EXHIBIT 13


                               1998 ANNUAL REPORT

<PAGE>


TABLE OF CONTENTS

Message from the Chairman and the President......................         1

Selected Consolidated Financial Information......................         2

Management's Discussion and Analysis of Financial
  Condition and Results of Operations............................         4

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

Consolidated Statements of Financial Condition...................        17

Consolidated Statements of Operations............................        19

Consolidated Statements of changes in
  Stockholders' Equity...........................................        20

Consolidated Statements of Cash Flows............................        21

Notes to Consolidated Financial Statements.......................        23

Stockholder and Corporate Information............................        47

<PAGE>


                                                                  March 15, 1999

To Our Shareholders:

            We are pleased to present the 1998 Annual Report of North
Bancshares, Inc. The information in this Annual Report is designed to provide a
detailed financial review of 1998 and our outlook for the future. A detailed
summary of the targets and goals are outlined in the "Management's Discussion
and Analysis" section of the report.

            The year 1998 presented us with many challenges and opportunities.
The dramatic decline in interest rates prompted a record number of mortgage
prepayments and refinancings. We met that challenge head-on by restructuring our
loan portfolio and booking a record number of loans. We continued the process of
diversifying our portfolio of loans to include more higher yielding investment
property and consumer loans while reducing our reliance on higher cost
certificates of deposit as a funding source.

            On January 19th of this year we announced an $.11 per share
quarterly dividend, which amounted to a 10% increase in the regular quarterly
dividend paid during 1998. This increase reflects our strong capital position,
our improved quarterly results, and our optimism for the future of the Company.

            We expanded the Board this past year with the appointment of Frank 
J. Donati. Mr. Donati's background is detailed in the proxy statement and we 
believe his appointment will enhance and strengthen the quality of the Board
as we move into the 21st century.

            The total compounded annual rate of return to shareholders, from
December 22, 1993, the date of conversion, to December 31, 1998, amounts to
approximately 15%. Our commitment has been and will always be long-term
shareholder value. We will do this by focusing on and responding to the needs of
the community and by offering products and services that meet those financial
needs.


                                   Sincerely,



                                   Mary Ann Hass
                                   Chairman of the Board




                                   Joseph A. Graber
                                   President and Chief Executive Officer

<PAGE>


Set forth below is selected financial data of the Company. This financial data
is derived in part from, and should be read in conjunction with, the
Consolidated Financial Statements of the Company and the Notes thereto.

<TABLE>
<CAPTION>

                                                        SELECTED CONSOLIDATED FINANCIAL INFORMATION
                                                                         DECEMBER 31,
                                           ---------------------------------------------------------------------------
                                                   1998          1997             1996            1995          1994
                                           ---------------------------------------------------------------------------
                                                                     (IN THOUSANDS)
======================================================================================================================


SELECTED FINANCIAL CONDITION DATA:

<S>                                            <C>            <C>             <C>              <C>           <C>     
Total assets                                   $125,832       $123,078        $117,473         $111,668      $106,959
Loans receivable, net                            82,123         79,031          73,378           56,161        45,288
Mortgage backed securities held to maturity       4,478          5,841           7,465            9,419        17,015
Mortgage backed securities available for sa      10,884            ---             ---            6,927           ---
Investment securities held to maturity              ---            ---             ---              498         3,493
Investment securities available for sale         14,880         23,250          24,426           27,882        24,695
Investment in mutual funds                          ---            ---             ---              ---         7,796
Deposit accounts                                 76,222         75,041          73,611           75,169        70,178
Borrowed funds                                   34,100         29,100          24,100           11,750        12,976
Stockholders' equity                             13,322         16,448          17,823           21,028        21,602




                                                                       YEAR ENDED DECEMBER 31,
                                           ---------------------------------------------------------------------------
SELECTED OPERATING DATA:                         1998            1997            1996              1995          1994
------------------------                   ---------------------------------------------------------------------------
                                                                                               
Total interest income                          $8,644          $8,751          $8,468            $7,525        $6,310
Total interest expense                          5,104           4,973           4,640             4,144         2,880
                                           ---------------------------------------------------------------------------
Net interest income before                                                                     
  provision for loan losses                     3,540           3,778           3,828             3,381         3,430
Provision for loan losses                           6             ---               8                40            54
                                           ---------------------------------------------------------------------------
Net interest income after provision                                                            
  for loan losses                               3,534           3,778           3,820             3,341         3,376
                                           ---------------------------------------------------------------------------
Non-interest income (loss):                                                                    
  Fees & service charges                          263             211             190               120           105
  Gain on sale of investment                                                                   
    securities and mutual funds, net               75              60              88               245           216
  Gain on sale of loans                             3             ---             ---               ---           ---
  Decline in value of mutual funds                ---             ---             ---               ---          (612)
  Other non-interest income                        18              20              23                19            41
                                           ---------------------------------------------------------------------------
Total non-interest income (loss)                  359             291             301               384          (250)
Non-interest expense                            3,146           3,070           3,464             2,776         2,728
                                           ---------------------------------------------------------------------------
                                                                                               
Income before taxes                               747             999             657               949           398
Income tax expense                                235             363             165               253           353
                                           ---------------------------------------------------------------------------
NET INCOME                                       $512            $636            $492              $696           $45
                                           ===========================================================================
                                                                                              
</TABLE>


                                       2

<PAGE>

<TABLE>
<CAPTION>

                                                                                YEAR ENDED DECEMBER 31,
                                                             ------------------------------------------------------
                                                               1998       1997       1996       1995        1994
                                                             ------------------------------------------------------
SELECTED FINANCIAL RATIOS AND OTHER DATA:
PERFORMANCE RATIOS:
-------------------
<S>                                                          <C>         <C>        <C>         <C>       <C>
 Return on assets (ratio of net income to
  average total assets)                                        0.41%      0.53%      0.42%      0.64%      0.04%
 Interest rate spread information:
  Average during year                                          2.33       2.41       2.53       2.15       2.67
  End of year                                                  2.36       2.51       2.57       2.24       2.23
 Net interest margin                                           2.94       3.19       3.36       3.19       3.54
 Ratio of operating expenses to average
  total assets                                                 2.54       2.54       2.98       2.57       2.75
 Ratio of average interest-earning assets to average
  interest-bearing liabilities                               114.43     118.65     120.61     126.61     129.40


ASSET QUALITY RATIOS:
---------------------

 Non-performing assets to total assets at end of period        0.02       0.00       0.00       0.02       0.03
 Allowance for loan losses to non-performing loans           891.67     N/A(1)     N/A(1)     833.33     500.00
 Allowance for loan losses to loans receivable                 0.26       0.26       0.28       0.36       0.35

CAPITAL RATIOS:
---------------
  Stockholders' equity to total assets                        10.59      13.36      15.17      18.83      20.20
  Average stockholders' equity to average assets              11.18      14.03      16.32      19.71      22.52
  Return on stockholders' equity (ratio of net income to
   average equity)                                             3.70       3.75       2.59       3.27       0.20

NUMBER OF FULL SERVICE OFFICES:                                   2          2          2          2          2
-------------------------------

</TABLE>

(1)  Not applicable because the Company had no non-performing loans as of
December 31, 1996 and 1997.

                                       3
<PAGE>


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

GENERAL

            North Bancshares, Inc. (the "Company") was organized on September
23, 1993 under Delaware law as the holding company for North Federal Savings
Bank (the "Bank"). In connection with the Bank's conversion from a federally
chartered mutual savings bank to a stock savings bank, the Bank issued all of
its common stock to the Company for approximately 50% of the net proceeds of the
conversion. On December 29, 1997, the Company effected a three-for-two stock
split in the form of a 50% common stock dividend. At December 31, 1998, there
were 1,262,893 outstanding shares of common stock. The Company's common stock
trades on The Nasdaq Stock Market under the symbol: "NBSI."

            The primary business of the Company is that of an independent
community-oriented financial institution offering a variety of financial
services to meet the needs of the communities it serves. The Company attracts
deposits from the general public and uses such deposits as well as borrowed
funds to originate or acquire one- to four-family residential mortgages, loans
secured by small apartment buildings or mixed use properties. The Company has
recently begun originating equity lines of credit secured by real estate and has
purchased participating interests in multi-family apartment building loans. The
Company also originates consumer loans in its primary market area and has
established a commercial line of credit with a manufactured housing developer.
The Company invests primarily in federal agency securities, investment grade
securities, mortgage-backed securities, common stock of other financial
institutions and money market accounts.

            The Company's consolidated results of operations are primarily
dependent on net interest income, which is the difference between the interest
earned on interest-earning assets and the interest paid on deposits and
borrowings and, to a lesser degree on non-interest income and non-interest
expense. The Company's operating expenses consist principally of employee
compensation, occupancy expenses, federal deposit insurance premiums and other
general and administrative expenses. The Company's results of operations are
also significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory authorities.


FORWARD-LOOKING STATEMENTS

            When used in this Annual Report, in future filings by the Company
with the SEC, in the Company's press releases or other public or shareholder
communications, and in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result", "are expected to",
"will continue", "is anticipated", "estimate", "project" or similar expressions
are intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties, including but not limited to, changes in
economic conditions in the Company's market area, changes in policies by
regulatory agencies, fluctuations in interest rates, demand for loans in the
Company's market area and competition, that could cause actual results to differ
materially from historical results and those presently anticipated or projected.
The Company wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The Company
wishes to advise readers that the factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ materially from any opinions or statements expressed
with respect to future periods in any current statements.

            The Company does not undertake -- and specifically disclaims any
obligation -- to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.

                                       4
<PAGE>

YEAR 2000 READINESS DISCLOSURES

            The Year 2000 issue arises from the inability of some computer
systems to recognize the year 2000. Many existing computer programs and systems
originally were programmed with six digit dates that provided only two digits to
identify the calendar year in the date field. With the impending new millennium,
these programs and computers will recognize "00" as the year 1900 rather than
the year 2000.

            The Company utilizes and is dependent upon data processing systems
and software to conduct its business. The data processing systems and software
include those developed and maintained by the Company's third-party data
processor and other software purchased which is operated on in-house personal
computers and a wide area network. During 1997, the Company initiated a review
and formed a committee to conduct an assessment of all hardware and software
systems to assess whether they will function properly in the year 2000. To date,
we have not found anything material that would affect the operations of the
Company. The vendors who have been contacted have indicated that their hardware
and software is or will be Year 2000 compliant during the time frames
established by our regulators. In house and third party data processor testing
of mission critical and other hardware and software systems is ongoing. A test
of the Company's third-party data processor's deposit and loan system was
conducted in August 1998. The results of the tests, using various dates in the
year 2000 indicated that all the transactions tested were processed correctly.
The third-party data processor's general ledger system was tested in October
1998. The third-part data processor's item processing and image systems have
been tested are believed to be compliant. The results of these tests indicated
that all transactions and statements were processed correctly.

            A contingency plan, which would involve conversion to an alternate
data processing system, disaster recovery programs in the event of electrical
failures and additional cash requirements is currently under review by
management. The costs associated with the compliance efforts have been
approximately $25,000 to date. It is anticipated that total costs will not
exceed $40,000 and are not expected to have a significant impact on the
Company's ongoing results of operations.


MANAGEMENT STRATEGY

THE COMPANY'S THREE YEAR FINANCIAL GOALS ARE TO:

*  Achieve a 7.5% to 8.5% return on equity (ROE) by the end of fiscal year 2001;
*  Achieve a .65% to .75% return on assets (ROA) by the end of fiscal year 2001;
*  Increase interest-earning assets by approximately 5% to 7% per year;
*  Maintain the Company's record of high asset quality;
*  Improve the loan to assets ratio to between 65% to 75%, of which 10% to 15% 
     would be consumer, multi-family and commercial loans;
*  Reduce certificates of deposit to 50% of total deposits;
*  Increase non-interest income by approximately 10% to 15% annually;
*  Maintain a high dividend payout ratio;
*  Continue to evaluate stock repurchase programs in light of the effect on 
     earnings per share and stock options exercised;
*  Improve efficiency ratio to 65% by the end of fiscal year 2001.

IN ORDER TO ACHIEVE THESE GOALS THE BANK:

*  Will continue to expand consumer lending;
*  Will continue to restructure the loan portfolio to include more investment 
     property loans;

                                       5
<PAGE>

*  Will continue to focus on shifting liabilities from higher cost certificates 
     of deposit to lower cost, fee generating transaction accounts; 
*  Will continue to develop relationships with other financial institutions in
     order to participate in multi-family apartment lending; 
*  Will continue to develop relationships with local high transaction volume 
     customer businesses in order to place additional ATM terminals off
     premises;
*  Will expand our marketing efforts in order to promote products to individuals
     and families who move  into the area, and will continue to promote our 
     products and services on the Bank's Internet Web page;
*  Will continue to review employee benefit plans and other non-interest 
     expenses in order to achieve additional cost savings; 
*  Will continue a review of development alternatives for the Bank's real
     estate.

GOALS ACHIEVED:

* Achieved average loan growth of 16.3% per year from the end of 1994 to the end
     of 1998;
* Diversified loan portfolio during 1998 with 69% of the loan production in 
     two-to four-family and multi family property loans;
* Management continued to develop business relationships with other financial 
     institutions and closed $2.5 million in multi-family participation loans 
     in 1998;
* Loans to assets ratio at the end of 1998 was 65.3%, of which 10.8% were 
     consumer, commercial and multi-family loans;
* The Company has maintained its high level of asset quality during 1998; only
     one loan in the amount of $24,000 was delinquent 90 days or more at 
     December 31, 1998;
* Reduced certificates of deposit from 59.4% of total deposits at the end of 
     1997 to 54.9% at the end of 1998, increased non-interest bearing checking
     accounts by 46.6% from January 1, 1998 to December 31, 1998 and increased 
     money market deposits by $4.6 million or 83.0% During 1998;
* Non-interest income improved 23% during 1998;
* Dividend payout ratio amounted to 100% of diluted earnings per share in 1998;
* Completed eleven stock repurchase programs totaling $10.7 million and the 
     Board of Directors recently approved the twelfth program to repurchase up
     to 50,000 shares;
* Managing excess capital will continue to be a priority.  The equity to assets 
     ratio has been reduced from 20.2% at the beginning of 1994 to 10.6% at the 
     end of 1998;



ASSET/LIABILITY MANAGEMENT

            A key component of successful asset/liability management is the
monitoring and management of interest rate risk sensitivity, which includes the
repricing and maturity of interest-earning assets and interest-bearing
liabilities. The Bank has an Asset-Liability Risk Management Committee and an
Interest Rate Committee that are composed of the Bank's president, executive
vice president, vice president/treasurer, vice-president-services and assistant
vice president/controller. Both committees meet on a regular basis to review the
business plan and assess the Bank's investment portfolio and deposit pricing,
and meets quarterly to assess economic conditions and consider methods of
managing the Bank's asset and liability mix and overall sensitivity to interest
rates.

            A financial institution has a negative interest rate sensitivity gap
for a given period if the amount of its interest-bearing liabilities maturing or
otherwise repricing within such period exceeds the amount of its
interest-earning assets maturing or otherwise repricing within the same period.
Accordingly, in a decreasing interest rate environment, financial institutions
with a negative interest rate sensitivity gap generally will experience greater
decreases in the cost of their interest-bearing liabilities than the yield of
their interest-earning assets. Conversely, in an environment of increasing
interest rates the cost of their interest-bearing liabilities generally will
increase more quickly than the yield of their interest-earnings assets. Changes
in interest rates generally will have the opposite effect on financial
institutions with a positive interest rate sensitivity gap. At December 31,
1998, based on management assumptions for passbook accounts, NOW accounts, money
market deposit accounts, certificates of deposit and borrowed funds, total
interest-bearing liabilities maturing or repricing within 

                                       6
<PAGE>

one year exceeded total interest-earning assets maturing or repricing in the
same period by $10.3 million, representing a cumulative one year gap as a
percentage of interest-earning assets of a negative 8.35%.

            The following table sets forth the repricing dates of the Company's
interest-earning assets and interest-bearing liabilities at December 31, 1998
and the Company's interest rate sensitivity gap percentages at the dates
indicated. The interest rate sensitivity gap is defined as the amount by which
assets repricing within the respective periods exceed liabilities repricing
within such periods. One- to four-family fixed-rate mortgage loans are assumed
to prepay at an annual rate of 24.1%. Consumer loans are also assumed to prepay
at an annual rate of 24.1%. Mortgage-backed securities with contractual
maturities of less than five years are assumed to prepay at an annual rate of
42.6% and those with maturities of more than five years are assumed to prepay at
an annual rate of 40.4%, depending on the stated interest rate. Passbook
accounts are assumed to be withdrawn at annual rates of 17.0%, 17.0%, 17.0%,
16.0% and 33.0%, respectively, during the periods shown. Money market deposit
accounts are assumed to be withdrawn at annual rates of 79.0% in the first six
months and 21.0% during the subsequent periods. Finally, transaction accounts
are assumed to be withdrawn at annual rates of 37.0% during the first year,
32.0% between one and three years, 17.0% between three and five years and 14.0%
for over five years. All prepayment and liability repricing assumptions are
those selected by management for the purpose of assessing the interest rate
sensitivity.

            The effect of these assumptions is to quantify the dollar amount of
items that are interest-sensitive and can be repriced within each of the periods
specified. Such repricing can occur in one of three ways: (1) the rate of
interest to be paid on an asset or liability may adjust periodically on the
basis of an index; (2) an asset or liability such as a mortgage loan may
amortize, permitting reinvestment of cash flows at the then prevailing interest
rates; or (3) an asset or liability may mature, at which time the proceeds can
be reinvested at current market rates.

            For purposes of this gap analysis, loans are reduced by loans in
process, but are not reduced by deferred loan fees or allowance for loan losses.
Investment securities and mortgage-backed securities are shown at amortized
cost.

<TABLE>
<CAPTION>


                                                                         DECEMBER 31, 1998
                                        -------------------------------------------------------------------------------------
                                                         Over 6
                                         6 Months      Months to    Over 1-3     Over 3-5         Over
                                         or less        One Year      Years       Years          5 Years        Total
                                        -------------------------------------------------------------------------------------
                                          Amount         Amount      Amount       Amount         Amount        Amount
                                        -------------------------------------------------------------------------------------
                                                                      (Dollars in thousands)
<S>                                        <C>             <C>            <C>           <C>           <C>       <C>  
Fixed rate one-to-four family and
  multi-family real estate loans        $  8,049      $  7,128      $ 23,435      $ 12,435      $ 14,363     $ 65,410
Consumer and commercial loans              1,575           138            62            21            27        1,823
Mortgage-backed securities                 3,717         2,517         5,941         2,122         1,138       15,435
Adjustable rate one-to-four family and
  multi-family real estate loans           1,336         1,692         7,587         4,641            --       15,256
Investment securities and other(1)        19,945         4,975           501            --           100       25,521
                                        ------------------------------------------------------------------------------
  Total interest-earning assets           34,622        16,450        37,526        19,219        15,628      123,445
                                        ------------------------------------------------------------------------------

Passbook accounts                       $  1,160      $  1,061      $  3,553      $  2,316      $  5,552     $ 13,642
NOW accounts                               1,617         1,318         3,121           835         1,849        8,740
Money market deposit accounts              4,006           644         2,065         1,289         2,139       10,143
Certificate accounts                      20,899         7,675         9,153         4,181            --       41,908
Borrowed funds                            20,000         3,000        10,350           750            --       34,100
                                        ------------------------------------------------------------------------------
  Total interest-bearing liabilities      47,682        13,698        28,242         9,371         9,540      108,533
                                        ------------------------------------------------------------------------------
Interest-earning assets less
  interest-bearing liabilities          ($13,060)     $  2,752      $  9,284      $  9,848      $  6,088     $ 14,912
                                        ---------------------------------------------------------------------=========
Cumulative interest rate
  sensitivity gap                       ($13,060)     ($10,308)     ($ 1,024)     $  8,824      $ 14,912
                                        ==============================================================================
Cumulative interest rate gap as a
  percentage of total assets              (10.38)%       (8.19)%       (0.81)%        7.01%       11.85%
                                        =============================================================================
</TABLE>


                                       7
<PAGE>

<TABLE>
<CAPTION>

<S>                                       <C>            <C>           <C>            <C>         <C>   
Cumulative interest rate gap as a
  percentage of interest-earning assets   (10.58)%       (8.35)%       (0.83)%        7.15%       12.08%
                                        =============================================================================
</TABLE>

----------------------------
(1) Includes investment securities available for sale, FHLB stock and other
interest-earning assets.





            Certain shortcomings are inherent in the method of analysis
presented in the foregoing table. For example, although certain assets and
liabilities may have similar maturities or periods to repricing, they may react
in different degrees to changes in market interest rates. Also, the interest
rates on certain types of assets and liabilities may fluctuate in advance of
changes in market interest rates, while interest rates on other types may lag
behind changes in market rates. Additionally, certain assets, such as
adjustable-rate mortgage loans (ARMs), have features which restrict changes in
interest rates on a short term basis and over the life of the asset. Further, in
the event of a change in interest rates, prepayment and early withdrawal levels
would likely deviate significantly from those assumed in calculating the table.
Finally, the ability of many borrowers to service their debt may decrease in the
event of an interest rate increase.




ANALYSIS OF NET INTEREST INCOME

            Net interest income represents the difference between income on
interest-earning assets and expense on interest-bearing liabilities. Net
interest income depends upon the volume of interest-earning assets and
interest-bearing liabilities and the interest rate earned or paid on them.

            The following table presents for the periods indicated the total
dollar amount of interest income from average interest-earning assets and the
resultant yields, as well as the interest expense on average interest-bearing
liabilities, expressed both in dollars and rates. No tax equivalent adjustments
were made. All average balances are monthly average balances.


<TABLE>
<CAPTION>


                                        --------------------------------------------------------------------------------------------
                                                        1998                         1997                          1996
                                        --------------------------------------------------------------------------------------------
                                          Average     Interest            Average    Interest           Average    Interest
                                        Outstanding   Earned\   Yield\  Outstanding  Earned\   Yield\ Outstanding  Earned\    Yield\
                                          Balance       Paid     Rate     Balance      Paid     Rate    Balance      Paid      Rate
                                        --------------------------------------------------------------------------------------------
                                                                       (Dollars in thousands)


INTEREST-EARNING ASSETS:
<S>                <C>                   <C>        <C>          <C>     <C>        <C>         <C>   <C>        <C>          <C>  
  Loans receivable (1)                   $ 77,962   $  5,924     7.60%   $ 76,376   $  5,968    7.81% $ 65,030   $  5,168     7.95%
  Investment securities                    23,291      1,643     7.05      27,558      1,933    7.02    33,125      2,324     7.02
  Mortgage-backed securities                8,014        481     6.00       6,737        470    6.98     9,956        659     6.62
  Federal funds sold                        6,837        399     5.84       3,627        207    5.71     3,087        165     5.34
  Other                                     4,274        197     4.61       3,989        173    4.34     2,535        152     6.00
                                   -------------------------------------------------------------------------------------------------
   Total interest-earning assets          120,378      8,644     7.18     118,287      8,751    7.40   113,733      8,468     7.45
                                   -------------------------------------------------------------------------------------------------
                                                                         
INTEREST-BEARING LIABILITIES:                                            
  MMDA & NOW accounts                      15,492        468     3.02      13,928        372    2.67    13,755        336     2.44
  Passbook accounts                        14,439        397     2.75      15,495        426    2.75    16,790        459     2.73
  Certificate accounts                     42,472      2,401     5.65      42,082      2,403    5.71    43,954      2,490     5.67
  Borrowed funds                           32,792      1,838     5.61      28,192      1,772    6.29    19,776      1,355     6.86
                                   -------------------------------------------------------------------------------------------------
   Total interest-bearing liabilities     105,195      5,104     4.85      99,697      4,973    4.99    94,295      4,640     4.92
                                    -----------------------------------------------------------------------------------------------
Net interest income                                 $  3,540                        $  3,778                      $ 3,828
                                                    --------                        --------                      -------

</TABLE>
 

                                      8
<PAGE>

<TABLE>
<CAPTION>
<S>                <C>                   <C>        <C>          <C>     <C>        <C>         <C>   <C>        <C>          <C>  
Net interest rate spread                                         2.33%                          2.41%                         2.53%
                                                                 ----                           ----                          ---- 
Net earning assets                       $ 15,183                        $ 18,590                     $ 19,438
                                         --------                        --------                     --------
Net yield on average interest-
 earning assets                                                  2.94%                          3.19%                         3.36%
                                                                 ----                           ----                          ---- 
Average interest-earning assets to
 average interest-bearing liabilities                   114.43%                       118.65%                       120.61%
                                                        ------                        ------                        ------ 

</TABLE>

----------
(1) Calculated net of deferred loan fees, loan discounts, loans in process and
allowance for loan losses.




WEIGHTED AVERAGE YIELD ANALYSIS

            The following table presents the yields received on loans,
mortgage-backed securities, investment securities, federal funds and other and
the rates paid on deposits and borrowed funds and the resultant interest rate
spreads at the dates indicated.


<TABLE>
<CAPTION>
                                                                      At December 31,
                                             ----------------------------------------------------------------------
                                                    1998                    1997                    1996
                                             ----------------------------------------------------------------------
<S>                                                          <C>                     <C>                     <C>  
WEIGHTED AVERAGE YIELD ON:                                                                                         
  Loans receivable                                            7.44%                   7.78%                   7.81%
  Investment securities                                       6.73                    6.90                    6.76
  Mortgage-backed securities (1)                              6.48                    7.18                    7.15
  Federal funds                                               4.52                    5.92                    6.25
  Other                                                       4.83                    5.80                    6.09
                                             ----------------------------------------------------------------------
   Combined weighted average yield on
    interest-earning assets                                   7.05                    7.42                    7.44
                                             ----------------------------------------------------------------------

WEIGHTED AVERAGE RATE PAID ON:                                                                                     
  Passbook accounts                                           2.75                    2.75                    2.75
  MMDA & NOW accounts                                         2.97                    2.55                    2.54
  Certificate accounts                                        5.58                    5.80                    5.62
  Borrowed funds                                              5.34                    5.82                    6.49
                                             ----------------------------------------------------------------------
   Combined weighted average rate paid on   
     interest-bearing liabilities                             4.69                    4.91                    4.87
                                             ----------------------------------------------------------------------


SPREAD                                                        2.36%                   2.51%                   2.57%
                                             ======================================================================

</TABLE>

-------------------------
(1) Mortgage-backed securities are net of premiums and discounts


                                       9

<PAGE>

RATE AND VOLUME ANALYSIS

            The following schedule presents the dollar amount of changes in
interest income and interest expense for major components of interest-earning
assets and interest-bearing liabilities. It distinguishes between the increase
related to changes in outstanding balances (volume) and that due to changes in
interest rates (rates). For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(I) changes in volume (i.e., changes in volume multiplied by current rate) and
(ii) changes in rate (i.e., changes in rate multiplied by old volume). Changes
attributable to both rate and volume which cannot be segregated have been
allocated proportionately to the change due to volume and the change due to
rate.

<TABLE>
<CAPTION>


                                                                   YEAR ENDED DECEMBER 31,
                                     ---------------------------------------------------------------------------
                                                 1997 vs 1998                           1996 vs 1997
                                     ---------------------------------------------------------------------------
                                         Increase (Decrease)                    Increase (Decrease)
                                              Due to          Total                   Due to         Total
                                     ---------------------------------------------------------------------------
                                                             Increase                               Increase
                                        Volume       Rate   (Decrease)          Volume      Rate   (Decrease)
                                     ---------------------------------------------------------------------------
                                                                (In Thousands)
<S>                                      <C>       <C>       <C>                <C>        <C>       <C> 
INTEREST-EARNING ASSETS:
 Loans receivable (1)                    $121      $(165)    $(44)              $887       $(87)     $800
 Investment securities (2)               (301)         9     (292)              (391)       ---      (391)
 Mortgage-backed securities (3)            77        (66)      11               (225)        36      (189)
 Federal funds sold                       187          5      192                 31         11        42
 Other                                     13         12       25                 63        (42)       21
                                     ---------------------------------------------------------------------------
  TOTAL INTEREST-EARNING ASSETS            97       (205)    (108)               365        (82)      283
                                     ---------------------------------------------------------------------------

INTEREST-BEARING LIABILITIES:                                                                             
 MMDA & NOW accounts                       47         49       96                  4         32        36
 Passbook accounts                        (29)       ---      (29)               (36)         3       (33)
 Certificate accounts                      22        (24)      (2)              (106)        19       (87)
 Borrowed funds                           258       (193)      65                529       (112)      417
                                     ---------------------------------------------------------------------------
  TOTAL INTEREST-BEARING LIABILITIES     $298      $(168)    $130               $391       $(58)     $333
                                     ---------------------------------------------------------------------------

CHANGE IN NET INTEREST INCOME                               ($238)                                   $(50)
                                                            ======                                   =====

</TABLE>


                                       10
<PAGE>

---------------------
(1) Calculated net of deferred loan fees, loan discounts, loans in process and
    allowance for loan losses. 
(2) Includes investments classified as available for sale and held to maturity. 
(3) Includes mortgage-backed securities classified available for sale and held 
    to maturity.



FINANCIAL CONDITION

            Total assets increased $2.7 million, or 2.2%, to $125.8 million at
December 31, 1998 from $123.1 million at December 31, 1997. The increase was
primarily attributable to a $3.1 million, or 3.9%, increase in net loans
receivable to $82.1 at December 31, 1998 from $79.0 million on December 31,
1997. The increase in net loans receivable is attributable primarily to funding
approximately $2.5 million in multi-family loan participations with local
financial institutions.

            Mortgage-backed securities available for sale amounted to $10.8
million at December 31, 1998. There were no mortgage-backed securities
classified available for sale at December 31, 1997. The increase was due
primarily to the Company's decision to reallocate certain shorter term
investment securities and liquid assets into higher yielding longer term
investments that are available for sale.

            Deposit accounts increased by $1.2 million, or 1.6%, to $76.2
million on December 31, 1998 from $75.0 million on December 31, 1997. The
increase was primarily attributable to the introduction of an enhanced version
of the Bank's Money Market Deposit Account and the promotion of its "Free
Checking" account and a small business checking account.

            Borrowed funds increased by $5.0 million, or 17.2%, to $34.1 million
at December 31, 1998 from $29.1 million at December 31, 1997. The increase in
borrowed funds was used primarily to fund loan originations and loan
participations. The Company anticipates a reduction in the average cost of
borrowed funds during 1999 compared with 1998 as a result of refinancing higher
rate FHLB advances during 1998.

            Stockholders' equity decreased $3.1 million, or 18.9%, to $13.3
million at December 31, 1998 from $16.4 million at December 31, 1997. The
decrease was primarily attributable to a $3.0 million increase in treasury stock
as a result of $3.9 million in stock repurchases, partially offset by $910,000
in stock options being exercised. Retained earnings remained steady at $11.1
million due to dividend payments offsetting net income for the year.


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

            GENERAL. Net income amounted to $512,000 for the year ended December
31, 1998, a decrease of $124,000 from $636,000 for the year ended December 31,
1997. Diluted earnings per share amounted to $.40 for the year ended December
31, 1998, a decrease of $.02 from $.42 per share for the year ended December 31,
1997. The decrease was primarily attributable to a decline in net interest
income, partially offset by an increase in non-

                                       11
<PAGE>

interest income and a decrease in the weighted average number of shares
outstanding.

            INTEREST INCOME. Interest income was $8.6 million for the year ended
December 31, 1998, a $107,000 decrease from $8.8 million for the year ended
December 31, 1997. There was a decline in the annualized yield on average
interest-earning assets to 7.18% for the year ended December 31, 1998 from 7.40%
for the year ended December 31, 1997. The decline was due primarily to proceeds
from mortgage loan prepayments and higher yielding investment securities called
prior to maturity, which were temporarily reinvested in shorter term lower
yielding investments. Average interest earning assets amounted to $120.4 million
for the year ended December 31, 1998, an improvement of $2.1 million from $118.3
million for the year ended December 31, 1997, which partially offset the yield
reduction.

            INTEREST EXPENSE. Interest expense was $5.1 million for the year
ended December 31, 1998, an increase of $131,000 from $5.0 million for the year
ended December 31, 1997. The increase was attributable to a $65,000 increase in
interest on deposit accounts and a $66,000 increase in interest on borrowed
funds. The average balance of interest-bearing deposit accounts was $72.4
million for the year ended December 31, 1998, an increase of $900,000 from $71.5
million for the year ended December 31, 1997. The average balance of borrowed
funds amounted to $32.8 million for the year ended December 31, 1998, an
increase of $4.6 million from $28.2 million for the year ended December 31,
1997. The annualized average cost of interest-bearing liabilities was 4.85% for
the year ended December 31, 1998, an improvement from 4.99% for the year ended
December 31, 1997, due primarily to a reduction in the average cost of borrowed
funds from 6.29% for the year ended December 31, 1997 to 5.61% for the year
ended December 31, 1998. The decrease in the average cost of borrowed funds is
primarily attributable to refinancing of higher cost FHLB advances at lower
rates.

            PROVISION FOR LOAN LOSSES. The Company added $6,000 to its allowance
for loan losses for the year ended December 31, 1998 compared with no provision
for the year ended December 31, 1997. The increase is primarily attributable to
an increase in the amount of consumer loans in the loan portfolio. The allowance
for loan losses was $214,000 at December 31, 1998 and amounted to .26% of loans
receivable at December 31, 1998 and at December 31, 1997. There was one loan 90
days delinquent at December 31, 1998 which amounted to $24,000. No loans were
delinquent 90 days or more at December 31, 1997. Future additions to the
Company's allowance for loan losses and any change in the related ratio of the
allowance for loan losses to non-performing loans are dependent upon the
performance and composition of the Company's loan portfolio, the economy,
changes in real estate values, interest rates and the view of the regulatory
authorities toward reserve levels and inflation.

            NON-INTEREST INCOME. Non-interest income amounted to $359,000 for
the year ended December 31, 1998, an improvement of $68,000 from $291,000 for
the year ended December 31, 1997. The increase was primarily attributable to a
$52,000 increase in fees and service charges related to a greater number of
transaction accounts that produce fee income in addition to increases in
interchange fees on foreign ATM transactions, debit card transaction fees and
increased safe deposit vault rentals.

            NON-INTEREST EXPENSE. Non-interest expense amounted to $3.1 million
for the year ended December 31, 1998 and December 31, 1997. There was a $93,000
increase in compensation and benefits expense primarily related to increased
personnel and occupancy costs related to extending the hours of operation at the
Chicago office. In addition there was a $115,000 increase in professional fees
primarily related to an unsuccessful hostile takeover attempt and costs
associated with shareholder proposals considered at the annual shareholders
meeting. These increases were partially offset by a $92,000 reduction in other
non-interest expense, related to the establishment of a $34,000 specific reserve
for losses in 1997 which was not established in 1998 and a $74,000 decrease in
recognition and retention plan expense. There was no recognition and retention
plan expense for the year ended December 31, 1998 since all shares became fully
vested. For the year ended December 31, 1998, a total of $141,000 in ESOP
expense, compared with $158,000 for the year ended December 31, 1997 was
recorded along with an offsetting entry to additional paid in capital, and
therefore stockholders' equity was unaffected by the 

                                       12
<PAGE>

transaction.

            INCOME TAX EXPENSE. The allocation for income taxes was $235,000 for
the year ended December 31, 1998, a decrease of $128,000 from $363,000 for the
year ended December 31, 1997. The decrease was primarily attributable to a
decrease in income before income taxes. The effective tax rate was 31.4% for the
year ended December 31, 1998 compared with 36.3% for the year ended December 31,
1997. The decrease in the effective tax rate is primarily attributable to an
Illinois state income tax refund.


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

            GENERAL. Net income for the year ended December 31, 1997 increased
by $144,000 or 29.3% from $492,000 for the year ended December 31, 1996 to
$636,000 for the year ended December 31, 1997. Diluted earnings per share, after
adjusting for the three-for-two stock split, increased by $.12 to $42 per share
for the year ended December 31, 1997 from $.30 per share for the year ended
December 31, 1996.

            INTEREST INCOME. Interest income for the year ended December 31,
1997 increased by $283,000 or 3.4% from $8.5 million for the year ended December
31, 1996 to $8.8 million for the year ended December 31, 1997. The increase was
attributable to a $4.6 million increase in average interest-earning assets from
$113.7 million for the year ended December 31, 1996 to $118.3 million for the
year ended December 31, 1997. The yield on average interest-earning assets
decreased from 7.45% for the year ended December 31, 1996 to 7.40% for the year
ended December 31, 1997.

            INTEREST EXPENSE. Interest expense for the year ended December 31,
1997 increased by $333,000 or 7.2% from $4.6 million for the year ended December
31, 1996 to $5.0 million for the year ended December 31, 1997. The increase was
attributable to a $5.4 million increase in average interest-bearing liabilities
from $94.3 million for the year ended December 31, 1996 to $99.7 million for the
year ended December 31, 1997. In addition, there was an increase in the average
cost of interest-bearing liabilities from 4.92% for the year ended December 31,
1996 to 4.99% for the year ended December 31, 1997.

            PROVISION FOR LOAN LOSSES. The Company did not make an allocation to
its provision for loan losses during 1997 compared with $8,000 for the year
ended December 31, 1996. The total allowance for loan losses amounted to
$208,000 at December 31, 1997 and at December 31, 1996. The allowance for loan
losses, at December 31, 1997, represented .26% of the Company's net loans
receivable. At that date the Company had no non-performing loans. Management
continuously evaluates the adequacy of its allowance for loan losses, based on
past loan experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay, estimated value of
the underlying collateral, and current market conditions. Future additions to
the Bank's allowance for loan losses are dependent upon the performance and
composition of the Bank's loan portfolio, the economy, changes in real estate
values and interest rates, and the view of the regulatory authorities toward
reserve levels and inflation.

            NON-INTEREST INCOME. Non-interest income decreased by $10,000 or
3.3% from $301,000 for the year ended December 31, 1996 to $291,000 for the year
ended December 31, 1997. The decrease was attributable to a $28,000 decrease in
gains on the sale of securities offset by a $18,000 increase in fees, service
charges and other non-interest income. The increase in fees and services charges
was attributable to an increase in the total number of transaction accounts that
produce fee income, interchange fees from foreign ATM transactions and
MasterCard(C) Master Money(TM) transactions and increased safe deposit vault
rentals.

            NON-INTEREST EXPENSE. Non-interest expense decreased by $394,000 or
11.4% from $3.5 million for the year ended December 31, 1996 to $3.1 million for
the year ended December 31, 1997. The decrease was primarily 

                                       13
<PAGE>


attributable to the absence of the $486,000 SAIF special assessment recorded
during 1996 partially offset by a $164,000 increase in compensation expense
which was primarily related to the increase in the market price of the Company's
stock that was allocated under the Employee Stock Ownership Plan, and to
increases in staff as a result of the Bank's expanded hours of operation. For
1997, the Company recorded $158,000 in additional ESOP expense due to the
increase in the market price of the Company's stock during the year, compared
with $62,000 for 1996. An offsetting entry to additional paid in capital was
recorded on the consolidated statements of financial condition and therefore
stockholders' equity is unaffected.

            INCOME TAX EXPENSE. The allocation for federal and state income
taxes increased by $198,000 or 120.0% from $165,000 for the year ended December
31, 1996 to $363,000 for the year ended December 31, 1997. The effective tax
rate increased from 25.1% in 1996 to 36.3% in 1997. The reasons for the increase
in the effective tax rate are an increase in net income before taxes and a
decrease in capital gains generated during 1997, which were offset against a
capital loss carryforward recognized for tax purposes during 1995. A capital
loss carryforward of approximately $297,000 remained available, as of December
31, 1997 to offset future capital gains and will expire in the year 2000.




LIQUIDITY AND CAPITAL RESOURCES

            The Bank's primary source of funds are deposits, borrowings from the
FHLB of Chicago, amortization and prepayment of loans, mortgage-backed
securities and sales, maturities of other investment securities, and
occasionally the use of reverse repurchase agreements. The Bank can also borrow
from its correspondent banks through the use of reverse federal funds. During
1998, the Bank borrowed an additional $5.0 million from the FHLB of Chicago.
Advances from the FHLB of Chicago at December 31, 1998 totaled $34.1 million.
Total deposits increased by $1.2 million during 1998. The Bank uses its liquid
resources to fund loan commitments, meet operating expenses, to invest and to
fund deposit withdrawals. Management believes that loan repayments and the other
sources of funds will be adequate to meet the liquidity needs of the Bank.

            The OTS requires minimum levels of liquid assets. OTS regulations
currently require the Bank to maintain an average daily balance of liquid assets
equal to at least 4% of the sum of its average daily balance of net withdrawable
accounts and borrowings payable in one year or less. At December 31, 1998, the
Bank's liquidity ratio was 8.8% compared with 15.0% for the year ended December
31, 1997. The decrease in liquidity was the result of the redeployment of
shorter term, lower yielding liquid assets into longer term, higher yielding
mortgage loans.

            The primary investing activities of the Bank are lending on owner
occupied and non-owner occupied one-to- four family, condominium and
multi-family residential properties, and purchasing U.S. government agency
securities and mortgage-backed securities. Management intends to continue to
focus its lending efforts on these type of properties, while expanding its
consumer lending with equity line of credit products for homeowners and
investors.

            During the year ended December 31, 1998, the Company originated and
purchased $30.3 million in mortgage, consumer, and commercial loans compared
with $18.1 million during 1997. The Company received $27.6 million in principal
repayments during 1998 compared with $7.9 million during 1997. The Company also
purchased $38.6 million of U. S. Government agency securities and
mortgage-backed securities, and repurchased $3.9 million in Company stock during
1998.

            At December 31, 1998, the Company had $1.8 million in outstanding
loan commitments and unused lines of credit.


                                       14
<PAGE>

            Certificates of deposit scheduled to mature in one year or less at
December 31, 1998, totaled approximately $28.6 million. Management believes,
based on its ability to adjust rates on those accounts to market levels, that a
significant portion of such deposits will remain with the Company. The Company
will continue to focus on shifting its liability mix from higher cost
certificates of deposit to lower cost transaction accounts that do not earn
interest and produce fee income.

            The Company's liquidity, represented by cash and cash equivalents,
is a combination of its operating, investing and financing activities. These
activities are summarized in the Consolidated Statements of Cash Flows for the
years ended December 31, 1998, 1997 and 1996.



CAPITAL REQUIREMENTS

            Current regulatory standards impose the following capital
requirements on the Bank and other thrifts: a risk-based capital standard
expressed as a percentage of risk-adjusted assets, a leverage ratio of core
capital to total adjusted assets, and a tangible capital ratio expressed as a
percentage of total adjusted assets. As of December 31, 1998, the Bank exceeded
its regulatory capital standards. At such date, the Bank's tangible capital,
core capital and risk-based capital of $12.1 million, $12.1 million and $12.3
million, respectively, exceeded the applicable minimum requirements by $10.2
million or 8.2%, $8.4 million or 6.7%, and $8.3 million or 16.6%, respectively.

IMPACT OF INFLATION AND CHANGING PRICES

            The Consolidated Financial Statements and Notes thereto have been
prepared in accordance with generally accepted accounting principles, which
generally requires the measurement of financial position and operating results
without considering the change in the relative purchasing power of money over
time due to inflation. Unlike most industrial companies, nearly all of the
assets and liabilities of the Company are monetary. 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 prices of goods and services.



IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

            In June 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", which is effective for fiscal years beginning after December 15,
1997. This statement establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. The Company determined it does not have
separate operating segments and disclosure requirements under this statement do
not apply.

            In February 1998, FASB issued SFAS No. 132, "Employers' Disclosures 
about Pensions and Other Postretirement Benefits", which is effective for fiscal
years beginning after December 15, 1997. This statement amends the disclosure
requirements of SFAS No. 87, "Employers' Accounting for Pensions", SFAS No. 88,"
Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits" and SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions". The statement
standardizes the disclosure requirements of Statements No. 87 and No. 106 to the
extent practicable and recommends a parallel format for presenting information
about pensions and other postretirement benefits. Statement 132 only addresses
disclosure and does not change any of the measurement or recognition provisions
provided for in Statements No. 87, No. 88, or No. 106. This adoption of this
statement did not have a material effect on the Company's financial statements.

            In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which is effective for the first quarter of
the fiscal year beginning after June 15, 1999. The statement establishes
accounting and reporting standards for derivative instruments embedded in other
contracts and to hedging activities. This statement is not expected to have a
material effect on the Company's financial statements when adopted.

            In October 1998, FASB issued SFAS No. 134, "Accounting for
mortgage-backed securities retained after the securitization of mortgage loans
held for sale by a Mortgage Banking Enterprise", which is effective for fiscal
years beginning after December 15, 1998. The statement requires that after
securitization of mortgage loans held for sale, an entity engaged in mortgage
banking activities classify the resulting mortgage-backed securities or retained
interest based on its ability and intent to sell or hold those investments, as
discussed in SAS 115, "Accounting for Certain Investments in Debt and Equity
Securities." The adoption of this statement is not expected to have a material
effect on the Company's financial statements.


                                       15

<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
North Bancshares, Inc.
Chicago, Illinois:


We have audited the accompanying consolidated statements of financial condition
of North Bancshares, Inc. and subsidiary (Company) as of December 31, 1998 and
1997, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1998. 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of North Bancshares,
Inc. and subsidiary as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998 in conformity with generally accepted accounting
principles.


                                                KPMG LLP



Chicago, Illinois
February 12, 1999


                                       16
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                 Consolidated Statements of Financial Condition

                           December 31, 1998 and 1997

                        (In thousands, except share data)

<TABLE>
<CAPTION>
                              ASSETS                                       1998       1997
                                                                         --------   --------
<S>                                                                      <C>             <C>
Cash and due from banks                                                  $    810        727

Interest-bearing deposits                                                   2,413      2,937

Federal funds sold                                                          5,722      5,976

Investment in dollar denominated mutual funds                                 801      1,477
                                                                         --------   --------

             Total cash and cash equivalents                                9,746     11,117

Investment securities available for sale, at fair value (note 2)           14,880     23,250

Mortgage-backed securities held to maturity,
    at amortized cost (note 3)                                              4,478      5,841

Mortgage-backed securities available for sale, at fair value (note 4)      10,884         --

Stock in Federal Home Loan Bank of Chicago, at cost                         1,705      1,705

Loans receivable, net of allowance for loan losses of $214
    and $208 in 1998 and 1997                                              82,123     79,031

Accrued interest receivable (note 6)                                          849      1,060

Premises and equipment, net (note 7)                                        1,021      1,043

Other assets                                                                  146         31
                                                                         --------   --------

             Total assets                                                $125,832    123,078
                                                                         ========   ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       17
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                 Consolidated Statements of Financial Condition

                           December 31, 1998 and 1997

                        (In thousands, except share data)

<TABLE>
<CAPTION>
          LIABILITIES AND STOCKHOLDERS' EQUITY                               1998          1997
                                                                           ---------     --------
<S>                      <C>                                               <C>             <C>
Liabilities:
  Deposit accounts (note 8)                                                $  76,222       75,041
  Borrowed funds (note 9)                                                     34,100       29,100
  Advance payments by borrowers for taxes and
     insurance                                                                 1,036        1,239
  Accrued interest payable and other liabilities                               1,152        1,250
                                                                           ---------     --------

             Total liabilities                                               112,510      106,630
                                                                           ---------     --------

Stockholders' equity:
  Preferred stock, $.01 par value. Authorized 500,000 shares;
     none outstanding                                                             --           --
  Common stock, $.01 par value. Authorized 3,500,000 shares;
     issued 1,914,105 shares                                                      19           19
  Additional paid-in capital                                                  13,437       13,767
  Retained earnings, substantially restricted                                 11,127       11,139
  Treasury stock, at cost (651,182 and 484,293 shares in 1998 and 1997)      (10,664)      (7,706)
  Accumulated other comprehensive income (loss), net of tax                     (153)        (216)
  Common stock acquired by Employee Stock Ownership
     Plan (note 14)                                                             (444)        (555)
                                                                           ---------     --------

             Total stockholders' equity                                       13,322       16,448


Commitments and contingencies


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

             Total liabilities and stockholders' equity                    $ 125,832      123,078
                                                                           =========     ========
</TABLE>


                                       18
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY
                      Consolidated Statements of Operations

                  Years ended December 31, 1998, 1997, and 1996

                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                     1998     1997     1996
                                                                    ------   ------   ------
<S>                                                                 <C>       <C>      <C>
Interest income:
    Loans receivable                                                $5,924    5,968    5,168
    Interest-bearing deposits and federal funds sold                   472      280      246
    Investment securities available for sale                         1,592    1,832    2,301
    Mortgage-backed securities available for sale                      141       --       77
    Mortgage-backed securities held to maturity                        340      470      582
    Investment in mutual funds                                          51      101       23
    Dividends on FHLB stock                                            124      100       71
                                                                    ------   ------   ------

             Total interest income                                   8,644    8,751    8,468
                                                                    ------   ------   ------

Interest expense:
    Deposit accounts                                                 3,266    3,201    3,285
    Borrowed funds                                                   1,838    1,772    1,355
                                                                    ------   ------   ------

             Total interest expense                                  5,104    4,973    4,640
                                                                    ------   ------   ------

Net interest income before provision for loan losses                 3,540    3,778    3,828
Provision for loan losses (note 5)                                       6       --        8
                                                                    ------   ------   ------

             Net interest income after provision for loan losses     3,534    3,778    3,820
                                                                    ------   ------   ------

Noninterest income:
    Gain on sale of mortgage loans held for sale                         3       --       --
    Gain on sale of investment securities available for sale            75       60       88
    Fees and service charges                                           263      211      190
    Other                                                               18       20       23
                                                                    ------   ------   ------

             Total noninterest income                                  359      291      301
                                                                    ------   ------   ------

Noninterest expense:
    Compensation and benefits                                        1,695    1,602    1,438
    Occupancy expense                                                  479      474      424
    Professional fees                                                  264      149      166
    Data processing                                                    194      169      127
    Advertising and promotion                                          138      133      156
    Federal deposit insurance premium                                   46       47      200
    SAIF assessment                                                     --       --      486
    Recognition and retention plan (note 15)                            --       74       75
    Other                                                              330      422      392
                                                                    ------   ------   ------

             Total noninterest expense                               3,146    3,070    3,464
                                                                    ------   ------   ------

Income before income taxes                                             747      999      657
Income tax expense (note 10)                                           235      363      165
                                                                    ------   ------   ------

             Net income                                             $  512      636      492
                                                                    ======   ======   ======

Earnings per share:
    Basic                                                           $  .42      .45      .31
    Diluted                                                            .40      .42      .30
                                                                    ======   ======   ======
</TABLE>

See accompanying notes to consolidated financial statements.


                                       19
<PAGE>

                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

           Consolidated Statements of Changes in Stockholders' Equity
                  Years ended December 31, 1998, 1997, and 1996
                        (in thousands, except share data)
<TABLE>
<CAPTION>
                                                                                                                         
                                                                                     ADDITIONAL                          
                                                                          COMMON      PAID-IN      RETAINED     TREASURY 
                                                                           STOCK      CAPITAL      EARNINGS      STOCK   
                                                                          -------     -------      -------      -------  
<S>                                                                       <C>         <C>          <C>          <C>    
Balance at December 31, 1995                                              $    14      13,629       10,949       (2,599) 

Net income                                                                     --          --          492           --  
Other comprehensive income, net of tax:
    Change in unrealized gain (loss) on securities available for sale          --          --           --           --  
    Reclassification adjustments in gains included in net income               --          --           --           --  
    Change in minimum pension liability                                        --          --           --           --  
                                                                          -------     -------      -------      -------  
    Comprehensive income (loss)                                                --          --          492           --  

Payment on ESOP loan                                                           --          --           --           --  
Market adjustment for common ESOP shares                                       --          62           --           --  
Amortization of award for RRP stock                                            --          --           --           --  
Purchase of treasury stock, 175,916 shares                                     --          --           --       (2,759) 
Cash dividend ($.27 per share)                                                 --          --         (453)          --  
Options exercised and reissuance of treasury stock                             --          (3)          --           18  
                                                                          -------     -------      -------      -------  
Balance at December 31, 1996                                                   14      13,688       10,988       (5,340) 

Net income                                                                     --          --          636           --  
Other comprehensive income, net of tax:
    Change in unrealized gain (loss) on securities available for sale          --          --           --           --  
    Reclassification adjustments for gains included in net income              --          --           --           --  
    Change in minimum pension liability                                        --          --           --           --  
                                                                          -------     -------      -------      -------  
    Comprehensive income                                                       --          --          636           --  

Payment on ESOP loan                                                           --          --           --           --  
Market adjustment for common ESOP shares                                       --         158           --           --  
Amortization of award of RRP Stock                                             --          --           --           --  
Purchase of treasury stock, 134,350 shares                                     --          --           --       (2,803) 
Cash dividend ($.32 per share)                                                 --          --         (485)          --  
Options exercised and reissuance of treasury stock                             --         (74)          --          437  
3 for 2 stock split effected in the form of a stock dividend                    5          (5)          --           --  
                                                                          -------     -------      -------      -------  
Balance at December 31, 1997                                                   19      13,767       11,139       (7,706) 

Net income                                                                     --          --          512           --  
Other comprehensive income, net of tax:
    Change in unrealized gain (loss) on securities available for sale          --          --           --           --  
    Reclassification adjustments for gains included in net income              --          --           --           --  
    Change in minimum pension liability                                        --          --           --           --  
                                                                          -------     -------      -------      -------  
Comprehensive income                                                           --          --          512           --  

Payment on ESOP loan                                                           --          --           --           --  
Market adjustment for common ESOP shares                                       --         141           --           --  
Purchase of treasury stock, 223,291 shares                                     --          --           --       (3,868) 
Cash dividend ($.40 per share)                                                 --          --         (524)          --  
Options exercised and resistance of treasury stock                             --        (471)          --          910  
                                                                          -------     -------      -------      -------  
Balance at December 31, 1998                                              $    19      13,437       11,127      (10,664) 
                                                                          =======     =======      =======      =======  
</TABLE>

                       [WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
                                                                         ACCUMULATED        COMMON
                                                                            OTHER            STOCK
                                                                        COMPREHENSIVE      ACQUIRED BY     DEFERRED
                                                                      INCOME (LOSS), NET      ESOP       COMPENSATION    TOTAL
                                                                      ------------------   -----------   ------------   -------
<S>                                                                        <C>               <C>           <C>          <C>
Balance at December 31, 1995                                                   (38)             (778)         (149)      21,028 
                                                                                                                                
Net income                                                                      --                --            --          492 
Other comprehensive income, net of tax:                                                                                         
    Change in unrealized gain (loss) on securities available for sale         (821)               --            --         (821)
    Reclassification adjustments in gains included in net income                53                --            --           53 
    Change in minimum pension liability                                         20                --            --           20 
                                                                           -------           -------       -------      ------- 
    Comprehensive income (loss)                                               (748)               --            --         (256)
                                                                                                                                
Payment on ESOP loan                                                            --               111            --          111 
Market adjustment for common ESOP shares                                        --                --            --           62 
Amortization of award for RRP stock                                             --                --            75           75 
Purchase of treasury stock, 175,916 shares                                      --                --            --       (2,759)
Cash dividend ($.27 per share)                                                  --                --            --         (453)
Options exercised and reissuance of treasury stock                              --                --            --           15 
                                                                           -------           -------       -------      ------- 
Balance at December 31, 1996                                                  (786)             (667)          (74)      17,823 
                                                                                                                                
Net income                                                                      --                --            --          636 
Other comprehensive income, net of tax:                                                                                         
    Change in unrealized gain (loss) on securities available for sale          582                --            --          582 
    Reclassification adjustments for gains included in net income               40                --            --           40 
    Change in minimum pension liability                                        (52)               --            --          (52)
                                                                           -------           -------       -------      ------- 
    Comprehensive income                                                       570                --            --        1,206 
                                                                                                                                
Payment on ESOP loan                                                            --               112            --          112 
Market adjustment for common ESOP shares                                        --                --            --          158 
Amortization of award of RRP Stock                                              --                --            74           74 
Purchase of treasury stock, 134,350 shares                                      --                --            --       (2,803)
Cash dividend ($.32 per share)                                                  --                --            --         (485)
Options exercised and reissuance of treasury stock                              --                --            --          363 
3 for 2 stock split effected in the form of a stock dividend                    --                --            --           -- 
                                                                           -------           -------       -------      ------- 
Balance at December 31, 1997                                                  (216)             (555)           --       16,448 
                                                                                                                                
Net income                                                                      --                --            --          512 
Other comprehensive income, net of tax:                                                                                         
    Change in unrealized gain (loss) on securities available for sale         (146)               --            --         (146)
    Reclassification adjustments for gains included in net income               49                --            --           49 
    Change in minimum pension liability                                        160                --            --          160 
                                                                           -------           -------       -------      ------- 
Comprehensive income                                                            63                --            --          575 
                                                                                                                                
Payment on ESOP loan                                                            --               111            --          111 
Market adjustment for common ESOP shares                                        --                --            --          141 
Purchase of treasury stock, 223,291 shares                                      --                --        (3,868)             
Cash dividend ($.40 per share)                                                  --                --            --         (524)
Options exercised and resistance of treasury stock                              --                --            --          439 
                                                                           -------           -------       -------      ------- 
Balance at December 31, 1998                                                  (153)             (444)           --       13,322 
                                                                           =======           =======       =======      ======= 
</TABLE>

See accompanying notes to consolidated financial statements.

                                       20
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                  Years ended December 31, 1998, 1997, and 1996

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                         1998         1997         1996
                                                                       --------     --------     --------
<S>                                                                    <C>           <C>          <C>    
Cash flows from operating activities:
    Net income                                                         $    512          636          492
    Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
        Depreciation and amortization                                        95           96           63
        Provision for deferred income taxes                                  44           43          125
        Provision for loan losses                                             6           --            8
        Deferred loan fees, net of amortization                              74           36         (110)
        Amortization of premiums and discounts                               (6)         (43)        (100)
        ESOP and RRP compensation expense                                   252          344          186
        Gain on sale of investment securities available for sale            (75)         (60)         (88)
        Changes in assets and liabilities:
           (Increase) decrease in accrued interest receivable               211          (35)         (66)
           (Increase) decrease in other assets                             (115)         273         (233)
           Increase (decrease) in other liabilities, net                     87           47         (418)
                                                                       --------     --------     --------

             Net cash provided by (used in) operating activities          1,085        1,337         (141)
                                                                       --------     --------     --------

Cash flows from investing activities:
    Maturities of investment securities available for sale               29,335        5,250        5,000
    Maturities of investment securities held to maturity                     --           --          500
    Purchase of investment securities available for sale                (27,562)     (11,694)     (15,746)
    Proceeds from sales of investment securities available for sale       6,596        8,780       12,180
    Proceeds from sales of mortgage-backed securities
      available for sale                                                     --           --        6,600
    Repayments of mortgage-backed securities
      held to maturity                                                    1,354        1,628        1,953
    Repayments of mortgage-backed securities available for sale             138           --          237
    Purchase of mortgage-backed securities available for sale           (11,097)          --           --
    Loan originations                                                   (31,044)     (18,093)     (26,844)
    Loan repayments                                                      27,872       12,404        9,729
    Purchase of Federal Home Loan Bank of
      Chicago stock                                                          --         (500)        (581)
    Purchase of premises and equipment                                      (73)         (78)        (290)
                                                                       --------     --------     --------

             Net cash used in investing activities                       (4,481)      (2,303)      (7,262)
                                                                       --------     --------     --------
</TABLE>

                                       21                            (Continued)
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                Consolidated Statements of Cash Flows, Continued

                  Years ended December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>
                                                                       1998         1997         1996
                                                                     --------     --------     --------
                                                                                            (in thousands)
<S>                                                                  <C>             <C>         <C>    
Cash flows from financing activities:
    Increase (decrease) in deposit accounts                          $  1,181        1,430       (1,558)
    Increase in borrowed funds                                          5,000        5,000       12,350
    (Decrease) increase in advance payments by
      borrowers for taxes and insurance                                  (203)          36          124
    Payment of cash dividend                                             (524)        (485)        (453)
    Proceeds from stock options exercised                                 439          296           15
    Purchase of treasury stock                                         (3,868)      (2,803)      (2,759)
                                                                     --------     --------     --------

             Net cash provided by financing activities                  2,025        3,474        7,719
                                                                     --------     --------     --------

             Net (decrease) increase in cash and cash equivalents      (1,371)       2,508          316

Cash and cash equivalents at beginning of year                         11,117        8,609        8,293
                                                                     --------     --------     --------

Cash and cash equivalents at end of year                             $  9,746       11,117        8,609
                                                                     ========     ========     ========

Supplemental disclosures of cash flow information -
  cash payments during the year for:
      Interest                                                       $  5,094        4,949        4,586
      Income taxes                                                        370           --          136
                                                                     ========     ========     ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       22                            (Continued)
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996



(1)     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

        North Bancshares, Inc. (the Company) was incorporated in August 1993 as
        a holding company to purchase 100% of the common stock of North Federal
        Savings Bank (Savings Bank) and subsidiary. The Savings Bank converted
        from the mutual form to a stock form institution, and North Bancshares,
        Inc. completed its initial public offering on December 21, 1993 at which
        time it purchased all of the outstanding shares of the Savings Bank. The
        accounting and reporting policies of the Company conform to generally
        accepted accounting principles and to general practice within the thrift
        industry.

        The following is a description of the more significant of those policies
        which the Company follows in preparing and presenting its consolidated
        financial statements.

        (a)   PRINCIPLES OF CONSOLIDATION

              The consolidated financial statements include the accounts of the
              Company, the Savings Bank, and its wholly owned subsidiary, North
              Financial Corporation. All significant intercompany balances and
              transactions have been eliminated in consolidation.

        (b)   MANAGEMENT ESTIMATES

              In order to prepare the consolidated financial statements in
              conformity with generally accepted accounting principles,
              management is required to make certain estimates that affect the
              amounts reported in the consolidated financial statements and
              accompanying notes. These estimates may differ from actual
              results.

        (c)   INVESTMENT AND MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE

              Investment and mortgage-backed securities available for sale are
              securities which may be sold in the future and are recorded at
              estimated fair value. Unrealized gains and losses are included as
              a separate component of stockholders' equity, net of related tax
              effects. Other than temporary declines in the market value of
              securities are charged to operations. Gains and losses on the sale
              of securities are determined using the specific identification
              method.

        (d)   MORTGAGE-BACKED SECURITIES HELD TO MATURITY

              Mortgage-backed securities held to maturity are carried at
              amortized cost, adjusted for amortization of premium or accretion
              of discount over the term of the security using the straight-line
              method. Other than temporary declines in the market value of
              securities are charged to operations. The Company has the positive
              intent and ability to hold such securities to maturity.

        (e)   INVESTMENT IN MUTUAL FUNDS

              The investment in mutual funds is carried at estimated market
              value. Market value is based on the month-end net asset value as
              provided by the funds. Other than temporary declines in the market
              value of mutual funds are charged to operations. Cost of
              securities sold is determined on the basis of average cost.


                                       23                            (Continued)

<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        (f)   LOANS RECEIVABLE

              Loans receivable are stated at unpaid principal balances less
              deferred loan fees and allowance for loan losses. Loan origination
              fees and certain direct costs associated with loan originations
              are deferred. The net amount deferred is accreted to interest
              income using the interest method over the contractual life of the
              loan.

              The allowance for losses on loans is increased by charges to
              operations and decreased by charge-offs (net of recoveries).
              Management's periodic evaluation of the adequacy of the allowance
              is based on past loan loss experience, known and inherent risks in
              the portfolio, adverse situations that may affect the borrowers'
              ability to repay, estimated value of underlying collateral, and
              current market conditions. In addition, various regulatory
              agencies, as an integral part of their examination process,
              periodically review the Savings Bank's allowance for loan losses.
              Such agencies may require the Savings Bank to recognize additions
              to the allowance based on their judgments about information
              available to them at the time of their examination. In the opinion
              of management, the allowance, when taken as a whole, is adequate
              to absorb losses in the portfolio. Interest income on loans is not
              recognized on loans which are 90 days or greater delinquent or on
              loans which management believes are uncollectible.

              Impaired loans are measured at the present value of expected
              future cash flows discounted at the loan's effective interest
              rate, or, as a practical expedient, at the loan's observable
              market price or the fair value of the collateral if the loan is
              collateral dependent. Impaired loans exclude homogenous loans that
              are collectively evaluated for impairment, including one-to-four
              family mortgage loans and consumer loans.

        (g)   PREMISES AND EQUIPMENT

              Depreciation of office property and equipment is accumulated
              primarily on the straight-line method over the estimated useful
              lives of the related assets. Leasehold improvements are amortized
              over the lesser of the estimated useful life of the asset or the
              remaining term of the lease.

        (h)   INCOME TAXES

              Deferred tax assets and liabilities are recognized for future tax
              consequences attributable to the temporary differences existing
              between the financial statement carrying amounts of assets and
              liabilities and their respective tax bases, as well as operating
              loss and tax credit carryforwards. Deferred tax assets and
              liabilities are measured using enacted tax rates expected to apply
              to taxable income in the years in which those temporary
              differences are expected to be recovered or settled. The effect on
              deferred tax assets and liabilities of a change in tax rates is
              recognized as an increase or decrease in income tax expense in the
              period such change is enacted.


                                       24                            (Continued)

<PAGE>

                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        (i)   EARNINGS PER SHARE

              In 1997, the Financial Accounting Standards Board issued Statement
              of Financial Accounting Standards (SFAS) No. 128, "Earnings per
              Share," which replaced the calculation of primary and fully
              diluted earnings per share with basic and diluted earnings per
              share. Basic earnings per share is calculated by dividing income
              available to common stockholders by the weighted average number of
              common shares outstanding. Diluted earnings per share is
              calculated by dividing net income by the weighted average number
              of shares adjusted for the dilutive effect of outstanding stock
              options.

              The following table sets forth the computation of basic and
              diluted earnings per share for the periods indicated:

<TABLE>
<CAPTION>
                                                                    FOR THE YEARS ENDED DECEMBER 31,
                                                             ------------------------------------------------
              (In thousands, except share data)                  1998            1997              1996
                                                             -------------- ---------------   ---------------
<S>                                                          <C>                     <C>                <C>
              Numerator -
                  net income                                 $        512            636                492
              Denominator:
                  Basic earnings per share - weighted
                    average outstanding shares                  1,230,678      1,424,476          1,603,879
                  Effect of dilutive stock options
                    outstanding                                    42,842         77,084             61,158
                  Diluted earnings per share - adjusted
                    weighted average shares outstanding         1,273,520      1,501,560          1,665,037
              Basic earnings per share                       $        .42            .45                .31
              Diluted earnings per share                     $        .40            .42                .30
</TABLE>

        (j)   STOCK SPLIT

              The Company declared a 3 for 2 common stock split on November 11,
              1997, effected in the form of a stock dividend, payable December
              29, 1997 to stockholders of record on December 8, 1997. All
              references in the consolidated financial statements and notes
              thereto as to the number of shares, per share amounts and market
              prices of the Company's common stock, excluding treasury stock,
              have been restated giving retroactive recognition to the stock
              split.

        (k)   CASH AND CASH EQUIVALENTS

              For purposes of the consolidated statements of cash flows, cash
              and cash equivalents include cash and due from banks,
              interest-bearing deposits, dollar denominated mutual funds, and
              federal funds sold.

        (l)   EMPLOYEE STOCK OWNERSHIP (ESOP)

              Compensation expense under the ESOP is equal to the fair value of
              common shares released or committed to be released annually to
              participants in the ESOP. Common stock purchased by the ESOP and
              not committed to be released to participants is included in the
              consolidated statements of financial condition at cost as a
              reduction of stockholders' equity.


                                       25                            (Continued)
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        (m)   FINANCIAL REPORTING OF SEGMENTS

              In June 1997, the Financial Accounting Standards Board issued
              Statement of Financial Accounting Standards No. 131 (SFAS 131),
              "Disclosures about Segments of an Enterprise and Related
              Information." SFAS 131 establishes standards for the way public
              business enterprises report information about operating segments
              in annual financial statements. Operating segments are components
              of an enterprise for which separate financial information is
              available, and is evaluated regularly by management in deciding
              how to allocate resources and in assessing performance. SFAS 131
              establishes standards for related disclosures about products,
              services, geographic areas, and major customers. The Company
              operates as a single segment.

        (n)   RECLASSIFICATION

              Certain reclassifications of prior year amounts have been made
              to conform with the current year presentation.

  (2)   INVESTMENT SECURITIES AVAILABLE FOR SALE

        The amortized cost and estimated fair value of investment securities
        available for sale as of December 31, 1998 and 1997 are summarized as
        follows:

<TABLE>
<CAPTION>
                                                         GROSS          GROSS
                                        AMORTIZED     UNREALIZED      UNREALIZED       ESTIMATED
                                          COST           GAINS          LOSSES        FAIR VALUE
                                       ----------     ----------      ----------      ----------
<S>                                    <C>            <C>             <C>             <C>
        December 31, 1998:
            U.S. Government agency
              securities               $   13,948              5             (31)         13,922
            Equity securities               1,021             --            (163)            858
            Other                             100             --              --             100
                                       ----------     ----------      ----------      ----------

                                       $   15,069              5            (194)         14,880
                                       ==========     ==========      ==========      ==========

<CAPTION>
                                                         GROSS          GROSS
                                        AMORTIZED     UNREALIZED      UNREALIZED       ESTIMATED
                                          COST           GAINS          LOSSES        FAIR VALUE
                                       ----------     ----------      ----------      ----------

        December 31, 1997:
            U.S. Government agency
              securities               $   22,727              6            (103)         22,630
            Equity securities                 418              5              (3)            420
            Other                             200             --              --             200
                                       ----------     ----------      ----------      ----------

                                       $   23,345             11            (106)         23,250
                                       ==========     ==========      ==========      ==========
</TABLE>


                                       26                            (Continued)
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        The amortized cost and estimated fair value of investment securities
        available for sale by contractual maturity at December 31, 1998 are
        shown below. Actual maturities may differ from contractual maturities
        because the borrowers may have the right to call or prepay obligations
        with or without prepayment penalties.

<TABLE>
<CAPTION>
                                                              AMORTIZED      ESTIMATED
                                                                 COST        FAIR VALUE
                                                            -------------  --------------

<S>                                                          <C>                 <C>
        Due after five years through ten years               $   3,507           3,489
        Due after ten years                                     10,541          10,533
        No stated maturity - equity securities                   1,021             858
                                                            -------------  --------------

                                                             $  15,069          14,880
                                                            =============  ==============
</TABLE>

        Proceeds from sales of investment securities available for sale during
        1998 were $6,596, with gross gains of $90, and gross losses of $15.
        Proceeds from sales of investment securities available for sale during
        1997 were $8,780, with gross gains of $217, and gross losses of $157.
        Proceeds from sales of investment securities available for sale during
        1996 were $12,180, with gross gains of $97, and gross losses of $9.

  (3)   MORTGAGE-BACKED SECURITIES HELD TO MATURITY

        The amortized cost and estimated fair value of mortgage-backed
        securities held to maturity are summarized as follows as of December 31,
        1998 and 1997:

<TABLE>
<CAPTION>
                                                             GROSS          GROSS
                                             AMORTIZED     UNREALIZED     UNREALIZED      ESTIMATED
                                               COST          GAINS          LOSSES       FAIR VALUE
                                             ---------     ---------      ---------      ---------
<S>                                          <C>           <C>            <C>            <C>
        December 31, 1998:
            Government National Mortgage
              Association                    $     121             6             --            127
            Federal Home Loan Mortgage
              Corporation                        3,701           104            (41)         3,764
            Federal National Mortgage
              Association                          656             1            (15)           642
                                             ---------     ---------      ---------      ---------

                                             $   4,478           111            (56)         4,533
                                             =========     =========      =========      =========

<CAPTION>
                                                             GROSS          GROSS
                                             AMORTIZED     UNREALIZED     UNREALIZED      ESTIMATED
                                               COST          GAINS          LOSSES       FAIR VALUE
                                             ---------     ---------      ---------      ---------
        December 31, 1997:
            Government National Mortgage
              Association                    $     182             9             --            191
            Federal Home Loan Mortgage
              Corporation                        4,696           155            (57)         4,794
            Federal National Mortgage
              Association                          963            14            (26)           951
                                             ---------     ---------      ---------      ---------

                                             $   5,841           178            (83)         5,936
                                             =========     =========      =========      =========
</TABLE>


                                       27                            (Continued)

<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        There were no sales of mortgage-backed securities held to maturity
        during 1998, 1997, or 1996.

  (4)   MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE

        The amortized cost and estimated fair value of mortgage-backed
        securities available for sale are summarized as follows as of December
        31, 1998:

<TABLE>
<CAPTION>
                                                                             GROSS           GROSS
                                            AMORTIZED     UNREALIZED      UNREALIZED       ESTIMATED
                                              COST          GAINS           LOSSES        FAIR VALUE
                                           ----------     ----------      ----------      ----------
<S>                                        <C>            <C>             <C>             <C>
        December 31, 1998:
            Federal Home Loan Mortgage
              Corporation                  $    9,960             --             (70)          9,890
            Federal National Mortgage
              Association                         997             --              (3)            994
                                           ----------     ----------      ----------      ----------

                                           $   10,957             --             (73)         10,884
                                           ==========     ==========      ==========      ==========
</TABLE>

        There were no sales of mortgage-backed securities available for sale
        during 1998, 1997, or 1996.

 (5)    LOANS RECEIVABLE

        Loans receivable are summarized as follows as of December 31, 1998 and
        1997:

<TABLE>
<CAPTION>
                                                                           1998             1997
                                                                          -------          ------
<S>                                                                       <C>              <C>
         Mortgage loans:
             One-to-four-family                                           $73,568          71,770
             Multi family                                                   7,098           6,459
                                                                          -------          ------

                    Total mortgage loans                                   80,666          78,229

         Commercial loans                                                   1,007             806
         Consumer loans                                                       816             282
                                                                          -------          ------

                    Total loans receivable                                 82,489          79,317
             Less:
                Deferred loan fees, net                                       152              78
                Allowance for loan losses                                     214             208
                                                                          -------          ------

                                                                          $82,123          79,031
                                                                          =======          ======

         Weighted average interest rate                                      7.44%           7.78%
                                                                          =======          ======
</TABLE>


                                       28                            (Continued)
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


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

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

        Balance at beginning of year                 $208    208    200
        Provision for loan losses                       6     --      8
                                                     ----    ---    ---

                           Balance at end of year    $214    208    208
                                                     ====    ===    ===

        Loans receivable delinquent three months or more at December 31, are as
        follows:

                                                                 PERCENTAGE
                                   NUMBER                         OF TOTAL
                                  OF LOANS        AMOUNT           LOANS
                                -------------  --------------  -------------

        1998                          1               24            .03%
        1997                         --               --            .00
        1996                          1                1            .00
                                =============  ==============  =============

        The Company did not have any loans considered to be impaired during
        1998, 1997 or 1996.

        Mortgage loans serviced for others amounted to approximately $82, $129,
        and $137 at December 31, 1998, 1997, and 1996, respectively.

 (6)    ACCRUED INTEREST RECEIVABLE

        Accrued interest receivable is summarized as follows as of December 31,
        1998 and 1997:

<TABLE>
<CAPTION>
                                                          1998          1997
                                                      ------------  -----------
<S>                                                    <C>          <C>
        Loans receivable                               $     487          488
        Mortgage-backed securities                           107           68
        Investment securities                                225          504
        Stock in Federal Home Loan Bank of Chicago            30           --
                                                      ------------  -----------

                                                       $     849        1,060
                                                      ============  ===========
</TABLE>


                                       29                            (Continued)
<PAGE>


                             NORTH BANCSHARES, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


  (7)   PREMISES AND EQUIPMENT

        The cost of premises and equipment, less accumulated depreciation and
        amortization, is summarized as follows as of December 31, 1998 and 1997:

<TABLE>
<CAPTION>
                                                           1998           1997
                                                      -------------   ------------
<S>                                                    <C>                  <C>
        Land                                           $     280            280
        Office building                                    1,138          1,134
        Furniture, fixtures, and equipment                 1,120          1,088
        Leasehold improvements                                87             87
                                                      -------------   ------------

                                                           2,625          2,589
                                                           1,604          1,546
                                                      -------------   ------------

                                                       $   1,021          1,043
                                                      =============   ============
 </TABLE>


        Included in occupancy expense is depreciation and amortization of
        premises and equipment of $95, $96, and $63 for the years ended December
        31, 1998, 1997, and 1996, respectively.


                                       30                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996




(8)     DEPOSIT ACCOUNTS

        Deposit accounts are summarized as follows as of December 31, 1998 and
        1997:

<TABLE>
<CAPTION>
                                                                         1998                             1997
                                                           -------------------------------  -------------------------------
                                                           WEIGHTED                          WEIGHTED
                                                            AVERAGE                           AVERAGE
                                                           OR STATED                         OR STATED
                                                             RATE       AMOUNT     PERCENT      RATE       AMOUNT   PERCENT
                                                           ---------  -----------  -------  -----------   -------   -------
<S>                                                           <C>     <C>            <C>          <C>     <C>         <C>
        Passbook                                              2.75%   $    13,642    17.9%        2.75%   $15,282     20.4%
        Non-interest bearing demand
           accounts                                             --          1,789     2.3           --      1,208      1.6
        NOW accounts                                          2.02          8,740    11.5         2.02      8,429     11.2
        Money market deposit accounts                         3.78         10,143    13.3         3.35      5,544      7.4
                                                         ---------    -----------  -------  -----------   -------    -----

                                                                           34,314    45.0                  30,463     40.6
                                                                      -----------  -------                -------    -----

        Certificate accounts:
           Fixed rate                                    5.75-8.11            459      .6    5.75-8.11        447       .6
           Money market certificates:
             91 day                                           4.34            814     1.1         4.90        736      1.0
             Six month                                        4.82          6,993     9.2         5.43      7,423      9.9
             One year                                         5.15          9,296    12.2         5.61      9,491     12.6
             One and one-half year                            5.43          2,388     3.1         5.85      8,002     10.7
             Two year                                         5.60          2,772     3.6         5.55      2,722      3.6
             Two and one-half year                            5.70            824     1.1         5.74      1,093      1.5
             Three, four, and five year                       6.10         18,362    24.1         6.14     14,664     19.5
                                                         ---------    -----------  -------  ----------    -------    -----

                                                                           41,908    55.0                  44,578     59.4
                                                                      -----------  -------                -------    -----

        Total deposit accounts                                        $    76,222   100.0%                $75,041    100.0%
                                                                      ===========  =======                =======    ======

        Weighted average interest rate                        4.34%                               4.51%
                                                           ========                         ==========

        Contractual maturity of certificate accounts:
             Under 12 months                                          $    28,574    68.2%                $25,601     57.5%
             12 to 36 months                                                9,152    21.8                  14,948     33.5
             Over 36 months                                                 4,182    10.0                   4,029      9.0
                                                                       ----------  -------                -------    -----

                                                                      $    41,908     100%                $44,578    100.0%
                                                                       ==========  =======                =======    =====
</TABLE>


        Certificates of deposit of $100 or more totaled $6,261, $6,137, and
        $5,780 at December 31, 1998, 1997, and 1996, respectively.


                                       31                            (Continued)
<PAGE>

                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        Interest expense for deposit accounts is summarized as follows for the
        years ended December 31, 1998, 1997, and 1996:

<TABLE>
<CAPTION>
                                                            1998      1997     1996
                                                           ------    -----    -----
<S>                                                        <C>         <C>      <C>
        Passbook                                           $  397      426      458
        NOW Accounts                                          159      158      144
        Money market deposit accounts                         309      214      192
        Certificate accounts                                2,401    2,403    2,491
                                                           ------    -----    -----

                                                           $3,266    3,201    3,285
                                                           ======    =====    =====
</TABLE>

(9)     BORROWED FUNDS

        Borrowed funds are summarized as follows as of December 31, 1998 and
1997:

<TABLE>
<CAPTION>
                                                         1998                           1997
                                            ------------------------------- ----------------------------
                                               WEIGHTED                        WEIGHTED
                                               INTEREST                        INTEREST
                                                 RATE           AMOUNT           RATE           AMOUNT
                                            ---------------  -------------- ---------------  -----------
<S>                                         <C>              <C>            <C>              <C>
        Secured advances from the FHLB of
           Chicago maturing:
                   1998                            --%       $         --       6.17%        $    8,000
                   1999                          6.11               3,000       6.11              3,000
                   2001                          5.89               7,350       5.89              7,350
                   2002                          5.43              10,750       5.43             10,750
                   2008                          4.77              13,000        --                  --
                                            ---------------  -------------- ---------------  -----------

                                                 5.34%       $     34,100       5.82%        $   29,100
                                            ===============  ============== ===============  ===========
</TABLE>

        All advances are fixed rate. Certain advances are callable by the FHLB
        on a quarterly basis. Advances in the amount of $10,000 with a scheduled
        maturity of 2002 are callable beginning in 1999. Advances with a
        scheduled maturity of 2008 in the amount of $10,000 are callable
        beginning in 1999, and the remaining $3,000 callable beginning in 2001.

        The Savings Bank has adopted a collateral pledge agreement whereby it
        has agreed to at all times keep on hand, free of all other pledges,
        liens, and encumbrances, first mortgages with unpaid principal balances
        aggregating no less than 167% of the outstanding secured advances from
        the Federal Home Loan Bank of Chicago (FHLB of Chicago). All stock in
        the FHLB of Chicago is pledged as additional collateral for these
        advances.


                                       32                            (Continued)


<PAGE>

                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


(10)    INCOME TAXES

        Income tax expense (benefit) is comprised as follows for the years ended
        December 31, 1998, 1997, and 1996:

<TABLE>
<CAPTION>
                                                            1998           1997         1996   
                                                        ------------   ------------ -----------
<S>                                                     <C>                 <C>           <C>
        Federal:
            Current                                     $    198            336           91
            Deferred                                          93             46          110
                                                        ------------   ------------ -----------

                                                             291            382          201
                                                        ------------   ------------ -----------

        State:
            Current                                           (7)           (16)         (51)
            Deferred                                         (49)            (3)          15
                                                        ------------   ------------ -----------

                                                             (56)           (19)         (36)
                                                        ------------   ------------ -----------

                                                        $    235            363          165
                                                        ============   ============ ===========
</TABLE>

        Income tax expense resulted in an effective tax rate of 31.5%, 36.4% and
        25.1% for the years ended December 31, 1998, 1997, and 1996,
        respectively. The reasons for the difference between the effective tax
        rate and the statutory Federal income tax rate are shown below.

<TABLE>
<CAPTION>
                                                        PERCENTAGE OF EARNINGS BEFORE INCOME
                                                                       TAXES
                                                      -----------------------------------------

                                                              YEARS ENDED DECEMBER 31,
                                                      -----------------------------------------
                                                         1998           1997          1996
                                                      ------------  -------------  ------------
<S>                                                       <C>            <C>            <C>
        Federal income tax rate                           34.0%          34.0           34.0
        Items affecting Federal income tax rate:
            State income tax, net of federal benefit      (7.5)          (1.0)          (7.8)
            Utilization of capital loss carryforward      (2.0)          (2.3)          (4.2)
            Nondeductible compensation expense             5.0            3.1            2.8
            Other, net                                     2.0            2.6             .3
                                                      ------------  -------------  ------------

                   Effective income tax rate              31.5%          36.4           25.1
                                                      ============  =============  ============
</TABLE>


                                       33                            (Continued)


<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        The tax effects of existing temporary differences that give rise to
        significant portions of the deferred tax liabilities and deferred tax
        assets at December 31 are:

<TABLE>
<CAPTION>
                                                                           1998             1997
                                                                      ---------------  ---------------
<S>                                                                    <C>             <C>
        Deferred tax liabilities:
            Dividends received in stock, not recognized for tax
             purposes                                                  $      33               33
            Tax depreciation in excess of book depreciation                  123               34
            Excess of tax bad debt reserve over base year                    107              156
            Deferred loan fees                                                87               71
                                                                      ---------------  ---------------

                   Gross deferred tax liabilities                            350              294
                                                                      ---------------  ---------------

        Deferred tax assets:
            State net operating loss carryforwards                           160              104
            Capital loss carryforward                                         98              115
            Unrealized loss on securities available for sale                 103               39
            Pension expense                                                   41               66
            Allowance for losses on loans                                     83               81
                                                                      ---------------  ---------------

                   Gross deferred tax assets                                 485              405
            Less valuation allowance                                         (98)            (115)
                                                                      ---------------  ---------------

                   Net deferred tax assets                                   387              290
                                                                      ---------------  ---------------

                   Net deferred tax liability (asset)                  $     (37)               4
                                                                      ===============  ===============
</TABLE>

        The Company believes, except as stated below, that it is more likely
        than not that the net deferred tax assets will be realized based on
        historical taxable income levels and anticipated future earnings and
        taxable income levels. A valuation allowance has been established to
        offset the capital loss carryforward at December 31, 1998 and 1997.

        Retained earnings at December 31, 1998 include $3,137 for which no
        provision for Federal income tax has been made. This amount represents
        allocations of income to bad debt deductions for tax purposes only.
        Reduction of amounts so allocated for purposes other than tax bad debt
        losses will create income for tax purposes only, which will be subject
        to the then current corporate income tax rate.

        The Company has a capital loss carryforward of $254 which will expire in
        the year 2000, and net operating loss carryforwards for state income tax
        purposes of approximately $3,370 which will expire in the year 2013.


                                       34                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


(11)    CONVERSION TO STOCK FORM OF OWNERSHIP

        On December 21, 1993, the Company issued 2,082,938 shares of $.01 par
        value common stock at $6.67 share, and became the parent company of the
        Savings Bank. Net proceeds, after deducting conversion expenses of $842,
        were $13,044. During 1994, the Company credited additional paid-in
        capital for the overaccrual of expenses related to the stock conversion
        in the amount of $73. As part of the conversion, the ESOP purchased
        166,635 shares of common stock with the use of a loan from the Company
        in the amount of $1,111.

        As part of the conversion, the Company established a liquidation account
        for the benefit of eligible depositors as of September 30, 1992, the
        eligibility date, who continue to maintain deposits in the Savings Bank
        following the conversion. The balance in this account decreases each
        year in which deposit balances of eligible account holders decline. In
        the unlikely event of a complete liquidation of the Savings Bank, each
        eligible depositor who has continued to maintain deposits in the Savings
        Bank following the conversion will be entitled to receive a liquidation
        distribution from the liquidation account, based on their proportionate
        share of the then total remaining qualifying deposits, prior to any
        distribution to the Company as the sole shareholder of the Savings Bank.
        Dividends cannot be paid from retained earnings allocated to the
        liquidation account.

(12)    PENSION PLAN

        The Company has a qualified noncontributory pension plan covering
        substantially all full-time employees employed more than six months and
        over 20-1/2 years of age, including part-time employees working over
        1,000 hours per year. The Savings Bank's funding policy provides that
        payments to the plan shall be consistent with the Employee Retirement
        Income Security Act of 1974 using the frozen entry age actuarial cost
        method.

        The Company's pension plan data for the years ended December 31, 1998
        and 1997 is shown below.

<TABLE>
<CAPTION>
                                                                        1998            1997
                                                                   ---------------  -------------
<S>                                                              <C>                <C>
        Change in benefit obligation:
            Benefit obligation at beginning of year              $         3,085          2,856
            Service cost                                                      43             43
            Interest cost                                                    235            219
            Actuarial loss                                                    88             86
            Benefits paid                                                   (130)          (119)
                                                                   ---------------  -------------

                      Benefit obligation at end of year          $         3,321          3,085
                                                                   ===============  =============

        Change in plan assets:
            Fair value of plan assets at beginning of year       $         2,702          2,524
            Actual return on plan assets                                     411            183
            Company contributions                                            111            114
            Benefits paid                                                   (130)          (119)
                                                                   ---------------  -------------

                      Fair value of plan assets at end of year   $         3,094          2,702
                                                                   ===============  =============
</TABLE>


                                       35                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>
                                                                          1998        1997
                                                                         -----        ----
<S>                                                                      <C>          <C>  
        Reconciliation of funded status:
            Funded status                                                $(227)       (383)
            Unrecognized net actuarial loss                                400         502
            Unrecognized transition asset                                  (15)        (20)
            Unrecognized prior service cost                                (10)        (11)
                                                                         -----        ----

                      Prepaid benefit cost                               $ 148          88
                                                                         =====        ====
</TABLE>

        Net pension cost for the years ended December 31,  1998, 1997, and 1996
        includes the following components:

<TABLE>
<CAPTION>
                                                               1998        1997        1996
                                                               -----       ----       ----
<S>                                                            <C>           <C>        <C>
        Service cost benefits earned during the year           $  43         43         74
        Interest cost on projected benefit obligation            235        219        208
        Actual return on plan assets                            (236)      (187)      (181)
        Net amortization and deferral                              8        (31)       (13)
                                                               -----       ----       ----

                                                               $  50         44         88
                                                               =====       ====       ====
</TABLE>

        The projected benefit obligation was determined using an assumed
        weighted average discount rate of 7.0%, 7.75%, and 8.0% in 1998, 1997,
        and 1996, respectively, and an assumed compensation increase of 4% in
        1998, 1997, and 1996. The assumed weighted average long-term rate of
        return on plan assets was assumed to be 9% in 1998, 1997, and 1996.

(13)    STOCK OPTION PLAN

        In 1993, the Company adopted a stock option plan (the Plan) pursuant to
        which the Company's Board of Directors may grant stock options to
        directors, officers, and employees of the Company and the Savings Bank.
        The number of common shares authorized under the Plan is 208,294, equal
        to 10% of the total number of shares issued in the initial stock
        offering, and are 100% vested upon date of grant. The exercise price is
        equal to the fair value of the common stock at the date of grant. The
        option term cannot exceed 10 years from the commencement date of the
        Plan of December 21, 1993. At December 31, 1998, there were 6,747
        additional shares available for grant under the Plan.

        The Company follows the disclosure provisions of Financial Accounting
        Standards Board Statement No. 123, "Accounting for Stock-Based
        Compensation" (SFAS No. 123). The per share weighted average fair value
        of stock options granted during 1998 and 1997 was $.58 and $1.99,
        respectively, on the dates of grant using the Black-Scholes option
        pricing model. The following weighted average assumptions were used for
        grants issued for the years ended December 31, 1998 and 1997,
        respectively: expected dividend yield of 3.25% and 2.5%; expected
        volatility factors of .05% and .04%; risk-free interest rates of 4.8%
        and 5.4%; and expected lives of 10 years. There were no stock options
        granted in 1996.


                                       36                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        Under SFAS No. 123, the Company is required to disclose pro forma net
        income and earnings per share for 1998, 1997, and 1996 as if
        compensation expense relative to the fair value of options granted had
        been included in earnings. Had the Company determined compensation
        expense based on the fair value at the grant date for its stock options
        under SFAS No 123, the Company's net income would have been reduced to
        the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                            1998         1997        1996
                                                                           ------        -----       ----
<S>                                                                        <C>             <C>        <C>
        Net income:                                                       
            As reported                                                    $  512          636        492
            Pro forma                                                         507          614        492
                                                                          
        Earnings per share:                                               
            Basic:                                                        
               As reported                                                    .42          .45        .31
               Pro forma                                                      .41          .43        .31
                                                                          
            Diluted:                                                      
               As reported                                                    .40          .42        .30
               Pro forma                                                      .40          .41        .30
                                                                           ======        =====       ====
</TABLE>

        A summary of the status of the Company's stock option transactions under
        the Plan for the years ended December 31, 1998, 1997, and 1996 is
        presented below:

<TABLE>
<CAPTION>
                                            1998                     1997                   1996
                                   ----------------------    ---------------------   ---------------------
                                                WEIGHTED-                WEIGHTED-               WEIGHTED-
                                                 AVERAGE                 AVERAGE                 AVERAGE
                                                 EXERCISE                EXERCISE                EXERCISE
                                    SHARES        PRICE       SHARES       PRICE     SHARES       PRICE
                                   ----------  ----------    -------     ---------   -------     ---------
<S>                                <C>           <C>         <C>          <C>        <C>          <C>
        Outstanding at
            beginning of year      142,553       $   7.39    174,549      $ 6.75     176,631      $  6.75
        Granted                     12,500          13.95     12,416       13.66          --           --
        Exercised                  (56,402)          7.01    (44,412)       6.67      (2,082)        6.67
                                   -------       --------    -------      ------     -------      -------

        Outstanding and
            exercisable at
            end of year             98,651           8.44    142,553        7.39     174,549         6.75

        =================================================================================================
</TABLE>

        At December 31, 1998, the range of exercise prices and weighted average
        remaining contractual life of outstanding options was $6.67 to $13.95
        and 5 years, respectively.


                                       37                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


(14)    EMPLOYEE STOCK OWNERSHIP PLAN

        In conjunction with the Savings Bank's conversion, the Company formed an
        Employee Stock Ownership Plan (ESOP). The ESOP covers substantially all
        employees with more than six months of employment who have attained the
        age of 20-1/2. The plan was funded by a loan in the amount of $1,111
        from North Bancshares, Inc. to the ESOP Trust at a rate of 8% with
        principal and interest payments due quarterly maturing on December 31,
        2002. The loan is secured by the shares of North Bancshares, Inc.
        purchased with the loan proceeds. The Savings Bank has committed to make
        contributions to the ESOP sufficient to allow the ESOP to fund its debt
        service requirements on the loan. The ESOP purchased 166,635 common
        shares of North Bancshares, Inc. in the conversion with the loan
        proceeds. In accordance with generally accepted accounting principles,
        the balance of the ESOP loan has been reported as a reduction of
        stockholders' equity on the Company's consolidated statements of
        financial condition in the amounts of $444 and $555 at December 31, 1998
        and 1997, respectively. In 1998 and 1997, contributions to the ESOP
        which were used to fund principal and interest payments on the ESOP debt
        totaled $152 and $161, respectively.

(15)    RECOGNITION AND RETENTION PLAN

        In conjunction with the Savings Bank's conversion, the Company formed a
        Recognition and Retention Plan (RRP). Pursuant to the RRP, restricted
        stock awards representing up to 4% of the shares of common stock that
        would be outstanding upon completion of the conversion (83,318 shares)
        may be granted to directors and executive officers of the Company.
        Restricted stock awards for 73,314 shares were distributed from
        authorized but unissued shares. The awards vest at a rate of 20% per
        year, beginning December 31, 1993. The cost of common shares awarded is
        amortized to compensation expense as the participants vest in the shares
        and the unamortized cost is reflected as a reduction of stockholders'
        equity as deferred compensation. At December 31, 1997, all 73,314 shares
        have vested. The Company recorded compensation expense in 1997 and 1996
        of $74 and $75, respectively. The awards were fully vested as of
        December 31, 1997.

(16)    COMPREHENSIVE INCOME

        In June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive
        Income," which is effective for fiscal years beginning after December
        15, 1997. This statement establishes standards for reporting and display
        of comprehensive income and its components (revenues, expenses, gains,
        and losses) in a full set of general-purpose financial statements. This
        statement requires that all items that are required to be recognized
        under accounting standards as components of comprehensive income be
        reported in a financial statement that is displayed with the same
        prominence as other financial statements. The Company adopted this
        statement effective January 1, 1998.


                                       38                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        The following table sets forth the required disclosures of the
        reclassification amounts as presented on the statement of changes in
        stockholders' equity and the related tax effects allocated to each
        component of other comprehensive income for the periods indicated.

<TABLE>
<CAPTION>
                                                                      BEFORE          TAX            NET
                                                                        TAX        (EXPENSE)       OF TAX
                                                                      AMOUNT        BENEFIT        AMOUNT
                                                                    ------------ --------------- ------------
<S>                                                                 <C>          <C>             <C>
        Year ended December 31, 1998:
           Disclosure of reclassification amount:
               Unrealized holding loss on securities arising
                 during the period                                    $  (242)           96          (146)
               Less:  reclassification adjustment for gain
                 included in net income                                    75           (26)           49
               Reduction of liability for employee pension plan           268          (108)          160
                                                                    ------------ --------------- ------------

        Change in other comprehensive income                          $   101           (38)           63
                                                                    ============ =============== ============

        Year ended December 31, 1997:
           Disclosure of reclassification amount:
               Unrealized holding gain on securities
                 arising during the period                            $ 1,000          (418)          582
               Less:  reclassification adjustment for gain
                 included in net income                                    60           (20)           40
               Additional liability adjustment for employee
                 pension plan                                             (86)           34           (52)
                                                                    ------------ --------------- ------------

        Change in other comprehensive income                          $   974          (404)          570
                                                                    ============ =============== ============

        Year ended December 31, 1996:
           Disclosure of reclassification amount:
               Unrealized holding loss on securities
                 arising during the period                            $(1,368)          547          (821)
               Less:  reclassification adjustment for gain
                 included in net income                                    88           (35)           53
               Reduction of liability for employee pension plan            34           (14)           20
                                                                    ------------ --------------- ------------

        Change in other comprehensive income (loss)                   $(1,246)          498          (748)
                                                                    ============ =============== ============
</TABLE>


                                       39                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


(17)    REGULATION AND SUPERVISION

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

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

        As of December 31, 1998 and 1997, the most recent notification from the
        Office of the Thrift Supervision categorized the Savings Bank as
        adequately capitalized under the regulatory framework for prompt
        corrective action. To be categorized as adequately capitalized, the
        Savings Bank must maintain minimum total risk-based, Tier I risk-based,
        Tier I leverage, and tangible capital ratios as set forth in the table.
        There are no conditions or events since that notification that
        management believes have changed the institution's category.

        The actual and minimum capital amounts and ratios of the Savings Bank as
        of December 31, 1998 and 1997 are presented in the table below.

<TABLE>
<CAPTION>
                                                                                     FOR CAPITAL ADEQUACY
                                                            ACTUAL                         PURPOSES
                                                -------------------------------  ------------------------------
                                                    AMOUNT           RATIO          AMOUNT           RATIO
                                                ---------------  --------------  --------------  --------------
<S>                                              <C>             <C>             <C>             <C>
        As of December 31, 1998:
            Total capital (to risk weighted
              assets)                            $   12,316          24.58%       $   4,009          8.0%
            Tier 1 capital (to risk weighted
              assets)                                12,102          24.15              N/A          N/A
            Tier 1 Capital (to average assets)       12,102           9.68            3,749          3.0
            Tangible capital (to average
              assets)                                12,102           9.68            1,874          1.5
                                                ===============  ==============  ==============  ==============

        As of December 31, 1997:
            Total capital (to risk weighted
              assets)                            $   11,771          25.38%       $   3,710          8.0%
            Tier 1 capital (to risk weighted        
              assets)                                11,563          24.93              N/A          N/A
            Tier 1 Capital (to average assets)       11,563           9.73            3,656          3.0
            Tangible capital (to average            
              assets)                                11,563           9.73            1,828          1.5
                                                ===============   =============   =============   =============
</TABLE>


                                       40                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


(18)    COMMITMENTS AND CONTINGENCIES AND FINANCIAL
                  INSTRUMENTS WITH OFF-BALANCE SHEET RISK

        The Company is a party to financial instruments with off-balance sheet
        risk in the normal course of its business. These instruments include
        commitments to originate loans and lines of credit and involve credit
        and interest rate risk in excess of the amount recognized in the
        consolidated statements of financial condition. The Company evaluates
        each customer's creditworthiness on a case-by-case basis.

        Commitments to originate loans at December 31, 1998 and 1997 of $1,814
        and $957, respectively, represent amounts which the Company plans to
        fund within the normal commitment period of 60 to 90 days. The
        commitments to originate loans at December 31, 1998 represent
        commitments for fixed rate loans with an average interest rate of 7.10%
        Because the creditworthiness of each customer is reviewed prior to the
        extension of the commitment, the Company adequately controls credit risk
        on these commitments, as it does for loans recorded on the consolidated
        statements of financial condition. The Company conducts substantially
        all of its lending activities in the Chicagoland area in which it
        serves.

(19)    DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INVESTMENTS

        Statement of Financial Accounting Standards No. 107, "Disclosures about
        Fair Value of Financial Instruments" (Statement 107), requires the
        disclosure of estimated fair values of all asset, liability, and
        off-balance sheet financial instruments. The estimated fair value
        amounts under Statement 107 have been determined as of a specific point
        in time utilizing various available market information, assumptions, and
        appropriate valuation methodologies. Accordingly, the estimated fair
        values presented herein are not necessarily representative of the
        underlying value of the Company. Rather the disclosures are limited to
        reasonable estimates of the fair value of only the Company's financial
        instruments. The use of assumptions and various valuation techniques, as
        well as the absence of secondary assets for certain financial
        instruments, will likely reduce the comparability of fair value
        disclosures between financial institutions. The Company does not plan to
        sell most of its assets or settle most of its liabilities at these fair
        values. The estimated fair values of the Company's financial instruments
        as of December 31 are set forth in the following table.

<TABLE>
<CAPTION>
                                                             DECEMBER 31, 1998           DECEMBER 31, 1997
                                                         --------------------------  --------------------------
                                                           CARRYING        FAIR        CARRYING        FAIR
                                                            AMOUNT        VALUE         AMOUNT        VALUE
                                                         -------------  -----------  -------------  -----------
<S>                                                       <C>                 <C>            <C>          <C>
        Financial assets:
           Cash and due from banks                        $      810          810            727          727
           Interest-bearing deposits                           2,413        2,413          2,937        2,937
           Federal funds sold                                  5,722        5,722          5,976        5,976
           Investment in dollar denominated
             mutual funds                                        801          801          1,477        1,477
           Investment securities available for sale           14,880       14,880         23,250       23,250
           Mortgage-backed securities held to maturity         4,478        4,533          5,841        5,936
           Mortgage-backed securities
             available for sale                               10,884       10,884             --           --

           Loans receivable                                   82,123       82,879         79,031       80,679
           Accrued interest receivable                           849          849          1,060        1,060
                                                         -------------  -----------  -------------  -----------

                                                          $  122,960      123,475        120,299      122,042
                                                         =============  ===========  =============  ===========
</TABLE>


                                       41                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>
                                                 DECEMBER 31, 1998           DECEMBER 31, 1997
                                            --------------------------------------------------------
                                              CARRYING        FAIR        CARRYING         FAIR
                                               AMOUNT        VALUE         AMOUNT         VALUE
                                            -------------  -----------  -------------- -------------
<S>                                          <C>           <C>          <C>            <C>
        Financial liabilities:
            Deposit accounts                 $   76,222       76,683         75,041       75,215
            Borrowed funds                       34,100       34,162         29,100       28,703
            Accrued interest payable                246          246            236          236
                                            -------------  -----------  -------------- -------------

                                             $  110,568      111,091        104,377      104,154
                                            =============  ===========  ============== =============
</TABLE>

        The following methods and assumptions were used by the Company to
        estimate the fair value of its financial instruments.

        (a)   CASH AND DUE FROM BANKS, INTEREST-BEARING DEPOSITS, AND
                    FEDERAL FUNDS SOLD

              For these short-term instruments, the carrying amount is a
              reasonable estimate of fair value.

        (b)   INVESTMENT IN DOLLAR DENOMINATED MUTUAL FUNDS

              The fair value of investment in dollar denominated mutual funds is
              based on quoted market prices.

        (c)   INVESTMENT AND MORTGAGE-BACKED SECURITIES

              The fair value of investment and mortgage-backed securities is the
              quoted market price, if available. If a quoted market price is not
              available, fair value is estimated using quoted market prices for
              similar securities.

        (d)   LOANS RECEIVABLE

              Fair values are estimated for portfolios of performing loans with
              similar financial characteristics. For certain homogeneous
              categories of loans, such as some residential real estate
              mortgages, fair value is estimated using quoted market prices. If
              no quoted market price exists for a category of loans, fair value
              is estimated based on current prices offered by the Savings Bank
              for similar loans. For loans that reprice frequently at market
              rates, the carrying amount is a reasonable estimate of fair value.

        (e)   ACCRUED INTEREST RECEIVABLE AND PAYABLE

              The carrying value of accrued interest receivable and payable
              approximates fair value due to the relatively short period of time
              between accrual and expected realization.


                                       42                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996


        (f)   DEPOSIT ACCOUNTS

              The fair value of deposits with no stated maturity, such as
              passbook, NOW accounts, and money market deposit accounts, is
              equal to the amount payable on demand. The fair value of fixed
              maturity time deposits is based on the discounted value of
              contractual cash flows using the rates offered by the Savings Bank
              for deposits of similar remaining maturities at December 31.

        (g)   BORROWED FUNDS

              The fair value of shorter term borrowings approximates carrying
              value due to the relatively short periods of time between the
              origination of the instruments and their expected payment.

              The fair value of fixed rate borrowings is the present value of
              the contractual cash flows, discounted by the current rate offered
              for similar remaining maturities.

(20)    PARENT COMPANY ONLY FINANCIAL INFORMATION

        The condensed statements of financial condition as of December 31, 1998
        and 1997 and the condensed statements of operations and cash flows for
        each of the years in the three-year period ended December 31, 1998 for
        the Parent Company only is presented below and should be read in
        conjunction with other notes to the consolidated financial statements.

<TABLE>
<CAPTION>
                      CONDENSED STATEMENTS OF FINANCIAL CONDITION (PARENT COMPANY ONLY)
        ----------------------------------------------------------------------------------------------
                                                                              1998            1997
                                                                         --------------  -------------
<S>                                                                      <C>             <C>
        Assets:
            Cash held at Savings Bank                                    $        58            852
            Interest-bearing deposits                                            145            141
            Investment in dollar denominated mutual funds                          4            581
            Investment securities available for sale                             958            620
            Accrued interest receivable                                            5              8
            Other assets                                                          20          2,778
            Investment in Savings Bank                                        12,034         11,507
                                                                         --------------  -------------
                   Total assets                                          $    13,224         16,487

        Liabilities - other liabilities                                  $       (98)            39

        Stockholders' equity:
            Common stock                                                          19             19
            Additional paid-in capital                                        13,437         13,767
            Retained earnings                                                 11,127         11,139
            Treasury stock, at cost                                          (10,664)        (7,706)
            Accumulated other comprehensive income (loss), net of tax           (153)          (216)
            Common stock acquired by Employee Stock Ownership Plan              (444)          (555)
                                                                         --------------  -------------
                   Total stockholders' equity                                 13,322         16,448
                                                                         --------------  -------------
                   Total liabilities and stockholders' equity            $    13,224         16,487
        ==============================================================================================
</TABLE>


                                       43                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>
                              CONDENSED STATEMENTS OF OPERATIONS (PARENT COMPANY ONLY)
        -------------------------------------------------------------------------------------------------------

                                                                        1998          1997           1996
                                                                      ----------- -------------- --------------
<S>                                                                   <C>               <C>            <C>
        Equity in earnings of the Savings Bank                        $   512           576            439
        Interest income                                                    93           181            157
        Gain on sale of investment securities available for sale,
            net                                                            43            67             81
        Other income                                                       --            --              4
        Noninterest expense                                              (156)         (195)          (203)
                                                                      ----------- -------------- --------------

                   Income before income taxes                             492           629            478
        Income tax benefit                                                 20             7             14
                                                                      ----------- -------------- --------------

                   Net income                                         $   512           636            492

<CAPTION>
                            CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY)
        ------------------------------------------------------------------------------------------------------

                                                                        1998          1997           1996
                                                                      ----------- -------------- -------------
<S>                                                                   <C>               <C>             <C>
        Cash flows from operating activities:
            Net income                                                $    512          636             492
            Adjustments to reconcile net income to net cash
               from operating activities:
                 Amortization of premiums and discounts                     --           (2)              1
                 Amortization of cost of stock benefit plans               111          186             186
                 Decrease (increase) in accrued interest                     3           (1)             63
                 (Decrease) increase in other liabilities                  (66)         108              20
                 (Increase) decrease in other assets                     2,758          248          (3,025)
                 Gain on sale of investment securities
                   available for sale, net                                 (43)         (67)            (81)
                 Equity in earnings of the Savings Bank                   (512)        (576)           (439)
                                                                      ----------- -------------- -------------

                      Net cash provided by (used in) operating
                          activities                                     2,763          532          (2,783)
                                                                      ----------- -------------- -------------

        Cash flows from investing activities:
            Purchase of investment securities available for
              sale                                                      (1,156)      (2,994)           (625)
            Maturities of investment securities available for
              sale                                                         100        1,000           1,000
            Proceeds from sale of investment securities
              available for sale                                           601        1,785           2,207
                                                                      ----------- -------------- -------------

                   Net cash provided by (used in) investing
                      activities                                          (455)        (209)          2,582
                                                                      ----------- -------------- -------------
        ======================================================================================================
</TABLE>


                                       44                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>
                                                                    1998           1997          1996
                                                                ------------  -------------  ------------
        Cash flows from financing activities:
<S>                                                              <C>             <C>            <C>
            Cash dividend from Savings Bank                      $    278         3,444          3,332
            Payment of cash dividends                                (524)         (485)          (453)
            Proceeds from stock options exercised                     439           296             15
            Purchase of treasury stock                             (3,868)       (2,803)        (2,759)
                                                                ------------  -------------  ------------

                   Net cash (used in) provided by financing
                      activities                                   (3,675)          452            135
                                                                ------------  -------------  ------------

        Net increase (decrease) in cash and cash equivalents       (1,367)          775            (66)
        Cash and cash equivalents at beginning of year              1,574           799            865
                                                                ------------  -------------  ------------

                                                                 $    207         1,574            799
                                                                ============  =============  ============
</TABLE>

(21)    QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

        The following table sets forth certain unaudited income and expense and
        per share data on a quarterly basis for the three month periods
        indicated:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31, 1998
                                                    ---------------------------------------------------------
                                                      1ST QTR        2ND QTR       3RD QTR        4TH QTR
                                                    -------------  ------------  -------------  -------------
                                                                         (IN THOUSANDS)
<S>                                                 <C>                <C>            <C>             <C>
        Interest income                             $   2,149          2,119          2,173           2,203
        Interest expense                                1,240          1,256          1,298           1,310
                                                    -------------  ------------  -------------  -------------

        Net interest income before provision for
            loan losses                                   909            863            875             893
        Provision for loan losses                          --             --             --               6
                                                    -------------  ------------  -------------  -------------

        Net interest income after provision for
            loan losses                                   909            863            875             887
        Fees and service charges                           59             66             69              69
        Gain (loss) on sale of investment
            securities available for sale                  39             20             24              (5)
        Other noninterest income                            4              5              6               3
        Noninterest expense                               798            823            797             728
                                                    -------------  ------------  -------------  -------------

        Income before income taxes                        213            131            177             226
        Income tax expense                                 58             65             64              48
                                                    -------------  ------------  -------------  -------------

        Net income                                  $     155             66            113             178
                                                    =============  ============  =============  =============

        Basic earnings per share                    $     .12            .05            .09             .16
                                                    =============  ============  =============  =============

        Diluted earnings per share                  $     .12            .05            .09             .14
                                                    =============  ============  =============  =============

        Cash dividends per share                    $     .10            .10            .10             .10
                                                    =============  ============  =============  =============
</TABLE>


                                       45                            (Continued)
<PAGE>


                              NORTH BANCSHARES INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31, 1997
                                                    ---------------------------------------------------------
                                                      1ST QTR        2ND QTR       3RD QTR        4TH QTR
                                                    -------------  ------------  -------------  -------------
                                                                         (IN THOUSANDS)
<S>                                                 <C>                <C>            <C>             <C>
        Interest income                             $   2,143          2,195          2,195           2,218
        Interest expense                                1,174          1,225          1,286           1,288
                                                    -------------  ------------  -------------  -------------

        Net interest income before provision for
            loan losses                                   969            970            909             930
        Provision for loan losses                          --             --             --              --
                                                    -------------  ------------  -------------  -------------

        Net interest income after provision for
            loan losses                                   969            970            909             930
        Fees and service charges                           46             57             53              55
        Gain (loss) on sale of investment
            securities available for sale                  48              6             (1)              7
        Other noninterest income                            4              5              4               7
        Noninterest expense                               746            796            798             730
                                                    -------------  ------------  -------------  -------------

        Income before income taxes                        321            242            167             269
        Income tax expense                                 92             67             55             149
                                                    -------------  ------------  -------------  -------------

        Net income                                  $     229            175            112             120
                                                    =============  ============  =============  =============

        Basic earnings per share                    $     .16            .12            .08             .09
                                                    =============  ============  =============  =============

        Diluted earnings per share                  $     .15            .12            .08             .08
                                                    =============  ============  =============  =============

        Cash dividends per share                    $     .08            .08            .08             .08
                                                    =============  ============  =============  =============
</TABLE>


                                       46
<PAGE>


                               BOARD OF DIRECTORS

MARY ANN HASS                ELMER L. HASS               GREGORY W. ROSE
Chairman of the Board        Retired-Cragin Metals       Managing Partner
                             Products, Inc.              Monarch Tool & Die Co.

JAMES L. FERSTEL             JOSEPH A. GRABER            ROBERT H. RUSHER
Attorney at Law              President and               Retired-President and
                             Chief Executive Officer     Chief Operating Officer

FRANK J. DONATI, CPA
President
Donati Financial Services, Inc.

                                CURRENT OFFICERS

JOSEPH A. GRABER             VICTOR E. CAPUTO            MARTIN W. TROFIMUK
President and                Executive Vice President    Vice President and
Chief Executive Officer      and Secretary and Chief     Treasurer
                             Operating Officer

KARLA A. LAUER               JOHN K. TAYLOR              EMILIE V. REITER
Vice President-Services      Vice President-Loans        Assistant Secretary
North Federal                North Federal Savings Bank
Savings Bank

CATHERINE J. HARPER          SUSAN L.  RODRIGUEZ         D. ROBERT HARLESS
Assistant Vice President     Assistant Secretary         Assistant Vice
North Federal Savings Bank   North Federal Savings Bank  President North
                                                         Federal Savings Bank

                                       47

<PAGE>



CORPORATE INFORMATION


STOCK PRICE INFORMATION
The Company's common stock trades on The Nasdaq Stock Market under the symbol:
NBSI. The table below shows the high and low sales prices of the common stock
during the periods indicated in fiscal 1998 and 1997. The prices have been
adjusted to reflect a three-for-two stock split effected in the form of a 50%
stock dividend on December 29, 1997. The Common Stock began trading on December
21, 1993. On March 1, 1999, North Bancshares, Inc. had approximately 200
shareholders of record and 400 beneficial shareholders. As of such date, there
were 1,258,585 shares of common stock issued and outstanding.

                               1998                     1997
------------------------------------------------------------------
                         HIGH        LOW         HIGH        LOW
------------------------------------------------------------------
First Quarter           18.500      17.500      13.167      10.500
Second Quarter          18.000      15.375      13.417      12.750
Third Quarter           15.375      11.250      16.333      12.833
Fourth Quarter          12.500      11.000      18.875      15.667





INVESTOR INFORMATION

A copy of North Bancshares, Inc.'s annual report on Form 10-KSB, to be filed
with the Securities and Exchange Commission, is available without charge by
writing our Corporate Office:


VICTOR E. CAPUTO, SECRETARY
North Bancshares, Inc.
100 West North Avenue
Chicago, Illinois 60610-1399
(312) 664-4320  E-Mail: northfedl@aol.com   www.northfederal.com

Shareholders, investors and analysts interested in additional information may
contact the above.


ANNUAL MEETING OF SHAREHOLDERS 
The Annual Meeting of the Shareholders of North Bancshares, Inc. will be held at
10:00 A.M., April 28, 1999, at the Chicago Historical Society, 1601 N. Clark
St., Chicago, Illinois:


STOCK TRANSFER AGENT AND REGISTRAR
Inquiries regarding stock transfer, registration, lost certificate, lost
dividend checks or changes in name and address should be directed to the stock
transfer agent and registrar by calling 312-360-5296 or by writing:


HARRIS TRUST AND SAVINGS BANK
Post Office Box 755

                                       48

<PAGE>

Chicago, IL 60690
Attn: Shareholder Services


CORPORATE COUNSEL/WASHINGTON,D.C.
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, D.C.  20005-3934


CORPORATE COUNSEL/CHICAGO, IL
John P. Koch
100 West North Avenue
Chicago, IL 60610-1399


INDEPENDENT AUDITORS
KPMG  LLP
303 East Wacker Drive
Chicago, IL 60601-5255



                                       49