  The Bank's interest expense  increased  $477,000 for the year
ended  December  31, 1995 from the same period in 1994.  This  increase  was the
result  of  increases  in  average  interest-bearing  liabilities,  as  well  as
increases in the average  cost of funds.  Average  interest-bearing  liabilities
increased to $60.4  million  during the year ended  December 31, 1995 from $59.4
million  during the year ended December 31, 1994 primarily due to an increase in
FHLB advances to fund the Bank's  diversification  of its loan  portfolio and to
purchase  commercial business leases and loan  participations.  The average rate
paid on  interest-bearing  liabilities  increase  to 4.45%  for the  year  ended
December 31, 1995 from 3.72% for the year ended  December 31, 1994. The increase
in rates was primarily the result of an increase in short and intermediate  term
market rates on deposits and to  increases in the Bank's  outstanding  amount of
certificates of deposit and borrowings.

Provision for Loan Losses. The provision for loan losses amounted to $39,000 for
the year ended  December  31, 1995 as compared to $62,000  provision  during the
year ended  December 31, 1994.  Management  believes that the allowance for loan
losses of  $360,000  is  adequate  given the state of the local  economy and the
Bank's loan  portfolio.  The Bank will continue to review its allowance for loan
losses  and make  further  provisions  as  economic  and  regulatory  conditions
dictate.
<PAGE>
Non-Interest  Income. The Bank's  non-interest income decreased $233,000 for the
year ended  December  31,  1995.  The  decrease  was  primarily  the result of a
decrease in gains on the sale of real estate owned of $176,000 and a decrease in
gains on the sale of  investment  securities  of $59,000.  Loan related fees and
service charges also decreased during the year ended December 31, 1995 primarily
due to a reduction in loan  origination's  and reduced  recognition  of deferred
loan fees on loan pay-offs, resulting from an increase in rates.

Non-Interest Expense. Non-interest expense decreased $303,000 for the year ended
December  31, 1995  primarily as a result of the Bank's write off of $332,000 of
previously  incurred stock conversion  expenses in the 1994 period which did not
recur during the 1995 period.

Provision  for  Income  Taxes.  The  change in income  taxes for the year  ended
December 31, 1995 and 1994 was  insignificant.  The  effective  tax rate for the
1995 and 1994 periods were 37.9% and 38.4% respectively.

Interest Rate Risk Management

         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
activities  may be  permitted  with the  approval  of the  Board  of  Directors,
management does not intend to engage in such activities 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 (ie., a  "positively
sloped  yield  curve"),  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.
<PAGE>
         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, 1996,  adjustable-rate loans represented $25.9 million, or 37.6% of
the total loan portfolio.  Second, most of the increase in non-residential loans
of $4.7 million is the result of a small  number of large loans  primarily  with
adjustable rates. Third, 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, At December 31, 1996, the Company had
$4.0 million of adjustable-rate mortgage-backed pass-through securities. Fourth,
a significant  portion of the Company's  other debt  securities  (primarily U.S.
Government and agency  securities) are short- or  intermediate-term  instruments
with $8.1 million of such securities contractually maturing within five years of
December  31,  1996.  Fifth,  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, 1996,
the Company had $16.3 million of regular savings accounts, $2.5 million of money
market  accounts and $6.7 million of NOW,  checking and club accounts.  Overall,
these accounts comprised 42.2% of the Company's total deposit base.

         One approach used by  management to quantify  interest rate risk is the
net portfolio value ("NPV") analysis.  In essence,  this approach calculates the
difference  between the present  value of  liabilities  and the present value of
expected  cash flows from  assets and  off-balance  sheet  contracts.  Under OTS
regulations, an institution's "normal" level of interest rate risk (in the event
of an assumed change in interest rates) is a decrease in the  institution's  NPV
in an  amount  not  exceeding  2% of the  present  value of its  assets.  Thrift
institutions  with greater than  "normal"  interest  rate  exposure  must make a
deduction from total capital available to meet risk-based capital  requirements.
The  amount of that  deduction  is one half of the  difference  between  (i) the
institution's  actual  calculated  exposure to a 200 basis point  interest  rate
increase or  decrease  (whichever  results in the greater pro forma  decrease in
NPV) and (ii) its "normal" level of exposure which is 2% of the present value of
its  assets.  The rule will not become  effective  until the OTS  evaluates  the
process by which savings associations may appeal an interest rate risk deduction
determination.  It is uncertain  as to when this  evaluation  may be  completed.
Savings institutions, however, with less than $300 million in assets and a total
risk-based  capital ratio in excess of 12%, such as the Bank,  are generally not
subject to this requirement. If the Bank had been subject to this requirement at
December 31, 1996,  its interest rate risk would have been  considered  "normal"
and no adjustment to its risk-based capital would have been required.
<PAGE>
         The  following  table sets forth,  at December 31, 1996, an analysis of
the  Bank's  interest  rate risk as  measured  by the  estimated  changes in NPV
resulting from  instantaneous  and sustained  parallel shifts in the yield curve
(+/-400 basis points, measured in 100 basis point increments).
<TABLE>
<CAPTION>

  Change in Interest Rates        Estimated NPV           Estimated Increase (Decrease) in NPV
     (Basis Points)                  Amount                   Amount                   Percent
     --------------                  ------                   ------                   -------
                                         (Dollars in thousands)
<S>                                 <C>                     <C>                          <C>
          +400                      $ 8,679                 $( 4,156)                    (32)
          +300                        9,790                   (3,046)                    (24)
          +200                       10,901                   (1,934)                    (15)
          +100                       11,949                     (886)                    ( 7)
           ---                       12,835                      ---                     ---
          -100                       13,438                      603                       5
          -200                       13,796                      961                       7
          -300                       14,128                    1,293                      10
          -400                       14,695                    1,860                      14

</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  interest rate
scenarios.  It was also  assumed  that  delinquency  rates  will not change as a
result of changes in interest rates although there can be no assurance that this
will be the case. Even if interest rates change in the designated amounts, there
can be no assurance that the 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.

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  activities of the Company are the origination of
real  estate and other  loans,  and the  purchase of  mortgage-backed  and other
securities.  During the years ended  December 31, 1996,  and 1995, the Company's
disbursements  for loan  originations  totaled $22.9 million,  and $14.9 million
respectively.  For the years ended  December  31, 1996,  and 1995,  purchases of
mortgage-backed  securities  totaled $3.0  million,  and $0,  respectively,  and
purchases of other securities  totaled $3.1 million and $800,000,  respectively.
These activities were funded  primarily by net deposit  inflows,  borrowings and
principal repayments on loans and securities.
<PAGE>
         For  the  years  ended   December  31,  1996,  and  1995,  the  Company
experienced  net  increases  in  deposits  (including  the  effect  of  interest
credited) of $800,000,  and $1.3 million  respectively.  The nominal increase in
fiscal 1996 reflects relatively flat market interest rates,  customer preference
for  alternative  investments,  and deposits  withdrawn to purchase stock in the
Conversion.  The increase in fiscal 1995 reflects the general increase in market
interest  rates  which  made  deposit   products   (particularly   shorter  term
certificates  of  deposit)  a more  attractive  investment  alternative  for the
Company's  customers.  Proceeds  from FHLB  advances were $8.5 million in fiscal
1996,  and $3.0 million in fiscal 1995.  FHLB  advances of $2.0 million and $1.0
million were repaid in fiscal 1996 and 1995  respectively.  Financing cash flows
for fiscal 1996 also  include  $10.7  million in net  proceeds  from the sale of
common stock in the offering (other than ESOP shares).

         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, 1996,  the Company's  borrowing  limit from the
FHLB of Indianapolis  was  approximately  $29.8 million,  with unused  borrowing
capacity of $20.3 million at that date.

         The Company is required to maintain an average  daily balance of liquid
assets and short-term liquid assets as a percentage of net withdrawable  deposit
accounts plus short-term  borrowings as defined by OTS regulations.  The minimum
required liquidity and short-term  liquidity ratios are currently 5.0% and 1.0%,
respectively.  At December 31, 1996, the Company's liquidity ratio was 15.4% and
its short- term liquidity ratio was 4.7%.

         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,  1996  and  1995,  cash  and cash
equivalents totaled $2.6 million and $4.0 million, respectively.

         At December  31, 1996,  the Company had  outstanding  loan  origination
commitments of $726,000,  undisbursed construction loans in process of $910,000,
and  unadvanced  lines of credit  extended to  customers  of $6.6  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, 1996  totaled  $25.7
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.

         The main sources of liquidity for the Company are net proceeds from the
sale of stock  and  dividends  received  from the  Bank,  if any.  The main cash
outflows are payments of dividends to  shareholders  and any  repurchases of the
Company's  common stock. In November 1996, the Company  completed the repurchase
of 5% of its shares under a  repurchase  program and 4% of its shares for awards
under its  recognition  and  retention  plan.  A total of  101,171  shares  were
repurchased at a cost of $1.3 million.
<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.  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.

         The OTS regulations require savings associations,  such as the Bank, to
meet three minimum capital  standards:  a tangible capital ratio  requirement of
1.5% of total assets as adjusted  under the OTS  regulations;  a leverage  ratio
requirement  of  3% of  core  capital  to  such  adjusted  total  assets;  and a
risk-based capital ratio requirement of 8% of core and supplementary  capital to
total risk-based  assets.  The Bank satisfied these minimum capital standards at
December  31, 1996 with  tangible and  leverage  capital  ratios of 13.08% and a
total  risk-based  capital  ratio  of  24.86%.  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.

Impact of Inflation and Changing Prices

         The  Consolidated  Financial  Statements  and Notes  thereto  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 December  1996,  the FASB issued  Statement of Financial  Accounting
Standards No. 127 "Deferral of the Effective  Date of Certain  Provisions of the
FASB Statement No. 125" ("SFAS No. 127").  The statement delays for one year the
implementation  of SFAS No.  125, as it relates to (1)  secured  borrowings  and
collateral,  and (2) for the  transfers  of  financial  assets  that are part of
repurchase agreement, dollar-roll, securities lending and similar transactions.

         The Company has adopted portions of SFAS No. 125 (those not deferred by
SFAS No. 127) effective January 1, 1997. Adoption of these portions did not have
a  significant  effect  on the  Company's  financial  condition  or  results  of
operations.  Based on its review of SFAS No.  125,  management  does not believe
that  adoption of the portions of SFAS No. 125 which have been  deferred by SFAS
No. 127 will have material effect on the Company.
<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.
<PAGE>

                          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, 1996 and 1995, 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, 1996.
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, 1996 and 1995, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period  ending  December  31,  1996,  in  conformity  with  generally   accepted
accounting principles.





February 14, 1997
Hickory Hills, Illinois


<PAGE>
<TABLE>
<CAPTION>
                                 AMB FINANCIAL CORP.
                                  AND SUBSIDIARIES

                   Consolidated Statements of Financial Condition


                                                                December 31,
                                                        ---------------------------
                                                             1996           1995
                                                        -----------     -----------
<S>                                                     <C>              <C>
Assets

Cash and amounts due from
  depository institutions .........................     $ 1,473,962       3,032,908
Interest-bearing deposits .........................       1,093,405       1,003,909
                                                        -----------     -----------
  Total cash and cash equivalents .................       2,567,367       4,036,817
Investment securities, available for sale,
  at fair value (note 2) ..........................       8,938,937       7,016,697
Investment securities held for trade (note 3) .....         539,500            --
Mortgage-backed securities, available for sale,
  at fair value (note 4) ..........................       4,018,835       1,478,841
Loans receivable (net of allowance for loan losses:
  1996 - $354,631; 1995 - $359,535) (note 5) ......      67,365,632      54,638,741
Stock in Federal Home Loan Bank of Indianapolis ...         545,600         545,600
Office properties and equipment - net (note 6) ....         510,603         608,944
Accrued interest receivable (note 7) ..............         452,955         386,633
Prepaid expenses and other assets (note 8) ........       1,162,631       1,075,867
                                                        -----------     -----------

   Total assets ...................................      86,102,060      69,788,140
                                                        ===========     ===========

Liabilities and Stockholders' Equity

Liabilities:
Deposits (note 9) .................................      60,410,997      59,588,157
Borrowed money (note 10) ..........................       9,500,000       3,000,000
Advance payments by borrowers
  for taxes and insurance .........................         312,213         324,496
Other liabilities  (note 11) ......................         708,993         561,984
                                                        -----------     -----------
  Total liabilities ...............................      70,932,203      63,474,637
                                                        -----------     -----------
<PAGE>
<CAPTION>
                                      AMB FINANCIAL CORP.
                                       AND SUBSIDIARIES

                        Consolidated Statements of Financial Condition


                                                                            December 31,
                                                                 ----------------------------
                                                                      1996           1995
                                                                 -----------       ----------
<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 1,067,919 shares outstanding
  at December 31, 1996 .....................................           11,241              --
Additional paid-in capital .................................       10,657,746              --
Retained earnings, substantially restricted ................        6,564,204         6,242,782
Unrealized gain on securities available
  for sale, net of income taxes ............................           30,386            70,721
Treasury stock, at cost (56,206 shares at December 31, 1996)         (724,718)             --
Common stock acquired by Employee Stock Ownership Plan .....         (809,370)             --
Common stock awarded by Recognition and Retention Plan .....         (559,632)             --
                                                                 ------------      ------------
  Total stockholders' equity (notes 15 and 16) .............       15,169,857         6,313,503
                                                                 ------------      ------------

Commitments and contingencies (notes 18 and 19)

   Total liabilities and stockholders' equity ..............     $ 86,102,060        69,788,140
                                                                 ============      ============








                 See accompanying notes to consolidated financial statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                       AMB FINANCIAL CORP.
                                         AND SUBSIDIARIES

                                Consolidated Statements of Income



                                                        Years Ended December 31,
                                                ----------------------------------------
                                                   1996           1995           1994
                                                ----------     ----------     ----------
<S>                                             <C>            <C>            <C>
Interest income:
  Interest on loans .......................     $4,949,491      4,569,803      4,127,635
  Interest on mortgage-backed securities ..        230,175        106,224        117,428
  Interest on investment securities .......        520,663        417,849        483,691
  Interest on interest-bearing deposits ...        214,295         85,422         77,207
  Dividends on Federal Home Loan Bank stock         42,694         42,972         31,402
                                                ----------     ----------     ----------
     Total interest income ................      5,957,318      5,222,270      4,837,363
                                                ----------     ----------     ----------

Interest expense:
  Interest on deposits ....................      2,760,774      2,587,591      2,208,619
  Interest on borrowings ..................        194,431         97,925          1,174
                                                ----------     ----------     ----------
     Total interest expense ...............      2,955,205      2,685,516      2,209,793
                                                ----------     ----------     ----------

     Net interest income before provision
      for loan losses .....................      3,002,113      2,536,754      2,627,570
Provision for loan losses (note 5) ........           --           39,384         61,613
                                                ----------     ----------     ----------
     Net interest income after provision
      for loan losses .....................      3,002,113      2,497,370      2,565,957
                                                ----------     ----------     ----------

Non-interest income:
  Loan fees and service charges ...........         97,576         68,700        123,963
  Commission income .......................         57,491         58,699         23,258
  Unrealized gain on trading securities-net         46,484           --             --
  Gain on sale of securities ..............         52,617           --           59,091
  Gain on sale of real estate owned .......         27,821          1,960        178,342
  Deposit related fees ....................        165,114        134,653         99,602
  Other income ............................         63,700         75,587         88,705
                                                ----------     ----------     ----------
     Total non-interest income ............        510,803        339,599        572,961
                                                ----------     ----------     ----------
<PAGE>
<CAPTION>
                                       AMB FINANCIAL CORP.
                                         AND SUBSIDIARIES

                          Consolidated Statements of Income (continued)



                                                                Years Ended December 31,
                                                        --------------------------------------
                                                           1996          1995           1994
                                                        ---------     ---------      ---------
<S>                                                    <C>            <C>            <C>
Non-interest expense:
  Staffing costs (notes 12 and 13) ...............      1,128,341        908,837        885,799
  Advertising ....................................         79,967        104,100         77,960
  Occupancy and equipment expenses (note 6) ......        334,286        328,432        346,406
  Data processing ................................        295,258        247,764        209,894
  Federal deposit insurance premiums .............        129,639        134,316        134,273
  SAIF special assessment (note 17) ..............        389,255           --             --
  Write-off of stock conversion expenses (note 22)           --             --          331,795
  Other ..........................................        499,731        491,137        530,443
                                                       ----------     ----------     ----------
     Total non-interest expense ..................      2,856,477      2,214,586      2,516,570
                                                       ----------     ----------     ----------

Income before income taxes .......................        656,439        622,383        622,348
  Income taxes (note 14) .........................        214,286        235,700        239,069
                                                       ----------     ----------     ----------

     Net income ..................................     $  442,153        386,683        383,279
                                                       ==========     ==========     ==========



Earnings per share -
     Primary .....................................     $      .43            N/A            N/A
     Fully diluted ...............................     $      .43            N/A            N/A

Dividends declared on common stock ...............     $      .12            N/A            N/A












                  See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                         AMB FINANCIAL CORP.
                                                          AND SUBSIDIARIES

                                     Consolidated Statements of Changes in Stockholders' Equity

                                                 Three Years Ended December 31, 1996


                                                                       Unrealized
                                                                       Gain (Loss)
                                                                          on                     Common     Common
                                            Additional                 Securities                 Stock      Stock
                                   Common    Paid-in      Retained     Available    Treasury    Acquired    Awarded
                                   Stock     Capital      Earnings      For Sale      Stock      by ESOP    by RRP      Total
                                   -----     -------      --------      --------      -----      -------    ------      -----
<S>                              <C>        <C>           <C>           <C>         <C>         <C>        <C>        <C>
Balance at December 31, 1993     $   -            -       5,472,820      (80,000)       -           -          -       5,392,820

Net income                                                  383,279                                                      383,279
Adjustment of securities
  available for sale to fair
  value, net of tax effect                                              (143,557)                                       (143,557)
                                   ------   ----------    ---------      -------     -------     -------    -------    ---------

Balance at December 31, 1994         -            -       5,856,099     (223,557)       -           -          -       5,632,542

Net income                                                  386,683                                                      386,683
Adjustment of securities
  available for sale to fair
  value, net of tax effect                                               294,278                                         294,278
                                   ------   ----------    ---------      -------     -------     -------    -------    ---------

Balance at December 31, 1995         -            -       6,242,782       70,721        -           -          -       6,313,503

Net income                                                  442,153                                                      442,153
Adjustment of securities
  available for sale to fair
  value, net of tax effect                                               (40,335)                                        (40,335)
Net proceeds of common stock
  issued in stock conversion       11,241   10,646,866                                          (899,300)              9,758,807
Purchase of treasury stock
  (56,206 shares)                                                                   (724,718)                           (724,718)
Purchase of stock for RRP                                                                                  (578,929)    (578,929)
Amortization of award of
  RRP stock                                                                                                  19,297       19,297
Contribution to fund ESOP loan                  10,880                                            89,930                 100,810
Dividends declared on
  common stock                                             (120,731)                                                    (120,731)
                                   ------   ----------    ---------      -------     -------     -------    -------   ----------

Balance at December 31, 1996     $ 11,241   10,657,746    6,564,204       30,386    (724,718)   (809,370)  (559,632)  15,169,857
                                   ======   ==========    =========      =======     =======     =======    =======   ==========



                                    See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                AMB FINANCIAL CORP.
                                                 AND SUBSIDIARIES

                                       Consolidated Statements of Cash Flows

                                                                             Years Ended December 31,
                                                             ----------------------------------------------------
                                                                  1996               1995               1994
                                                             -------------      -------------      --------------
<S>                                                          <C>                <C>                <C>
 Cash flows from operating activities:
  Net income ...........................................     $     442,153            386,683            383,279
  Items not requiring (providing) cash:
     Depreciation ......................................           139,808            132,848            130,493
     Amortization of cost of stock benefit plans .......           120,107               --                 --
     Amortization of premiums and accretion of discounts              (434)            (5,778)               472
     Net gain on sale of securities ....................           (52,617)              --              (59,091)
     Net gain on sale of real estate owned .............           (27,821)            (1,960)          (178,342)
     Loss on disposal of fixed assets ..................              --                 --                  930
     Provision for loan losses .........................              --               39,384             61,613
     Unrealized gain on securities held for trade ......           (46,484)              --                 --
     Purchase of trading account securities ............          (493,016)              --                 --
     Increase (decrease) in deferred income on loans ...            23,507            (34,771)            14,806
     Increase (decrease) in accrued and deferred
      income taxes .....................................           (50,221)           204,700           (171,400)
     (Increase) decrease in accrued interest receivable            (66,322)           (49,731)            14,621
     Increase in accrued interest payable ..............            24,739             28,784              8,056
     Increase in deferred compensation .................            71,069             63,068             56,535
     Other, net ........................................            41,548              2,572            189,617
                                                             -------------      -------------      -------------

Net cash provided by operating activities ..............           126,016            765,799            451,589
                                                             -------------      -------------      -------------

Cash flows from investing activities:
     Proceeds from sales of investment securities ......           132,617               --            3,832,813
     Proceeds from maturities of investment securities .         1,000,000            500,000            500,000
     Purchase of investment securities .................        (3,056,153)          (798,004)        (3,515,796)
     Proceeds from repayments of mortgage-backed
      securities .......................................           481,548            207,673            682,335
     Purchase of mortgage-backed securities ............        (3,034,420)              --                 --
     Property and equipment expenditures, net ..........           (41,467)          (120,181)          (118,487)
     Purchase of loans .................................        (4,647,821)        (3,439,588)          (893,590)
     Proceeds from sale of loans .......................              --                 --              112,200
     Loan disbursements ................................       (22,901,235)       (14,920,478)       (17,947,552)
     Loan repayments ...................................        14,800,656         15,517,663         15,355,180
     Proceeds from sale of real estate owned ...........            25,823             49,183            241,618
                                                             -------------      -------------      -------------

Net cash provided for investing activities .............       (17,240,452)        (3,003,732)        (1,751,279)
                                                             -------------      -------------      -------------
<PAGE>
<CAPTION>
                                                AMB FINANCIAL CORP.
                                                 AND SUBSIDIARIES

                                 Consolidated Statements of Cash Flows (continued)

                                                                             Years Ended December 31,
                                                             ----------------------------------------------------
                                                                  1996               1995               1994
                                                             -------------      -------------      --------------
<S>                                                          <C>                <C>                <C>
Cash flows from financing activities:
     Net proceeds from sale of common stock ............         9,758,807               --                 --
     Deposit receipts ..................................       122,368,827        108,637,226        102,605,184
     Deposit withdrawals ...............................      (123,874,056)      (109,461,879)      (105,070,201)
     Interest credited to deposits .....................         2,328,069          2,132,233          1,659,464
     Proceeds from borrowed money ......................         8,500,000          3,000,000          1,000,000
     Repayment of borrowed money .......................        (2,000,000)        (1,000,000)              --
     Increase (decrease) in advance payments by
       borrowers for taxes and insurance ...............           (12,283)            52,705            (78,147)
     Purchase of treasury stock ........................          (724,718)              --                 --
     Purchase of RRP stock .............................          (578,929)              --                 --
     Dividends paid on common stock ....................          (120,731)              --                 --
                                                             -------------      -------------      -------------

Net cash provided by financing activities ..............        15,644,986          3,360,285            116,300
                                                             -------------      -------------      -------------

Net change in cash and cash equivalents ................        (1,469,450)         1,122,352         (1,183,390)

Cash and cash equivalents at beginning of year .........         4,036,817          2,914,465          4,097,855
                                                             -------------      -------------      -------------

Cash and cash equivalents at end of year ...............     $   2,567,367          4,036,817          2,914,465
                                                             =============      =============      =============


Supplemental disclosure of cash flow information:
Cash paid during the year for:
   Interest ............................................     $   2,930,466          2,656,732          2,201,737
   Income taxes ........................................           265,709            131,000            346,097
  Non-cash investing activities:
   Transfer of loans to foreclosed real estate .........     $        --               48,463             49,617



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

         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  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.

         SFAS 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.
<PAGE>
1)       Summary of Significant Accounting Policies (continued)

         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.

         Investment Securities Held For Trade

         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.

         On January 1, 1995,  the Company  adopted 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.  Substantially all of the Company's lending
         is excluded from the provisions of SFAS 114 and SFAS 118.

         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, 1996
         and no loans to be evaluated for impairment at December 31, 1996.
<PAGE>
1)       Summary of Significant Accounting Policies (continued)

         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.

         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.

         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.

         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 of deferred tax assets
         and  liabilities  of a change in tax rates is  recognized in income for
         the period that includes the enactment date.
<PAGE>
1)       Summary of Significant Accounting Policies (continued)

         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.

         Earnings per Share

         Earnings per share for the year ended  December 31, 1996 was determined
         by dividing net income for the year by  1,027,090  and  1,031,035,  the
         weighted  average  number of both primary and fully  diluted  shares of
         common stock and common stock  equivalents  outstanding.  Stock options
         are regarded as common stock  equivalents and are therefore  considered
         in both  primary and fully  diluted  earnings  per share  calculations.
         Common stock  equivalents are computed using the treasury stock method.
         Earnings  per share  information  for the  prior  year  periods  is not
         meaningful because the Company was not a public company until March 29,
         1996.

         Reclassification

         Certain 1994 and 1995 amounts  have been  reclassified  to conform with
         the 1996 presentation.

2)       Investment Securities, Available for Sale

         Investment  securities available for sale are recorded at fair value in
         accordance with SFAS 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, 1996
United States Government
 securities ................     $8,260,086         54,019         30,752      8,283,353
Marketable equity securities        632,085         23,499           --          655,584
                                 ----------     ----------     ----------     ----------

                                 $8,892,171         77,518         30,752      8,938,937
                                 ==========     ==========     ==========     ==========


 December 31, 1995
United States Government
 securities ................     $6,235,825        149,026          1,066      6,383,785
Marketable equity securities        677,651         35,261         80,000        632,912
                                 ----------     ----------     ----------     ----------

                                 $6,913,476        184,287         81,066      7,016,697
                                 ==========     ==========     ==========     ==========
</TABLE>
<PAGE>
         The  contractual  maturity of the above  investments  is  summarized as
follows:
<TABLE>
<CAPTION>

                                     December 31, 1996            December 31, 1995
                                 -------------------------     -------------------------
                                  Amortized        Fair         Amortized        Fair
  Term to Maturity                   Cost          Value           Cost          Value
  ----------------                   ----          -----           ----          -----
<S>                              <C>            <C>            <C>            <C>
Due in one year or less ....     $  749,722        750,920      1,000,058      1,005,525
Due after one year through
  five years ................     7,284,914      7,306,020      4,851,563      4,976,680
Due after five years through
  ten years .................       225,450        226,413        384,204        401,580
Marketable equity securities        632,085        655,584        677,651        632,912
                                 ----------     ----------     ----------     ----------
                                 $8,892,171      8,938,937      6,913,476      7,016,697
                                 ==========     ==========     ==========     ==========
</TABLE>
         Proceeds from sales of investment  securities available for sale during
         the year ended  December  31,  1996 were  $132,617  with gross gains of
         $52,617  realized  on those  sales.  There were no sales of  investment
         securities  available for sale during the year ended December 31, 1995.
         Proceeds from sales of investment  securities available for sale during
         the year ended  December 31, 1994 were  $2,532,813  with gross gains of
         $37,130 and gross losses of $11,001 realized on those sales. The change
         in net unrealized  gains and losses during the current year of $56,455,
         net of the tax  effect of  $22,582,  resulted  in a  $33,873  charge to
         stockholders' equity.

3)       Investment Securities Held for Trade

         Investment securities held for trade are accounted for at their current
         fair values. Investment securities held for trade at December 31, 1996,
         consists of common stock equity  securities.  The  adjustment  of these
         securities  to  their  current  fair  values  has  resulted  in  a  net
         unrealized gain of $46,484 as of December 31, 1996. There were no sales
         of investment  securities held for trade during the year ended December
         31, 1996.
<PAGE>
4)       Mortgage-Backed Securities, Available for Sale

         Mortgage-backed  securities  available  for sale are  recorded  at fair
         value in  accordance  with SFAS 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, 1996
  Participation Certificates:
   FHLMC - Fixed rate ..........     $3,177,901           2,743          5,293      3,175,351
   FNMA  - Adjustable rate .....         81,640             231           --           81,871
   GNMA  - Adjustable rate .....        755,414           7,053            854        761,613
                                     ----------      ----------     ----------     ----------

                                     $4,014,955          10,027          6,147      4,018,835
                                     ==========      ==========     ==========     ==========


  Weighted average interest rate           6.87%
                                           ====


December 31, 1995
  Participation Certificates:
   FHLMC - Fixed rate ..........     $  444,125           5,692            531        449,286
   FNMA  - Adjustable rate .....         95,390           1,945           --           97,335
   GNMA  - Adjustable rate .....        924,676           8,428            884        932,220
                                     ----------      ----------     ----------     ----------

                                     $1,464,191          16,065          1,415      1,478,841
                                     ==========      ==========     ==========     ==========


  Weighted average interest rate           7.22%
                                           ====
</TABLE>


         There were no sales of  mortgage-backed  securities  available for sale
         during the years ended December 31, 1996,  1995 and 1994. The change in
         net unrealized gains and losses during the current year of $10,770, net
         of  the  tax  effect  of  $4,308,   resulted  in  a  $6,462  charge  to
         stockholders' equity.
<PAGE>
5)       Loans Receivable

         Loans receivable are summarized as follows:
<TABLE>
<CAPTION>

                                                                 December 31,
                                                        ----------------------------
                                                            1996             1995
                                                        -----------      -----------
<S>                                                     <C>              <C>
   Mortgage loans:
     One - to Four - family .......................     $43,668,728       38,056,084
     Multi - family ...............................       3,259,173        3,418,760
     Nonresidential ...............................       8,806,316        4,146,252
     Construction .................................       4,405,490        3,194,225
     Land .........................................         216,899          222,910
                                                        -----------      -----------

    Total mortgage loans ..........................      60,356,606       49,038,231
                                                        -----------      -----------

   Other loans:
     Loans on deposit accounts ....................         185,224          222,464
     Equity lines of credit .......................       2,968,265        2,745,249
     Other consumer ...............................       1,835,654        1,053,155
                                                        -----------      -----------

 Total other loans ................................       4,989,143        4,020,868
                                                        -----------      -----------

Commercial business loans .........................       3,519,034        2,420,231
                                                        -----------      -----------

    Total loans receivable ........................      68,864,783       55,479,330
                                                        -----------      -----------

   Less:
     Loans in process .............................         910,045          268,088
     Deferred loan fees, premiums and discounts-net         234,475          212,966
     Allowance for loan losses ....................         354,631          359,535
                                                        -----------      -----------

   Loans receivable, net ..........................     $67,365,632       54,638,741
                                                        ===========      ===========


   Weighted average interest rate .................            8.10%            8.19%
                                                        ===========      ===========

</TABLE>
<PAGE>
         Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>

                                                Years Ended December 31,
                                      -----------------------------------------
                                         1996            1995            1994
                                      ---------       ---------       ---------
<S>                                   <C>             <C>             <C>

Balance, beginning of year .....      $ 359,535         330,458         290,595
Provision for loan losses ......           --            39,384          61,613
Charge-offs ....................         (4,954)        (10,457)        (22,311)
Recoveries .....................             50             150             561
                                      ---------       ---------       ---------

Balance, end of year ...........      $ 354,631         359,535         330,458
                                      =========       =========       =========
</TABLE>


         Delinquent loans (loans having monthly payments past due ninety days or
         more and  non-accruing)  at  December  31,  1996 and 1995  amounted  to
         approximately $305,000 and $369,000 respectively.

         For the years ended December 31, 1996 and 1995,  gross interest  income
         which would have been recorded had the non-accruing  loans been current
         in  accordance  with their  original  terms  amounted to  approximately
         $23,000 and $17,000 respectively.

         Loans to directors  and  executive  officers  aggregated  approximately
         $220,000 and $602,000 at December 31, 1996 and 1995 respectively.  Such
         loans are made on substantially  the same terms as those for other loan
         customers.
<PAGE>
6)       Office Properties and Equipment

         Office properties and equipment are summarized as follows:
<TABLE>
<CAPTION>

                                                               December 31,
                                                     --------------------------
                                                           1996           1995
                                                       ---------      ---------
<S>                                                  <C>              <C>
         Cost:
        Land -     Munster                           $    40,669         40,669
                   Hammond                                33,300         33,300
                   East Chicago                            5,000          5,000
        Building - Munster                               408,360        408,360
                   Hammond                               241,890        241,890
                   East Chicago                           36,637         36,637
        Leasehold improvements - Dyer                    148,096        148,096
        Furniture and equipment                          682,881        641,414
                                                       ---------      ---------
                                                       1,596,833      1,555,366
                                                       ---------      ---------

      Less accumulated depreciation:
        Building - Munster                               366,494        357,048
                   Hammond                               204,640        187,733
                   East Chicago                            8,839          5,208
        Leasehold improvements - Dyer                     46,587         38,944
        Furniture and equipment                          459,670        357,489
                                                       ---------      ---------
                                                       1,086,230        946,422
                                                       ---------      ---------

      Net book value                                 $   510,603        608,944
                                                       =========      =========

</TABLE>
         Depreciation  of office  properties  and  equipment for the years ended
         December 31,  1996,  1995 and 1994  amounted to $139,808,  $132,848 and
         $130,493 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, 1996 amounted to $2,919  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,  1996,  1995 and 1994  amounted to  $35,028,  $34,552 and
         $38,667 respectively. Rent expense for 1994 includes $5,078 on the East
         Chicago,  Indiana  location  which was being leased prior to the Bank's
         purchase of this facility in December, 1994.
<PAGE>
7)       Accrued Interest Receivable

         Accrued interest receivable is summarized as follows:

<TABLE>
<CAPTION>
                                                             December 31,
                                                    ---------------------------
                                                       1996              1995
                                                    ---------         ---------
<S>                                                 <C>               <C>
Investment securities ......................        $ 114,069           106,976
Mortgage-backed securities .................           23,297             9,496
Loans receivable ...........................          354,680           292,649
Allowance for uncollected interest .........          (39,091)          (22,488)
                                                    ---------         ---------

                                                    $ 452,955           386,633
                                                    =========         =========
</TABLE>
8)       Prepaid Expenses and Other Assets

         Prepaid expenses and other assets consist of the following:
<TABLE>
<CAPTION>

                                                              December 31,
                                                    ----------------------------
                                                         1996              1995
                                                    ----------        ----------
<S>                                                 <C>               <C>
Prepaid insurance premiums .................        $   54,783            26,912
Prepaid conversion costs ...................              --               9,807
Other prepaid expenses .....................            28,244            71,066
Cash surrender value of life
     insurance policies (a) ................           930,353           888,191
Deferred federal and state income
     tax benefit - net (b) .................           124,150            61,850
Miscellaneous ..............................            25,101            18,041
                                                    ----------        ----------

                                                    $1,162,631         1,075,867
                                                    ==========        ==========

</TABLE>

         (a)      The Board of Directors has approved a non-qualified retirement
                  income plan 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 plan. 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,
                  1996 and 1995 under SFAS 109 is as follows:
<PAGE>
<TABLE>
<CAPTION>
                                                      Assets       Liabilities        Net
                                                    ---------      ---------      ---------
      <S>                                           <C>            <C>            <C>
      December 31, 1996

      Loan fees deferred for
       financial reporting purposes ...........     $  41,700           --           41,700
      Accelerated book depreciation ...........         1,500           --            1,500
      Deferred compensation ...................        96,200           --           96,200
      Nondeductible incentive plan expense ....         7,710           --            7,710
      Bad debt reserves established
       for financial reporting purposes .......       141,850           --          141,850
      Increases to tax bad debt reserves
       since January 1, 1988 ..................          --         (125,950)      (125,950)
      Unrealized gain on securities
       available for sale .....................          --          (20,260)       (20,260)
      Unrealized gain on trading
       account securities .....................          --          (18,600)       (18,600)
                                                    ---------      ---------      ---------

                                                    $ 288,960       (164,810)       124,150
                                                    =========      =========      =========

<CAPTION>

                                                      Assets       Liabilities        Net
                                                    ---------      ---------      ---------
      <S>                                           <C>            <C>            <C>
      December 31, 1995

      Loan fees deferred for
       financial reporting purposes ...........     $  71,200           --           71,200
      Accelerated depreciation
       for tax purposes .......................          --           (6,400)        (6,400)
      Deferred compensation ...................        67,800           --           67,800
      Bad debt reserves established
       for financial reporting purposes .......       143,800           --          143,800
      Increases to tax bad debt reserves
       since January 1, 1988 ..................          --         (126,400)      (126,400)
      Unrealized gain on securities
       available for sale .....................          --          (47,150)       (47,150)
      Other ...................................          --          (41,000)       (41,000)
                                                    ---------      ---------      ---------

                                                    $ 282,800       (220,950)        61,850
                                                    =========      =========      =========

</TABLE>
<PAGE>
9)       Deposits

         Deposit accounts are summarized as follows:
<TABLE>
<CAPTION>
                                                                       December 31,
                                                              ---------------------------
                                                                   1996           1995
                                                                ----------     ----------
         <S>                                                  <C>              <C>
         Passbook accounts                                    $ 16,311,084     16,797,882
         Demand deposits and NOW accounts                        6,712,053      6,622,175
         Money market accounts                                   2,454,249      2,678,138

         Certificates of deposit:
           Jumbo                                                 5,696,748      3,823,128
           7-91 days                                             1,115,737      1,129,616
           6-11 months                                           7,100,476      6,966,397
           12-29 months                                         11,153,781     11,963,497
           30 months and over                                    8,142,683      7,906,979
           IRA and Keogh                                         1,724,186      1,700,345
                                                                ----------     ----------

                                                              $ 60,410,997     59,588,157
                                                                ==========     ==========

</TABLE>
         The weighted  average rate on deposit accounts at December 31, 1996 and
         1995 was 4.38% and 4.55% respectively.

         A summary of certificates of deposit by maturity is as follows:
<TABLE>
<CAPTION>

                                                          December 31,
                                                 ---------------------------
                                                      1996           1995
                                                   ----------     ----------
      <S>                                        <C>              <C>
      Within 12 months                           $ 25,692,560     21,582,204
      12 months to 24 months                        6,657,443      6,467,052
      24 months to 36 months                        2,025,883      3,756,952
      36 months to 48 months                          541,980      1,281,568
      Over 48 months                                   15,745        402,186
                                                   ----------     ----------

        Total                                    $ 34,933,611     33,489,962
                                                   ==========     ==========

</TABLE>
<PAGE>
         Interest expense on deposits consists of the following:

<TABLE>
<CAPTION>

                                                  Years Ended December 31,
                                        ----------------------------------------
                                             1996           1995          1994
                                          ---------      ---------     ---------
         <S>                            <C>              <C>           <C>
         Passbook accounts              $   509,836        543,561       613,645
         NOW accounts                       137,192        143,032       128,695
         Money market accounts               88,853        101,801        99,316
         Certificates of deposit          2,024,893      1,799,197     1,366,963
                                          ---------      ---------     ---------

        Total                           $ 2,760,774      2,587,591     2,208,619
                                        ===========      =========     =========

</TABLE>

         The aggregate  amount of deposit accounts with a balance of $100,000 or
         greater was  approximately  $7,200,000  and  $6,900,000 at December 31,
         1996 and 1995,  respectively.  Deposits in excess of  $100,000  are not
         insured by the Federal Deposit Insurance Corporation.

10)      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           1996           1995
         -------------                       ----           ----           ----
         <S>                                  <C>       <C>              <C>
         June 5, 1996                         6.26%     $      -         1,000,000
         September 3, 1996                    5.71             -         1,000,000
         June 5, 1997                         6.50        1,000,000      1,000,000
         October 20, 1997                     5.79        1,500,000           -
         November 3, 1998                     5.87        3,000,000           -
         December 7, 1998                     5.80        3,000,000           -
         December 6, 1999                     5.94        1,000,000           -
                                                          ---------      ------

                                                        $ 9,500,000      3,000,000
                                                         ==========      =========


         Weighted average interest rate                        5.91%          6.16%
                                                               ====           ====
</TABLE>
<PAGE>
         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,  1996,  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.

         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.

11)      Other Liabilities

         Other liabilities include the following:
<TABLE>
<CAPTION>

                                                                December 31,
                                                        ------------------------
                                                            1996           1995
                                                          -------        -------
         <S>                                            <C>              <C>

         Accrued interest on deposits                   $  76,018         68,019
         Accrued interest on borrowings                    24,950          8,210
         Accrued bonus                                     25,000         51,566
         Accrued audit and accounting fees                 16,775         11,225
         Accrued real estate and personal
           property taxes                                  52,500         50,500
         Accrued federal and state income tax              48,489         63,300
         Accrued pension                                   27,500           -
         Deferred compensation (see note 12)              240,519        169,450
         Miscellaneous accounts payable                   197,242        139,714
                                                          -------        -------

                                                        $ 708,993        561,984
                                                          =======        =======

</TABLE>
<PAGE>
12)      Benefit Plans

         The Bank participates in a  non-contributory  qualified 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 present  funding policy is to make the minimum annual  contribution
         as required by applicable regulations.

         The  following  table sets forth the plan's  funded  status and amounts
         recognized in the Bank's consolidated  financial statements at December
         31.
<TABLE>
<CAPTION>
                                                              1996           1995
                                                          ---------      ---------
<S>                                                       <C>            <C>
Projected benefit obligation (actuarial present value
of projected benefits attributed to employee service
to date based on future compensation levels) ........     $ 895,838        860,123
Plan assets at fair value ...........................       804,260        714,509
                                                          ---------      ---------
Plan assets less than projected benefit obligation ..       (91,578)      (145,614)
Unrecognized prior service cost .....................        89,023           --
Unrecognized net (gain) loss ........................      (121,723)        72,000
Unrecognized net obligation, being recognized
over 18 years .......................................        96,778        102,472
                                                          ---------      ---------

(Accrued) prepaid pension costs .....................     $ (27,500)        28,858
                                                          =========      =========
</TABLE>

         Included in the  projected  benefit  obligation is an amount called the
         accumulated  benefit  obligation.  The accumulated  benefit  obligation
         represents  the  actuarial  present  value of  benefits  attributed  to
         employee service and compensation levels to date. At December 31, 1996,
         the accumulated benefit obligation was $709,074. The vested portion was
         $706,057.

         Net pension  expense for the years ended  December 31,  1996,  1995 and
         1994 is being  accounted for per Financial  Accounting  Standards Board
         Statement No. 87, "Employers' Accounting for Pensions" and includes the
         following components:
<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                         ---------------------------------------
                                             1996           1995           1994
                                         --------       --------       --------
<S>                                      <C>            <C>            <C>
Service cost ......................      $ 42,713         37,924         37,841
Interest cost .....................        63,953         45,828         41,063
Actual return on assets ...........       (87,097)      (121,520)        11,320
Net amortization and deferral .....        33,052         78,492        (52,833)
                                         --------       --------       --------

Net pension expense ...............      $ 52,621         40,724         37,391
                                         ========       ========       ========
</TABLE>
<PAGE>
         The discount rate used in  determining  the actuarial  present value of
         the  projected  benefit  obligation  at the  beginning  of the  year to
         determine the net periodic  pension cost and at the end of the year for
         the present  value of the benefit  obligation  during 1996 was 7.5% and
         during 1995 and 1994 was 6.0%. The expected long-term rate of return on
         assets was 9.0% during 1996 and 7.0% during 1995 and 1994, and the rate
         of increase in future compensation was 3.5% in 1996, 1995 and 1994.

         The Bank has  established a  non-qualified  401(k) Plan for officers of
         the Bank. The Plan provides  participating  officers the opportunity to
         defer up to 6% of their  salary  over the next  five  years  into a tax
         deferred accumulation for future retirement.  The Bank will match up to
         50% (3% of salary) of this deferral. In addition,  the Bank established
         a Director  Deferral Plan which provides  participating  directors with
         the  opportunity  to defer all or a portion of their fees over the next
         five years.  Deferred  amounts 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 $29,178,  $22,253 and $16,089 for the years ended
         December 31, 1996, 1995 and 1994 respectively.


13)      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 shares  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,  while  12,370  options were
         reserved for future grants.  No options were exercisable as of December
         31, 1996.

         The Company has elected to follow  Accounting  Principles Board Opinion
         No. 25 "Accounting  for Stock Issued to Employees" (APB 25) and related
         Interpretations in accounting for its employee stock options. Under APB
         25, because the exercise price of the Company's  employee stock options
         equals the market price of the  underlying  stock on the date of grant,
         no compensation expense is recognized.

         The  Company  implemented  SFAS No.  123  "Accounting  for  Stock-Based
         Compensation"   during  1996.  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.
<PAGE>
         The following  summarizes the pro forma net income as if the fair value
         method  of  accounting  for  stock-based  compensation  plans  had been
         utilized for the year ended December 31, 1996:

         Net income (as reported)                                     $ 442,153
         Pro forma net income                                           431,117
         Earnings per share (as reported)                                   .43
         Pro forma earnings per share                                       .42

         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 year ended  December  31,
         1996 was estimated using the Black Scholes Method,  using 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 $132,084 for the year ended December 31, 1996.

         On November 22, 1993, the AICPA issued  Statement of Position No. 93-6,
         "Employers'  Accounting  for  Employee  Stock  Ownership  Plans"  ("SOP
         93-6").  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.  SOP  93-6  is
         effective  for fiscal years  beginning  after  December  31, 1992.  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 year ended
         December  31,  1996,  additional  compensation  expense of $10,880  was
         recognized as a result of implementation of this accounting principle.
<PAGE>
13)      Director, Officer and Employee Plans (continued)

         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 during the quarter ended December 31, 1996
         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
         year ended  December 31, 1996,  $19,297 had been  amortized to expense.
         The unamortized cost, which is comparable to deferred compensation,  is
         reflected as a reduction of stockholders' equity.


14)      Income Taxes

         The Company has adopted Statement of Financial Accounting Standards No.
         109 (SFAS 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 109 which will impact the Bank is the tax
         treatment of bad debt  reserves.  SFAS 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,  1996   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,
                                         -------------------------------------
                                            1996          1995          1994
                                           -------       -------       -------
         <S>                             <C>             <C>           <C>

         Current                         $ 249,696       249,650       198,957
         Deferred (benefit)                (35,410)      (13,950)       40,112
                                           -------       -------       -------

                                         $ 214,286       235,700       239,069
                                           =======       =======       =======
</TABLE>
<PAGE>
         A reconciliation  of the statutory federal income tax rate to effective
         income tax rate is as follows:
<TABLE>
<CAPTION>

                                                            Years Ended December 31,
                                                       --------------------------------
                                                       1996          1995          1994
                                                       ----          ----          ----
         <S>                                           <C>           <C>           <C>
         Statutory federal income tax rate             34.0%         34.0%         34.0%
         State income taxes                             5.0           5.8           5.7
         Other                                         (6.4)         (1.9)         (1.3)
                                                       ----          ----          ----

         Effective income tax rate                     32.6%         37.9%         38.4%
                                                       ====          ====          ====

</TABLE>
         Deferred  income tax expense  (benefit)  consists of the  following tax
         effects of timing differences:
<TABLE>
<CAPTION>
                                                             Years Ended December 31,
                                                    --------------------------------------
                                                        1996          1995          1994
                                                       ------        ------        ------
         <S>                                        <C>             <C>           <C>

         Loan fees                                  $  29,500        12,200        (8,000)
         Depreciation                                  (7,900)       (2,300)        1,800
         Deferred compensation                        (28,400)      (25,300)      (22,700)
         Statutory bad debt deduction in excess of
           (less than) book provision                   1,500         6,400        (1,100)
         Other, net                                   (30,110)       (4,950)       70,112
                                                       ------        ------        ------

                                                    $ (35,410)      (13,950)       40,112
                                                    =========       =======       =======

</TABLE>
15)      Regulatory Capital Requirements

         On August 9, 1989,  the Financial  Institution  Reform,  Recovery,  and
         Enforcement Act of 1989 ("FIRREA") was signed into law. FIRREA mandated
         that  the OTS  adopt  new  capital  standards  which  requires  savings
         associations to satisfy three different capital requirements. Under the
         new standards,  savings  associations must maintain  "tangible" capital
         equal to 1.5% of adjusted total assets, "core" capital equal to 3.0% of
         adjusted  total assets and a  combination  of core and  "supplementary"
         capital equal to 8.0% of "risk-weighted" assets.

         For  purposes  of the  regulation,  the core and  tangible  capital  of
         American Savings, FSB is defined as stockholders' equity,  adjusted for
         unrealized  gains and losses on  securities  available  for sale (other
         than unrealized losses in equity  securities),  net of taxes.  Adjusted
         total assets are the Bank's total assets as determined  under generally
         accepted  accounting  principles,  adjusted  for  unrealized  gains and
         losses on securities available for sale, net of taxes.
<PAGE>
         In determining compliance with the risk-based capital requirement,  the
         Bank is  allowed to use both core  capital  and  supplementary  capital
         provided the amount of  supplementary  capital used does not exceed the
         Bank's core capital.  Supplementary capital of American Savings, FSB is
         defined  to include  all of the  Bank's  general  loss  allowances.  In
         addition, certain exclusions from capital and assets are required to be
         made for the purpose of calculating  total capital,  in addition to the
         adjustments  required for  calculating  core capital.  Such  exclusions
         consist of equity investments as defined by regulation.  The risk-based
         capital  requirement  is measured  against  risk-weighted  assets which
         equals the sum of each asset and the  credit-equivalent  amount of each
         off-balance  sheet item after  being  multiplied  by an  assigned  risk
         weight.

         At December  31,  1996,  the Bank's  regulatory  equity  capital was as
         follows:
<TABLE>
<CAPTION>
                                                       Tangible       Core     Risk-based
                                                        Capital      Capital     Capital
                                                       ----------  ----------  ----------
         <S>                                         <C>           <C>         <C>


         Stockholders' equity                        $ 11,192,355  11,192,355  11,192,355
         Unrealized gain on securities
          available for sale, net of taxes                (30,386)    (30,386)    (30,386)
         General loss allowances                             -           -        354,631
         Direct equity investments                           -           -        (15,000)
                                                       ----------  ----------  ----------

         Regulatory capital computed                   11,161,969  11,161,969  11,501,600
         Minimum capital requirement                    1,280,000   2,561,000   3,701,000
                                                       ----------  ----------  ----------

            Regulatory capital excess                $  9,881,969   8,600,969   7,800,600
                                                       ==========  ==========  ==========

         Computed capital ratio                             13.08%      13.08%      24.86%
         Minimum capital ratio                               1.50        3.00        8.00
                                                            -----       -----       -----

         Regulatory capital excess                          11.58%      10.08%      16.86%
                                                            =====       =====       =====

</TABLE>
         A  reconciliation  of the Bank's equity capital at December 31, 1996 is
         as follows:
<TABLE>
<CAPTION>

         <S>                                                    <C>
         Stockholders' equity                                   $ 15,169,857
         Less Company stockholders' equity not available
          for regulatory capital                                  (3,977,502)
                                                                ------------
         Stockholders' equity of the Bank                       $ 11,192,355
                                                                  ==========
</TABLE>
<PAGE>
16)      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.

         The  Bank's  capital  exceeds  all  of  the  fully  phased-in   capital
         requirements imposed by FIRREA. OTS regulations  generally provide that
         an institution  that exceeds all fully phased-in  capital  requirements
         before and after a proposed  capital  distribution  could,  after prior
         notice but without the approval by the OTS, make capital  distributions
         during the fiscal  year of up to 100% of its net income to date  during
         the fiscal  year plus the  amount  that would  reduce by  one-half  its
         "surplus  capital ratio" (the excess  capital over its fully  phased-in
         capital  requirements)  at the  beginning  of the  calendar  year.  Any
         additional  capital   distributions   would  require  prior  regulatory
         approval.

         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.

17)      SAIF Special Assessment and its Impact on SAIF Insurance Premiums

         The deposits of savings  associations,  such as American Savings,  FSB,
         are  presently  insured  by  the  Savings  Association  Insurance  Fund
         ("SAIF"),  which together with the Bank Insurance Fund ("BIF"), are the
         two  insurance  funds  administered  by the Federal  Deposit  Insurance
         Corporation ("FDIC").  Financial  institutions which are members of the
         BIF are experiencing  substantially  lower deposit  insurance  premiums
         because the BIF has achieved its required  level of reserves  while the
         SAIF  has not yet  achieved  its  required  reserves.  In order to help
         eliminate  this  disparity  and  any  competitive  disadvantage  due to
         disparate   deposit  insurance   premium   schedules,   legislation  to
         recapitalize the SAIF was enacted in September 1996.

         The legislation  requires a special  one-time  assessment of 65.7 cents
         per $100 of SAIF insured  deposits  held by the Bank at March 31, 1995.
         The one-time special assessment has resulted in a charge to earnings of
         approximately  $390,000  during the year ended  December 31, 1996.  The
         after-tax effect of this one-time charge to earnings totaled  $234,000.
         The legislation is intended to fully recapitalize the SAIF fund so that
         commercial  bank and  thrift  deposits  will be  charged  the same FDIC
         premiums  beginning January 1, 1997. As of such date, deposit insurance
         premiums  for  highly  rated  institutions,  such as the Bank,  will be
         substantially reduced.
<PAGE>
         The Bank, however, will continue to be subject to an assessment to fund
         repayment of the Financing Corporation's ("FICO") obligations. The FICO
         assessment for SAIF insured institutions will be 6.48 cents per $100 of
         deposits while BIF insured institutions will pay 1.30 cents per $100 of
         deposits until the year 2000 when the assessment will be imposed at the
         same rate on all FDIC insured institutions. Accordingly, as a result of
         the reduction of the SAIF assessment and the resulting FICO assessment,
         the annual  after-tax  decrease in  assessment  costs is expected to be
         approximately $60,000 based upon a December 31, 1996 assessment base.

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 $725,600 at December 31,
         1996  represent  amounts which the Bank plans to fund within the normal
         commitment  period of 60 to 90 days.  Of this  amount,  $255,000 are in
         fixed rate  commitments  with rates  ranging  from 7.13% to 7.75%,  and
         $470,600  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 which it serves.  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.

         The Bank has  approved,  but  unused,  home  equity  lines of credit of
         approximately  $5,382,000  at December 31,  1996.  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 $580,000 at December 31, 1996. The
         Bank  also has  approved  but  unused  credit  card  lines of credit of
         approximately $618,000.

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 February 1, 1997, the Company  declared a quarterly cash dividend of
         $.06  per  share,  totaling  $64,075,  payable  February  28,  1997  to
         shareholders of record as of February 14, 1997.
<PAGE>
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.
<PAGE>
         The estimated fair value of the Company's  financial  instruments as of
         December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>

                                                                 December 31, 1996
                                                            --------------------------
                                                               Carrying        Fair
                                                                Amount        Value
                                                                ------        -----
<C>                                                         <C>             <C>
Financial assets:
        Cash and cash equivalents                           $  2,567,367     2,567,367
        Investment securities, available for sale              8,938,937     8,938,937
        Investment securities held for trade                     539,500       539,500
        Mortgage-backed securities, available for sale         4,018,835     4,018,835
        Loans receivable                                      67,365,632    66,956,000

         Financial liabilities:
           Deposits                                         $ 60,410,997    60,514,400
           Borrowed money                                      9,500,000     9,390,630

<CAPTION>

                                                                 December 31, 1995
                                                            --------------------------
                                                               Carrying        Fair
                                                                Amount        Value
                                                                ------        -----
<C>                                                         <C>             <C>
Financial assets:
        Cash and cash equivalents                           $  4,036,817     4,036,817
        Investment securities, available for sale              7,016,697     7,016,697
        Mortgage-backed securities, available for sale         1,478,841     1,478,841
        Loans receivable                                      54,638,741    55,574,000

         Financial liabilities:
           Deposits                                         $ 59,588,157    59,992,000
           Borrowed money                                      3,000,000     3,015,000
</TABLE>
22)      Prior Plan of Conversion

         On August 18,  1993,  the Board of  Directors  of the Bank,  subject to
         regulatory  approval and approval by the members of the Bank, adopted a
         Plan of Conversion to convert from a federally chartered mutual savings
         bank to a federally  chartered  stock savings bank with the  concurrent
         formation  of a holding  company.  The  conversion  was  expected to be
         accomplished  through  amendment of the Bank's federal  charter and the
         sale of the holding  company's  common  stock in an amount equal to the
         consolidated pro forma market value of the holding company and the Bank
         after  giving  effect to the  conversion.  In early  1994,  the Plan of
         Conversion was approved by the regulators and members of the Bank.
<PAGE>
         Subsequent to the Bank's special  meeting of members,  but prior to the
         completion  of the  Bank's  conversion  to  stock  form,  the  Bank was
         informed by the Office of Thrift  Supervision that its rating under the
         Community  Reinvestment  Act ("CRA") was being changed to  "substantial
         noncompliance"  and that it  recommended  that the  stock  offering  be
         postponed until this rating was improved. After due consideration,  the
         board  determined  to postpone  the  completion  of the stock  offering
         pending the satisfactory  resolution of the CRA concerns,  Accordingly,
         in March 1994, all subscription funds were refunded to subscribers with
         interest.

         As of December 31, 1994,  the Bank elected to charge off all conversion
         expenses incurred to date totaling approximating  $332,000. This amount
         is reflected in non-interest expense in the consolidated  statements of
         income.

         During the period  from the  termination  of the stock  offering  until
         November 1995, the Bank embarked on a comprehensive  program to enhance
         its community reinvestment  activities.  By the end of that period, the
         Bank was  informed  by the OTS that it would  upgrade  the  Bank's  CRA
         rating to "satisfactory".

         On November 15, 1995, the Board of Directors of the Bank terminated the
         aforementioned  Plan of Conversion and in December,  1995 adopted a new
         Plan of Conversion.


23)      Condensed Parent Company Only Financial Statements

         The  following  condensed  statement  of  financial  condition,  as  of
         December 31, 1996 and condensed statements of income and cash flows for
         the period from March 29, 1996 to December  31, 1996 for AMB  Financial
         Corp.  should be read in conjunction  with the  consolidated  financial
         statements and the notes thereto.
<PAGE>

23)      Condensed Parent Company Only Financial Statements (continued)
<TABLE>
<CAPTION>

                             Statement of Cash Flows
                 Period from March 29, 1996 to December 31, 1996

<S>                                                                <C>
Operating activities:
  Net income ..............................................        $    356,330
  Equity in earnings of the Bank ..........................            (302,801)
  Unrealized gain on securities held for trade ............             (46,484)
  Amortization of cost of stock benefit plan ..............              19,297
  Purchase of trading account securities ..................            (493,016)
  Increase in accrued taxes and other liabilities .........              43,546
                                                                   ------------

Net cash provided for operating activities ................            (423,128)
                                                                   ------------

Investing activities:
  Purchase of capital stock of the Bank ...................          (5,329,053)
  Loan disbursements ......................................          (3,733,530)
  Loan repayments .........................................             803,353
                                                                   ------------

Net cash provided for investing activities ................          (8,259,230)
                                                                   ------------

Financing activities:
  Net proceeds from sale of common stock ..................          10,658,107
  Purchase of treasury stock ..............................            (724,718)
  Purchase of RRP stock ...................................            (578,929)
  Dividends paid on common stock ..........................            (120,731)
                                                                   ------------

Net cash provided by financing activities .................           9,233,729
                                                                   ------------

Net increase in cash and cash equivalents .................             551,371
Cash and cash equivalents at beginning of period ..........                --
                                                                   ------------

Cash and cash equivalents at end of period ................        $    551,371
                                                                   ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                        Statement of Financial Condition
                                December 31, 1996


Assets

Cash and cash equivalents ................................         $    551,371
Investment securities held for trade .....................              539,500
Loans receivable .........................................            2,930,177
Equity investment in the Bank ............................           11,960,459
                                                                   ------------

                                                                     15,981,507
                                                                   ============

Liabilities and Stockholders' Equity

Liabilities:
Accrued taxes and other liabilities ......................               43,546
                                                                   ------------

Stockholders' Equity:
Common stock .............................................               11,241
Additional paid-in capital ...............................           10,646,866
Retained earnings ........................................            6,564,204
Treasury stock ...........................................             (724,718)
Common stock awarded by RRP ..............................             (559,632)
                                                                   ------------

  Total stockholders' equity .............................           15,937,961
                                                                   ------------
                                                                   $ 15,981,507
                                                                   ============
<CAPTION>

                               Statement of Income
                 Period from March 29, 1996 to December 31, 1996


<S>                                                                <C>
Interest income ..........................................         $    207,053
Unrealized gain on securities held for trade .............               46,484
Non-interest expense .....................................             (159,960)
                                                                   ------------

Net income before income taxes
  and equity in earnings of subsidiaries .................               93,577
Provision for income taxes ...............................               40,048
                                                                   ------------
Net income before equity in earnings of
  subsidiaries ...........................................               53,529
Equity in earnings of subsidiaries .......................              302,801
                                                                   ------------
  Net income .............................................         $    356,330
                                                                   ============
</TABLE>
<PAGE>















                               AMB Financial Corp.
                             Stockholder Information

     Annual Meeting

     The annual meeting of stockholders will be held at 10:30 a.m., on April 23,
     1997, 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 1996. 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>
       June 30, 1996  . . . . . . .     11              9 3/4          -----
       September 30, 1996 . . .         11 3/4         10 3/8          $0.06
       December 31, 1996  . . .         13 1/4         11              $0.06
</TABLE>

     The  Company  paid a six cents per share  dividend  to holders of record on
     September  16, 1996 and  November 15,  1996.  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 16 of the  Notes to the
     Consolidated  Financial Statements for information regarding limitations of
     the Bank's ability to pay dividends to the Company.
<PAGE>
     As of December 31,  1996,  the Company had 203  stockholders  of record and
     1,067,919 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


                               AMB Financial Corp.
                              Corporate Information
     Corporate Office

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

     Directors of the Board                    AMB Financial Corp.
                                               Officers

     Clement B. Knapp, Jr.                     Clement B. Knapp, Jr.
     President since 1977.                     Chairman of the Board, President
                                               and 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
     7800 W. 95th Street                       Attorneys at Law
     Hickory Hills, IL  60457                  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


<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:

     Leslie Mullins
     AMB Financial Corp.
     8230 Hohman Avenue
     Munster, Indiana 46321
     (219) 836-5870