================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 0-20082 Alliance Bancorp (Exact name of registrant as specified in its charter) Delaware 36-3811768 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Grant Square, Hinsdale, Illinois 60521 (Address of principal executive offices) (Zip Code) (630) 323-1776 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all the reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO____ --- Indicate the number of shares outstanding of each of the issuer's classes of stock, as of the latest practicable date. Common Stock, $0.01 par value -9,299,055 shares outstanding as of May 4, 2001. ================================================================================ Alliance Bancorp and Subsidiaries Form 10-Q Index -----

Part I. Financial Information Page ------- --------------------- ---- Item 1. Financial Statements (unaudited) Consolidated Statements of Financial Condition as of ~~September~~March 3031, ~~2000~~2001 and December 31, ~~1999~~2000 1 Consolidated Statements of Income for the Three ~~and Nine~~ Months Ended ~~September~~March 3031, ~~2000~~2001 and ~~1999~~2000 2 Consolidated Statements of Changes in Stockholders' Equity for the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2000~~2001 and ~~1999~~2000 3 Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2000~~2001 and ~~1999~~2000 4 Notes to Consolidated Financial Statements 65 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 119 Item 3. Quantitative and Qualitative Disclosures About Market Risk See "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Asset/Liability Management" 1715 Part II. Other Information -------- ----------------- Item 1. Legal Proceedings 2219 Item 2. Changes in Securities 2319 Item 3. Defaults upon Senior Securities 2319 Item 4. Submission of Matters to a Vote of Security Holders 2319 Item 5. Other Information 2319 Item 6. Exhibits and Reports on Form 8-K 2320 Signature Page 2421

Alliance Bancorp and Subsidiaries Consolidated Statements of Financial Condition

~~September~~March 3031, December 31, (In thousands, except share data) 2001 2000 ~~1999~~ ---------------------------------------------------------------------------------------------------------------------~~---~~ (unaudited) Assets Cash and due from banks $ 2520,~~577~~108 4821,~~922~~918 Interest-bearing deposits 364,~~202~~688 1130,~~598~~235 Investment securities available for sale, at fair value 5548,~~838~~483 6451,~~494~~848 Investment securities atheld ~~amortized~~to ~~cost~~maturity (fair value of $1920,~~638~~412 and $20,309) 19,~~403~~407 -19,405 Mortgage-backed securities available for sale, at fair value ~~221~~220,~~986~~750 ~~356~~223,~~434~~423 Mortgage-backed securities atheld ~~amortized~~to ~~cost~~maturity (fair value of $12,~~840)~~994 and 11,878 12,~~449~~165 -$13,134) Loans, net of allowance for losses of $7,~~244~~307 at ~~September~~March 3031, ~~2000~~2001 and $67,~~031~~276 at December 31, ~~1999~~2000 1,~~496~~492,~~564~~465 1,~~363~~526,~~266~~296 Accrued interest receivable 1110,~~064~~946 1013,~~493~~143 Real estate 18,~~443~~555 2019,~~796~~675 Premises and equipment, net 1211,~~566~~436 12,~~528~~110 Stock in Federal Home Loan Bank of Chicago, at cost 2829,~~905~~995 2729,~~383~~486 ~~Due from broker - 550~~ Bank owned life insurance 4648,~~892~~222 2047,~~878~~519 Other assets 1814,~~708~~929 2415,~~966~~447 --------------------------------------------------------------------------------------------------------------------- $ 12,~~971~~011,~~597~~862 12,~~962~~022,~~308~~670 ~~---------------------------------------------------------------------------------------------------------------------~~===================================================================================================================== Liabilities and Stockholders' Equity Liabilities: Deposits $ 1,~~267~~304,~~924~~661 1,~~242~~275,~~198~~338 Borrowed funds ~~525~~500,~~594~~138 ~~538~~550,~~150~~116 Advances by borrowers for taxes and insurance 49,~~012~~358 1110,~~358~~666 Accrued expenses and other liabilities 1927,~~170~~155 1622,~~931~~494 --------------------------------------------------------------------------------------------------------------------- Total liabilities 1,~~816~~841,~~700~~312 1,~~808~~858,~~637~~614 --------------------------------------------------------------------------------------------------------------------- Stockholders' Equity: Preferred stock, $.01 par value; authorized 1,500,000 shares; none issued and outstanding - - Common stock, $.01 par value; authorized 21,000,000 shares; 11,~~702~~754,~~397~~153 shares issued and 9,~~243~~295,~~575~~331 outstanding at ~~September~~March 3031, ~~2000~~2001 11,~~700~~702,~~010~~397 shares issued and 109,~~177~~243,~~188~~575 outstanding at December 31, ~~1999~~2000 117 117 Additional paid-in capital 108,~~123~~972 108,~~093~~123 Retained earnings, substantially restricted ~~102~~110,~~741~~059 92106,~~337~~722 Treasury stock, at cost; 2,458,822 shares at ~~September~~March 3031, ~~2000~~2001 and ~~1,522,822 at~~ December 31, ~~1999~~2000 (46,440) (2946,~~857~~440) Accumulated other comprehensive loss (92,~~644~~158) (174,~~019~~466) --------------------------------------------------------------------------------------------------------------------- Total stockholders' equity ~~154~~170,~~897~~550 ~~153~~164,~~671~~056 --------------------------------------------------------------------------------------------------------------------- Commitments and contingencies --------------------------------------------------------------------------------------------------------------------- $ 12,~~971~~011,~~597~~862 12,~~962~~022,~~308~~670 ~~---------------------------------------------------------------------------------------------------------------------~~=====================================================================================================================

See accompanying notes to unaudited consolidated financial statements. 1 Alliance Bancorp and Subsidiaries Consolidated Statements of Income

Three Months Ended ~~Nine~~March ~~Months Ended September 30~~31, ~~September 30,~~ (In thousands, except per share amounts) ~~2000~~2001 ~~1999~~ 2000 ~~1999~~ ----------------------------------------------------------------------------------------------------------------------- (unaudited) Interest Income: Loans $ 2930,~~723~~484 2426,~~125~~561 ~~84,507 71,437~~ Mortgage-backed securities 4,~~320~~013 75,~~208~~371 ~~13,911 19,792~~ Investment securities 1,~~929~~840 1,~~747~~623 ~~5,092 5,078~~ Interest-bearing deposits ~~126~~703 ~~447~~100 ~~422 2,619~~ ----------------------------------------------------------------------------------------------------------------------- Total interest income 3637,~~098~~040 33,~~527~~655 ~~103,932 98,926~~ ----------------------------------------------------------------------------------------------------------------------- Interest Expense: Deposits 1415,~~846~~370 1213,~~699~~307 ~~41,879 39,381~~ Borrowed funds 78,~~780~~165 76,~~070~~499 ~~20,792 19,803~~ ----------------------------------------------------------------------------------------------------------------------- Total interest expense 2223,~~626~~535 19,~~769~~806 ~~62,671 59,184~~ ----------------------------------------------------------------------------------------------------------------------- Net interest income 13,~~472~~505 13,~~758~~849 ~~41,261 39,742~~ Provision for loan losses 1,200 50200 ~~1,600 150~~ ----------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 1213,~~272~~305 13,~~708~~649 ~~39,661 39,592~~ ----------------------------------------------------------------------------------------------------------------------- Noninterest Income: Gain on sales of loans held for sale 3- 514 ~~38 474~~ Loss on sales of mortgage-backed securities available for sale - - (6,059) ~~(22)~~Loss ~~Gain (loss)~~ on sales of investment securities available for sale ~~506~~- (16491) ~~15 (16)~~ Income from real estate operations ~~2,421~~485 ~~1,007~~974 ~~4,531 2,735~~ Servicing fee income, ~~net~~58 3953 ~~16 145 247~~ ATM fee income ~~466~~197 ~~463~~421 ~~1,377 1,490~~ Other fees and commissions 1,~~775~~679 31,~~686~~275 ~~4,783 13,200~~ Other, net ~~203~~521 23(89) ~~124 459~~ ----------------------------------------------------------------------------------------------------------------------- Total noninterest income 52,~~413~~940 5(3,~~184~~902) ~~4,954 18,567~~ ----------------------------------------------------------------------------------------------------------------------- Noninterest Expense: Compensation and benefits 54,~~392~~965 65,~~599~~423 ~~15,964 20,968~~ Occupancy expense 2,~~016~~084 12,~~912~~004 ~~6,048 5,528~~ Federal deposit insurance premiums 6870 ~~186~~69 ~~206 579~~ Advertising expense ~~570~~169 ~~332~~197 ~~1,087 874~~ ATM expense ~~279~~93 ~~304~~269 ~~839 984~~ Computer services ~~329~~348 ~~289~~354 ~~1,015 953~~ Other 2,~~121~~167 2,~~624~~519 ~~6,823 8,011~~ ----------------------------------------------------------------------------------------------------------------------- Total noninterest expense 109,~~775~~896 1210,~~246~~835 ~~31,982 37,897~~ ----------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes and extraordinary item 6,~~910~~349 6(1,~~646~~088) ~~12,633 20,262~~ Income tax expense ~~2,264~~(benefit) 21,~~018~~711 ~~3,964~~(540) ~~6,526~~ ----------------------------------------------------------------------------------------------------------------------- Income (loss) before extraordinary item 4,~~646~~638 ~~4,628~~(548) ~~8,669 13,736~~ Extraordinary item-gain on early extinguishment of debt, net of tax expense of $3,069 - - 5,700 - --------------------------------------------------------------------------------------------------------------------~~---~~ Net income $ 4,~~646~~638 45,~~628~~152 ~~14,369 13,736~~ ----------------------------------------------------------------------------------------------------------------------- Basic earnings per share Income (loss) before extraordinary item $ 0.50 (0.4305) ~~0.90 1.24~~ Extraordinary item, net of tax - - 0.6057 - --------------------------------------------------------------------------------------------------------------------~~---~~ Net income 0.50 0.4352 ~~1.50 1.24~~ ----------------------------------------------------------------------------------------------------------------------- Diluted earnings per share Income (loss) before extraordinary item 0.4847 (0.4105) ~~0.87 1.18~~ Extraordinary item, net of tax - - 0.57 - --------------------------------------------------------------------------------------------------------------------~~---~~ Net income $ 0.4847 0.4152 ~~1.44 1.18 -----------------------------------------------------------------------------------------------------------------------~~=====================================================================================================================

See accompanying notes to unaudited consolidated financial statements. 2 Alliance Bancorp and Subsidiaries Consolidated Statements of Changes in Stockholders' Equity

Accumulated Additional Other Comprehensive Common Paid-in Retained Treasury Comprehensive (In thousands, except per share amounts) Income Stock Capital Earnings Stock Income (Loss) Total ~~-----------------------------------------------------------------------------------------------------------------------------------~~==================================================================================================================================== (unaudited) ~~Nine~~Three Months Ended ~~September~~March 3031, ~~1999~~2000 Balance at December 31, ~~1998~~1999 $ ~~116~~117 ~~107~~108,~~130~~093 8092,~~219~~337 (129,~~511~~857) (17,019) ~~185~~153,~~937~~671 Net income 135,~~736~~152 - - 135,~~736~~152 - - 135,~~736~~152 Other comprehensive income, net of tax Change in minimum pension liability 23 - - - - 23 23 Change in unrealized gain (loss) on securities available for sale, net of reclassification adjustment ~~(10~~6,~~404)~~631 - - - - ~~(10~~6,~~404)~~631 ~~(10~~6,~~404)~~631 -------------- Total comprehensive income 311,~~332~~806 Cash dividends declared, $0.4214 per share - - (41,~~575~~362) - - (41,~~575~~362) Purchase of treasury stock - - - (208,~~119~~318) - (208,~~119~~318) Proceeds from exercise of stock options 1- ~~301~~5 - - - ~~302~~5 Tax benefit from stock related compensation - ~~199~~5 - - - ~~199~~5 ------------------------------------------------------------------------------------------------------------------------------------ Balance at ~~September~~March 3031, ~~1999~~2000 $ 117 ~~107~~108,~~630~~103 8996,~~380~~127 (2138,~~630~~175) (10,~~421~~365) ~~165~~155,~~076~~807 ==================================================================================================================================== ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2000~~2001 Balance at December 31, ~~1999~~2000 $ 117 108,~~093~~123 92106,~~337~~722 (2946,~~857~~440) (174,~~019~~466) ~~153~~164,~~671~~056 Net income 144,~~369~~638 - - 144,~~369~~638 - - 144,~~369~~638 Other comprehensive income, net of tax Change in minimum pension liability 23(10) - - - - 23(10) 23(10) Change in unrealized gain (loss) on securities available for sale, net of reclassification adjustment 72,~~352~~318 - - - - 72,~~352~~318 72,~~352~~318 -------------- Total comprehensive income 216,~~744~~946 Cash dividends declared, $0.4214 per share - - (31,~~965~~301) - - (31,~~965~~301) ~~Purchase of treasury stock - - - (16,583) - (16,583)~~ Proceeds from exercise of stock options - 25658 - - - 25658 Tax benefit from stock related compensation - 5191 - - - 5191 ------------------------------------------------------------------------------------------------------------------------------------ Balance at ~~September~~March 3031, ~~2000~~2001 $ 117 108,~~123~~972 ~~102~~110,~~741~~059 (46,440) (92,~~644~~158) ~~154~~170,~~897~~550 ====================================================================================================================================

See accompanying notes to unaudited consolidated financial statements. 3 Alliance Bancorp and Subsidiaries Consolidated Statements of Cash Flows

~~Nine~~Three Months Ended ~~September~~March 3031, (In thousands) 2001 2000 ~~1999~~ -------------------------------------------------------------------------------------------------------------------- (unaudited) Cash Flows From Operating Activities: Net income $ 144,~~369~~638 135,~~736~~152 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ~~2,354~~763 ~~1,982~~750 Provision for loan losses ~~1,600~~200 ~~150~~200 Federal Home Loan Bank of Chicago stock dividend (~~1,522~~509) -(476) Amortization of premiums, discounts, and deferred loan fees ~~1,056~~465 ~~1,127~~322 Originations of loans held for sale (8146,~~056~~044) (~~473~~15,637) Sale of loans originated for resale 7350,~~142~~447 ~~579~~9,~~962~~791 Gain on sales of loans ~~(38)~~- (~~474~~14) Loss on sales of mortgage-backed securities available for sale - 6,059 22Loss ~~(Gain) loss~~ on sales of investment securities available for sale ~~(15)~~- 16491 Extraordinary item-gain on early extiguishment of debt, net of tax - (5,700) -Decrease ~~(Increase) decrease~~ in accrued interest receivable ~~(571)~~2,197 ~~592~~1,089 Increase in other assets (1,~~446~~716) (41,~~659~~745) Increase ~~(decrease)~~ in accrued expenses and other liabilities 24,~~413~~829 ~~(2,627)~~1 -------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1015,~~645~~270 ~~116,190~~283 -------------------------------------------------------------------------------------------------------------------- Cash Flows From Investing Activities: Loans originated or purchased for investment (~~355~~71,~~745~~611) (~~331~~102,~~638~~503) Purchases of premises and equipment (89) (556) Proceeds from sale of: Mortgage-backed securities available for sale - ~~(237~~115,~~351)~~180 ~~Mortgage-backed~~Investment securities available for sale - 12,505 Loans held tofor ~~maturity~~investment (4,554 2,~~014)~~374 -Proceeds ~~Investment~~from maturities of investment securities available for sale ~~(12~~4,~~899)~~071 - Net (~~74,840~~increase) ~~Investment~~decrease ~~securities~~in ~~held~~real toestate ~~maturity~~ventures 924 (191,~~400~~815) -Principal ~~Stock~~collected inon ~~Federal~~loans ~~Home~~96,373 ~~Loan~~57,870 ~~Bank~~Principal ofcollected ~~Chicago~~on mortgage-backed ~~(3,560)~~securities ~~Premises~~available ~~and~~for ~~equipment~~sale (25,~~494)~~772 (210,~~037)~~512 ~~Bank~~-------------------------------------------------------------------------------------------------------------------- ~~owned~~Net ~~life~~cash ~~insurance~~provided ~~(25~~by investing activities 39,~~000)~~994 93,567 -------------------------------------------------------------------------------------------------------------------- ~~Proceeds~~Cash ~~from~~Flows ~~sale~~From orFinancing ~~maturity of~~Activities: ~~Mortgage-backed~~Net ~~securities~~increase ~~available~~in ~~for~~deposits ~~sale 115~~29,~~180~~323 ~~114~~13,~~022~~744 ~~Investment~~Proceeds ~~securities~~from ~~available~~borrowed ~~for~~funds ~~sale~~- 12115,~~505~~000 12Repayment of borrowed funds (50,~~016~~000) ~~Stock~~(246,231) Net decrease in ~~Federal~~advance ~~Home~~payments ~~Loan~~by ~~Bank~~borrowers offor ~~Chicago~~taxes -and insurance (1,~~451~~308) ~~Premises~~(1,051) ~~and~~Purchase ~~equipment~~of ~~102~~treasury stock - ~~Loans~~(8,318) ~~held~~Cash ~~for~~dividends ~~investment~~paid 16(1,~~619~~294) 20(1,~~027~~425) Proceeds from ~~maturities~~exercise of ~~investment~~stock ~~securities~~options ~~available~~658 ~~for~~5 ~~sale~~ -------------------------------------------------------------------------------------------------------------------- ~~42,640~~ Net ~~(increase)~~cash ~~decrease~~used in ~~real~~financing ~~estate~~activities ~~joint~~(22,621) ~~ventures 2~~(128,~~259~~276) -------------------------------------------------------------------------------------------------------------------- Net increase (~~389~~decrease) ~~Principal~~in ~~collected~~cash onand ~~loans~~cash ~~211~~equivalents 32,~~109~~643 ~~241~~(34,~~621~~426) ~~Principal~~Cash ~~collected~~and oncash ~~mortgage-backed~~equivalents ~~securities~~at 23beginning of period 52,~~494~~153 9660,~~952~~520 -------------------------------------------------------------------------------------------------------------------- ~~Net~~Cash and cash ~~used~~equivalents inat ~~investing~~end ~~activities~~of ~~(36~~period $ 84,~~284)~~796 ~~(121~~26,~~086)~~094 ==================================================================================================================== Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ 23,785 20,164 Income taxes - - Supplemental Disclosures of Noncash Activities: Loans exchanged for mortgage-backed securities $ 320 - Additions to real estate acquired in settlement of loans $ 67 496 --------------------------------------------------------------------------------------------------------------------

See accompanying notes to unaudited consolidated financial statements. 4 Alliance Bancorp and Subsidiaries Notes to Consolidated Financial Statements (unaudited) Three Months Ended March 31, 2001 and 2000 (1) Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation have been included. The unaudited consolidated financial statements include the accounts of Alliance Bancorp (the "Company") and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated. (2) Comprehensive Income The following table sets forth the required disclosures of other comprehensive income and the reclassification amounts as presented in the consolidated statements of changes in stockholders' equity and the related tax effects allocated to each component of other comprehensive income for the periods indicated:

~~Nine~~Before ~~Months~~Tax ~~Ended~~Net ~~September~~Tax ~~30,~~(Expense) of Tax (In thousands) ~~2000~~Amount ~~1999~~or Benefit Amount --------------------------------------------------------------------------------------------------------------------- ~~(unaudited)~~Three ~~Cash~~Months ~~Flows~~Ended ~~From~~March ~~Financing~~31, ~~Activities:~~2000 ~~Net~~Disclosure ~~increase~~of ~~(decrease)~~reclassification inamount: ~~deposits~~Unrealized ~~25,726~~holding gain (~~56,689~~loss) ~~Proceeds~~on ~~from~~securities ~~borrowed~~available ~~funds~~for ~~342,353~~sale ~~134,327~~arising ~~Repayment~~during ofthe ~~borrowed~~period ~~funds~~$ ~~(346~~3,~~181)~~650 (711,~~127~~276) ~~Net~~2,374 ~~increase~~Less: ~~(decrease)~~reclassification inadjustment ~~advance~~for ~~payments~~gain by(loss) ~~borrowers~~included ~~for~~in ~~taxes~~net ~~and~~income ~~insurance~~ (76,~~346~~550) ~~799~~2,293 ~~Purchase~~(4,257) of--------------------------------------------------------------------------------------------------------------------- ~~treasury~~Net ~~stock~~unrealized ~~(16,583)~~gain (~~20,119~~loss) ~~Cash~~on ~~dividends~~securities ~~paid~~$ (410,~~096)~~200 (43,~~705~~569) ~~Proceeds~~6,631 ~~from~~Change ~~exercise~~in ofminimum ~~stock~~pension ~~options~~liability 2538 ~~302~~(15) 23 --------------------------------------------------------------------------------------------------------------------- ~~Net~~Other ~~cash~~comprehensive ~~used~~income in$ ~~financing~~10,238 ~~activities~~ (63,~~102~~584) ~~(17~~6,~~212)~~654 --------------------------------------------------------------------------------------------------------------------- ~~Net~~Three ~~decrease~~Months inEnded ~~cash~~March ~~and~~31, ~~cash~~2001 ~~equivalents~~Disclosure ~~(31,741)~~of reclassification amount: Unrealized holding gain (~~22,108~~loss) ~~Cash~~on ~~and~~securities ~~cash~~available ~~equivalents~~for atsale ~~beginning~~arising ofduring the period 60$ 3,~~520~~566 80(1,~~997~~248) 2,318 Less: reclassification adjustment for gain (loss) included in net income - - - --------------------------------------------------------------------------------------------------------------------- ~~Cash~~Net ~~and~~unrealized ~~cash~~gain ~~equivalents~~(loss) aton ~~end~~securities ~~of period~~ $ 283,~~779~~566 58(1,~~889~~248) 2,318 Change in minimum pension liability (16) 6 (10) --------------------------------------------------------------------------------------------------------------------- ~~Supplemental~~Other ~~Disclosures~~comprehensive ofincome ~~Cash Flow Information: Cash paid during the period for: Interest~~ $ ~~62,295 59,061 Income taxes~~ 3,~~250~~550 9(1,~~935~~242) ~~Supplemental Disclosures of Noncash Activities: Loans exchanged for mortgage-backed securities $ 1~~2,~~030~~308 ~~473 Additions to real estate acquired in settlement of loans 770 270~~ ---------------------------------------------------------------------------------------------------------------------

5 Alliance Bancorp and Subsidiaries Notes to Consolidated Financial Statements - (Continued) (unaudited) Three Months Ended March 31, 2001 and 2000 (3) Earnings per Share The following table sets forth the computation of basic and diluted earnings per share for the periods indicated:

~~Before~~Three ~~Tax~~Months ~~Net~~Ended ~~Tax~~March ~~(Expense)~~31, ~~of Tax (In thousands) Amount or Benefit Amount~~ --------------------------------~~-------------------------------------------------------------------------------------~~ ~~Nine Months Ended September 30, 1999 Disclosure of reclassification amount: Unrealized holding gain~~ (~~loss)~~In ~~on securities available for sale arising during the period $ (16~~thousands,~~044)~~ ~~5,615~~except ~~(10,429)~~share ~~Less: reclassification adjustment for gain (loss~~data) ~~included~~2001 in2000 ~~net income (38) 13 (25)~~ -------------------------------------------------------------------------------------------------------------~~--------~~ ~~Net~~Numerator: ~~unrealized~~Income ~~gain~~ (loss) onbefore ~~securities~~extraordinary item $ ~~(16~~4,~~006~~638 (548) 5Extraordinary item,~~602~~ ~~(10~~net of tax - 5,~~404)~~700 -------------------------------- Net income $ 4,638 5,152 --------------------------------~~-----------------------------------------------------~~ ~~Nine Months Ended September 30, 2000 Disclosure of reclassification amount~~Denominator: ~~Unrealized~~Basic ~~holding~~earnings ~~gain~~per ~~(loss)~~share-weighted onaverage ~~securities~~shares ~~available for sale arising during the period $ 5~~9,~~265 (1~~263,~~841)~~895 39,~~424~~961,869 ~~Less:~~Effect ~~reclassification~~of ~~adjustment~~dilutive ~~for~~securities-stock ~~gain~~options ~~(loss) included in net income (6~~591,~~044)~~943 ~~2,116~~- ~~(3,928)~~ -------------------------------- Diluted earnings per share-adjusted weighted average shares 9,855,838 9,961,869 --------------------------------~~----------------------------------------------------~~ ~~Net~~Basic ~~unrealized~~earnings ~~gain~~per share Income (loss) onbefore ~~securities~~extraordinary item $ ~~11,309~~0.50 (~~3,957~~0.05) 7Extraordinary item,~~352~~ ~~Change~~net inof ~~minimum~~tax ~~pension~~- ~~liability~~0.57 ~~38 (15) 23~~ -------------------------------- Net income $ 0.50 0.52 --------------------------------~~-----------------------------------------------------~~ ~~Other~~Diluted ~~comprehensive~~earnings ~~income~~per share Income (loss) before extraordinary item $ ~~11,347~~0.47 (~~3,972~~0.05) 7Extraordinary item,~~375~~ net of tax - 0.57 -------------------------------- Net income $ 0.47 0.52 --------------------------------~~----------------------------------------------------~~

(4) Commitments and Contingencies At March 31, 2001, the Company had outstanding commitments to originate or purchase loans of $23.4 million and undisbursed balances of construction loans of $164.4 million. Unused equity lines of credit available to customers were $111.7 million at March 31, 2001. 6 Alliance Bancorp and Subsidiaries Notes to Consolidated Financial Statements - (Continued) (unaudited) Three Months Ended March 31, 2001 and 2000 (5) Operating Segments The Company's operations include three primary segments: banking, mortgage brokerage and joint venture real estate developments. Through its banking subsidiary's network of 19 retail banking facilities in Chicago; north, west and southwestern Cook County; and DuPage County in Illinois, the Company provides traditional community banking services such as accepting deposits and making loans. Mortgage brokerage activities conducted through the Bank's subsidiary, Liberty Home Mortgage include the origination of primarily residential mortgage loans for sale to various investors as well as to the Bank. Joint venture real estate activities are primarily conducted through the Company's real estate subsidiaries. The real estate subsidiaries provide equity financing in various developments with reputable real estate developers, primarily for the construction of single family homes. The Company's three reportable segments are strategic business units that are separately managed as they offer different products and services and have different marketing strategies. Smaller operating segments are combined and are shown as "Other" below and consist of financial advice and brokerage services and holding company investments. Assets and results of operations are based on accounting principles generally accepted in the United States of America, with profit and losses of equity method investees excluded. Inter-segment revenues and expenses are eliminated in reporting consolidated results of operations. Operating segment information is as follows:

~~Three~~Mortgage ~~Months~~Real ~~Ended~~Estate ~~Nine~~Inter-segment ~~Months~~Consolidated ~~Ended September 30, September 30,~~ (In thousands,) ~~except~~Banking ~~share~~Brokerage ~~data)~~Joint ~~2000~~Ventures ~~1999~~Other ~~2000~~Eliminations ~~1999~~Total ---------------------------------------------------------------------------------------------------------------------------------- ~~Numerator:~~Three ~~Income~~Months ~~before~~Ended ~~extraordinary~~March ~~item~~31, 2001 Interest income $ 436,~~646~~904 ~~4,628~~202 ~~8,669~~31 ~~13,736~~297 ~~Extraordinary~~(394) ~~item~~37,040 ~~net~~Interest ofexpense ~~tax~~23,511 -178 -164 576 (394) 23,~~700~~535 - --------------------------------------------------------------------------------------------------------------------------------- Net interest income $(loss) 413,~~646~~393 ~~4,628~~24 ~~14,369~~(133) 221 - 13,~~736~~505 Provision for loan losses 200 - - - - 200 ---------------------------------------------------------------------------------------------------------------------------------- ~~Denominator:~~Net ~~Basic~~interest ~~earnings~~income ~~per~~(loss) ~~share-weighted~~after ~~average~~provision ~~shares~~for 9loan losses 13,~~267,532~~193 1024 (133) 221 - 13,~~846,200~~305 9Other fees and commissions 1,~~589,485~~100 11439 - 415 (20) 1,~~092,453~~934 ~~Effect~~Other ofnoninterest ~~dilutive~~income, ~~securities~~net 547 -~~stock~~ ~~options~~434 ~~368,361~~78 ~~526~~(53) 1,~~087~~006 ~~374~~Noninterest expense 8,~~034~~613 ~~522~~756 34 566 (73) 9,~~981~~896 ---------------------------------------------- ~~Diluted earnings per share~~-~~adjusted weighted average shares 9,635,893 11,372,287 9,963,519 11,615,434~~ ----------------------------------------------------------------------------------- ~~Basic~~Income ~~earnings~~(loss) ~~per~~before ~~share~~income ~~Income~~taxes ~~before~~6,227 ~~extraordinary~~(293) ~~item~~267 $148 ~~0.50~~- ~~0.43~~6,349 ~~0.90~~Income ~~1.24~~tax ~~Extraordinary~~expense ~~item~~(benefit) 1,662 ~~net~~(116) of106 ~~tax~~59 - -1,711 ~~0.60~~ - --------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ ~~0.50~~4,565 ~~0.43~~(177) ~~1.50~~161 ~~1.24~~89 - 4,638 ---------------------------------------------------------------------------------------------------------------------------------- ~~Diluted~~Assets ~~earnings per share Income before extraordinary item~~ $ ~~0.48~~1,986,740 ~~0.41~~10,823 ~~0.87 1.~~18,131 ~~Extraordinary~~19,457 ~~item~~(23,289) ~~net~~2,011,862 ~~of tax~~ - - ~~0.57~~ - ---------------------------------------------- ~~Net income $ 0.48 0.41 1.44 1.18~~ ---------------------------------------------------------------------------------

7 Alliance Bancorp and Subsidiaries Notes to Consolidated Financial Statements - (Continued) (unaudited) Three Months Ended March 31, 2001 and 2000

Mortgage Real Estate Inter-segment Consolidated (In thousands) Banking Brokerage Joint Ventures Other Eliminations Total ------------------------------------------------------------------------------------------------------------------------------------ Three Months Ended ~~September~~March 3031, 2000 Interest income $ 3633,~~033~~636 ~~200~~127 2446 ~~279~~166 (~~438~~320) 3633,~~098~~655 Interest expense 2219,~~579~~885 ~~192~~87 ~~203~~154 90- (~~438~~320) 2219,~~626~~806 ------------------------------------------------------------------------------------------------------------------------------------ Net interest income (loss) 13,~~454~~751 840 (~~179~~108) ~~189~~166 - 13,~~472~~849 Provision for loan losses 1,200 - - - - 1,200 ------------------------------------------------------------------------------------------------------------------------------------ Net interest income (loss) after provision for loan losses 1213,~~254~~551 840 (~~179~~108) ~~189~~166 - 1213,~~272~~649 Other fees and commissions 1,~~292~~152 ~~466~~357 - ~~560~~517 (38277) 21,~~280~~749 Other noninterest income, ~~882~~net (6,372) - ~~2,302~~888 2(114) (53) 3(5,~~133~~651) Noninterest expense 8,~~886~~975 1,~~388~~572 922 ~~583~~596 (91330) 10,~~775~~835 ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) before income taxes ~~5,542~~and extraordinary item (~~914~~644) 2(1,~~114~~175) ~~168~~758 (27) - 6(1,~~910~~088) Income tax expense (benefit) ~~1,721~~(371) (~~362~~458) ~~839~~297 66(8) - 2(540) ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) before extraordinary item (273) (717) 461 (19) - (548) ------------------------------------------------------------------------------------------------------------------------------------ Extraordinary item-gain on early extinguishment of debt,~~264~~ net of tax expense 5,700 - - - - 5,700 ------------------------------------------------------------------------------------------------------------------------------------ Net income (loss) $ 35,~~821~~427 (~~552~~717) 461 (19) - 5,152 ------------------------------------------------------------------------------------------------------------------------------------ Assets $ 1,~~275~~812,085 ~~102~~12,626 -24,921 414,~~646~~920 (27,520) 1,837,032 ------------------------------------------------------------------------------------------------------------------------------------

(6) Reclassifications Certain reclassifications of prior year amounts have been made to conform with the current year presentation. 8 Alliance Bancorp and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations General Alliance Bancorp ( the "Company") is a registered savings and loan holding company incorporated under the laws of the state of Delaware and is engaged in the business of providing financial service products to the public through its wholly-owned subsidiary, Liberty Federal Bank (the "Bank"). The Bank, a Federal savings bank chartered under the authority of the Office of Thrift Supervision ("OTS"), originally was organized in 1934, and changed its charter from a federal savings and loan association to a federal savings bank in 1991. The Bank is a member of the Federal Home Loan Bank ("FHLB") System and its deposit accounts are insured to the maximum allowable amount by the Federal Deposit Insurance Corporation ("FDIC"). The Bank is regulated by the OTS and the FDIC and is further regulated by the Board of Governors of the Federal Reserve System as to reserves required to be maintained against deposits and certain other matters. The Bank is a community-oriented company providing financial services through nineteen full service retail banking facilities in Chicago; north, west and southwestern Cook County; and DuPage County in Illinois. The Bank offers a variety of deposit products in an attempt to attract funds from the general public in highly competitive market areas surrounding its offices. In addition to deposit products, the Bank also offers its customers financial advice and security brokerage services through INVEST Financial Corporation ("INVEST"). The Bank invests its retail deposits primarily in mortgage and consumer loans, investment securities and mortgage-backed securities, secured primarily by one- to four-family residential loans. The earnings of the Bank are primarily dependent on its net interest income, which is the difference between the interest income earned on its loans, mortgage-backed and investment securities portfolios, and its cost of funds, consisting of the interest paid on its deposits and borrowings. The Bank's earnings are also affected by noninterest income, including income related to loan origination fees contributed by Liberty Home Mortgage and the noncredit consumer related financial services offered by the Bank, such as net commissions received by the Bank from securities brokerage services, loan servicing income, fee income on transaction accounts, and interchange fees from its shared ATMs. In the current quarter, the Bank terminated its participation in a shared ATM network primarily due to increased costs. Currently the Bank operates eighteen ATM's located at its branch offices. The Bank's noninterest income has also been affected by gains from the sale of various assets, including loans, mortgage-backed securities, investment securities and real estate. Noninterest expense consists principally of employee compensation and benefits, occupancy expense, federal deposit insurance premiums, and other general and administrative expenses of the Bank and Liberty Home Mortgage. The Bank'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. On January 22, 2001, the Company entered into a definitive agreement with Charter One Financial, Inc. under which Alliance Bancorp would be merged into Charter One. Charter One is one of the 30 largest bank holding companies in the country with over $33 billion in assets and approximately 420 branch office locations in Ohio, Michigan, New York, Illinois, Massachusetts and Vermont. Terms of the agreement call for each share of Alliance common stock to be exchanged for $5.25 in cash and .72 shares of Charter One stock. The transaction has been approved by the boards of directors of both companies and is subject to approval by the Office of Thrift Supervision, the Federal Reserve Board, and Alliances' shareholders. The transaction will be accounted for as a purchase and is expected to be completed early in the third quarter of 2001. 9 Forward-Looking Statements This Quarterly Report on Form 10-Q, contains forward-looking statements within the meaning of the federal securities laws. The Company intends such forward- looking statements to be covered by the safe harbor provisions for forward- looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and the subsidiaries include, but are not limited to, changes in: interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flow, competition, demand for financial services in the Company's market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Accordingly, results actually achieved may differ materially from expected results in these statements. The Company does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements. Liquidity/Capital Resources The Company's primary sources of funds are deposits, borrowings, principal and interest payments on loans and mortgage-backed securities and the sale of loans, mortgage-backed and investment securities. While maturities and scheduled amortization of loans and mortgage-backed securities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by interest rate cycles and economic conditions. The Company's most liquid assets are cash and cash equivalents, which include investments in highly liquid, short-term investments and interest-bearing deposits. The levels of these assets are dependent on the Company's operating, financing, lending and investing activities during any given period. At March 31, 2001, cash and cash equivalents totaled $84.8 million. Liquidity management for the Company is both a daily and long-term function of the Company's management strategy. Excess funds are generally invested in short-term investments and interest-bearing deposits. In the event that the Company should require funds beyond its ability to generate them internally, additional sources of funds are available through the use of FHLB advances. The Company's cash flows are comprised of three classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Net cash related to operating activities, consisting primarily of interest and dividends received less interest paid on deposits and the origination and sale of loans, provided $15.3 million for the three months ended March 31, 2001. Net cash related to investing activities, consisting primarily of disbursements for loans originated or purchased for investment, offset by principal collections on loans and mortgage-backed securities, provided $40.0 million for the three months ended March 31, 2001. Net cash utilized by financing activities, consisting primarily of net activity in deposit and escrow accounts, net activity from borrowed funds and the payment of dividends, totaled $22.6 million for the three months ended March 31, 2001. The Bank's tangible capital ratio at March 31, 2001 was 7.21%. This exceeded the tangible capital requirement of 1.5% of adjusted assets by $113.5 million. The Bank's core capital ratio at March 31, 2001 was 7.21%. This exceeded the core capital requirement of 4.0% of adjusted assets by $63.8 million. The Bank's risk-based capital ratio was 10.83% at March 31, 2001. The Bank currently exceeds the risk-based capital requirement of 8.0% of risk-weighted assets by $39.1 million. 10 Changes in Financial Condition The Company had total assets of $2.0 billion at March 31, 2001, a decrease of $10.8 million, or 0.5%, from December 31, 2000. Loans totaled $1.5 billion at March 31, 2001, a decrease of $33.8 million. Loan originations were $117.7 million for the three months ended March 31, 2001, offset by loan sales of $55.0 million and principal repayments of $96.4 million. Deposits totaled $1.3 billion at March 31, 2001, an increase of $29.3 million. The deposit base and the interest paid on deposits continues to be affected by alternative investment products and competition within the Company's market areas. The weighted average deposit cost at March 31, 2001 was 5.15% compared to 5.21% at December 31, 2000. Stockholders' equity totaled $170.6 million at March 31, 2001, an increase of $6.5 million. At March 31, 2001, the number of common shares outstanding was 9,295,331 and the book value per common share outstanding was $18.35 per share. On March 16, 2001, the Company declared a $0.14 per share cash dividend payable April 13, 2001 to shareholders of record on March 31, 2001. 11 Asset Quality Non-performing Assets The following table sets forth information as to non-accrual loans and real estate owned at the dates indicated. The Company discontinues the accrual of interest on loans ninety days or more past due, at which time all accrued but uncollected interest is reversed. There were no loans at March 31, 2001 nor during the quarter ended March 31, 2001, which met the definition of an impaired loan. A loan is considered impaired when it is probable that a creditor will be unable to collect contractual principal and interest due according to the contractual terms of the loan agreement. Loans considered for impairment do not include residential mortgage and consumer installment loans.

~~Mortgage~~Quarter ~~Real~~Ended ~~Estate Inter~~-~~segment Consolidated (In thousands) Banking Brokerage Joint Ventures Other Eliminations Total~~ ----------------------------------------------------------------------~~-------------------------------------------------------------~~ ~~Three~~March ~~Months Ended September 30~~31, ~~1999~~December ~~Interest income $ 33~~31,~~424~~ ~~697~~September ~~20 190 (804) 33~~30,~~527~~ ~~Interest~~June ~~expense 19~~30,~~844~~ ~~602~~March ~~127 - (804) 19~~31,~~769~~ ~~----------------------------------------------------------------------------------------------------------------------------------- Net interest income~~ (~~loss)~~Dollars ~~13,580~~in ~~95 (107~~thousands) ~~190~~2001 -2000 ~~13,758~~2000 ~~Provision~~2000 ~~for~~2000 ~~loan losses 50~~ - - - - 50 ------------------------------------------------------------------------------------------------------------ Non-~~----------------------~~accrual ~~Net~~mortgage ~~interest~~loans ~~income~~90 ~~(loss)~~days ~~after~~or ~~provision~~more ~~for~~past ~~loan~~due ~~losses~~$ 132,~~530~~478 ~~95 (107) 190 - 13,708 Other fees and commissions 1,139~~ 2,~~785~~703 ~~- 577 (336)~~ 4,~~165~~598 ~~Other noninterest income 67 - 996 5 (49) 1~~3,~~019~~393 ~~Noninterest expense 8,621~~ 3,~~281~~143 Non-accrual ~~729~~commercial ~~(385)~~real ~~12,246~~estate ~~-----------------------------------------------------------------------------------------------------------------------------------~~loans ~~Income~~90 ~~(loss)~~days ~~before~~or ~~income~~more ~~taxes~~past ~~6,115~~due ~~(401)~~680 ~~889~~657 43645 -643 ~~6,646~~643 ~~Income tax expense (benefit) 1,801 (156) 351 22~~ Non-accrual ~~2,018~~consumer ~~-----------------------------------------------------------------------------------------------------------------------------------~~loans Net income (loss) $ 4,314 (245) 538 21 - 4,628 ----------------------------------------------------------------------------------------------------------------------------------- Nine Months Ended September 30, 2000 Interest income $ 103,860 486 84 613 (1,111) 103,932 Interest expense 62,739 425 528 90 ~~(1,111)~~days ~~62,671~~or ~~-----------------------------------------------------------------------------------------------------------------------------------~~more ~~Net~~past ~~interest~~due ~~income~~946 ~~(loss)~~972 ~~41,121~~728 61720 ~~(444)~~685 ~~523~~ - ~~41,261 Provision for loan losses 1,600~~ - - - - ~~1,600~~ ----------------------------------------------------------------~~-------------------------------------------------------------------~~ ~~Net~~Total ~~interest income (loss) after provision for loan losses 39,521 61 (444) 523~~ non-performing ~~39,661~~loans ~~Other fees and commissions 3~~4,~~783~~104 14,~~199~~332 ~~- 1,737 (414) 6,305 Other noninterest income, net (~~5,~~398)~~971 - 4,~~318~~756 ~~(112) (159) (1,351) Noninterest expense 26,344~~ 4,~~329~~471 39Total ~~1,843~~foreclosed ~~(573)~~real ~~31,982~~estate ~~-----------------------------------------------------------------------------------------------------------------------------------~~182 ~~Income~~378 ~~(loss)~~147 ~~before~~629 ~~income~~693 ~~taxes and extraordinary item 11,562 (3,069) 3,835 305~~ - ~~12,633 Income tax expense (benefit) 3,539 (1,217) 1,516 126~~ - ~~3,964~~ -------------------------------------------------------------------~~----------------------------------------------------------------~~ ~~Income~~Total ~~(loss)~~non-performing ~~before~~assets ~~extraordinary~~$ ~~item 8~~4,~~023~~286 (14,~~852)~~710 26,~~319~~118 ~~179 - 8,669 Extraordinary item-gain on early extinguishment of debt, net of tax~~ 5,~~700~~385 ~~- - - -~~ 5,~~700~~164 --------------------------------------------------------------------- Total non-~~-------------------------------------------------------------~~performing ~~Net~~loans ~~income~~to ~~(loss)~~total $loans ~~13,723~~0.27% ~~(1,852)~~0.28 ~~2,319~~0.40 ~~179~~0.32 -0.32 ~~14,369~~Total non-~~----------------------------------------------------------------------------------------------------------------------------------~~performing ~~Assets~~assets ~~$1,950,897~~to ~~15,085~~total ~~23,866~~assets ~~14,787~~0.21% ~~(33,038)~~0.23 ~~1,971,597~~0.31 ~~-----------------------------------------------------------------------------------------------------------------------------------~~0.28 0.28

The following table sets forth certain information regarding the Company's allowance for loan losses at the dates indicated.

Classification of Assets The Company regularly reviews the assets in its portfolio to determine whether any assets require classification in accordance with applicable regulations. As of March 31, 2001 the Company had total classified assets of $3.9 million, of which $3.2 million were classified "substandard" and $658,000 were classified as "doubtful." The assets so classified consisted of auto loans, single family residential loans including equity lines of credit and foreclosed single family residential loans (real estate owned). 12 Loan Portfolio Composition The following table sets forth the composition of the Company's loan portfolio in dollar amounts and in percentages at the dates indicated.

~~Quarter~~March ~~Ended~~31, December 31, September 30, June 30, March 31, 2001 2000 2000 2000 2000 ------------------------------------------------------------------------- ~~September 30, June 30, March 31, December 31, September 30, (Dollars in thousands) 2000 2000 2000 1999 1999~~ ---------------------------- Percent Percent Percent Percent Percent of of of Of of Amount Total Amount Total Amount Total Amount Total Amount Total --------------------- ------------------ ---------- ------- ---------- ------- --------- ------- (Dollars in thousands) Mortgage loans: One-to ~~Non~~four-~~accrual~~family ~~mortgage~~$ ~~loans~~622,592 9037.40% ~~days~~656,413 or38.76 ~~more~~692,707 ~~past~~42.08 ~~due~~713,377 $44.42 4724,~~598~~859 348.02 Multi-family 224,~~393~~028 313.46 227,~~143~~601 313.44 210,~~701~~214 312.77 205,~~656~~793 ~~Non-accrual~~12.81 ~~commercial~~176,778 11.71 Commercial real estate ~~loans~~161,547 909.70 ~~days~~163,492 or9.65 ~~more~~149,802 ~~past~~9.10 ~~due~~142,373 ~~645~~8.87 ~~643~~142,794 ~~643~~9.46 ~~189~~Land 6,239 0.37 6,858 0.40 6,551 0.40 7,914 0.49 5,680 0.38 Construction One-to ~~Non~~four-~~accrual~~family ~~consumer~~25,517 ~~loans~~1.53 9028,398 ~~days~~1.68 or27,837 ~~more~~1.69 ~~past~~26,827 ~~due~~1.67 ~~728~~21,817 ~~720~~1.45 ~~685~~Multi-family ~~651~~209,412 ~~302~~12.58 192,964 11.39 159,107 9.66 124,200 7.74 95,637 6.33 Commercial real estate 94,934 5.70 99,350 5.87 94,802 5.76 95,784 5.96 73,662 4.88 --------------------- ------------------ ---------- ------ ---------- ------- ~~Total~~--------- ~~non~~-~~performing~~------ Total mortgage loans 51,~~971~~344,269 80.74 1,375,076 81.19 1,341,020 81.46 1,316,268 81.96 1,241,227 82.23 Other loans: Commercial leases 50,762 3.05 46,407 2.74 36,577 2.22 30,263 1.89 25,371 1.68 Home equity lines of credit 112,634 6.77 113,311 6.69 110,714 6.72 107,245 6.68 102,920 6.82 Automobile loans 136,459 8.20 138,664 8.19 138,616 8.42 134,245 8.36 123,354 8.17 Commercial business loans 4,~~756~~447 0.27 4,~~471~~571 0.27 4,~~541~~518 30.27 4,~~958~~080 ~~Total~~0.25 ~~foreclosed~~4,012 ~~real~~0.27 ~~estate~~Consumer loans 16,147 ~~629~~0.97 ~~693~~15,638 ~~241~~0.92 7814,915 0.91 13,830 0.86 12,510 0.83 --------------------- ------------------ ---------- ------ ---------- ------- ~~Total~~--------- ~~non~~-~~performing~~------ ~~assets~~Total $loans 6receivable 1,~~118~~664,718 5100.00% 1,~~385~~693,667 5100.00 1,~~164~~646,360 4100.00 1,~~782~~605,931 4100.00 1,~~036~~509,394 100.00 -------- ------ ------ ------- ------- Add (deduct): Loans in process One-to four-family (7,840) (9,647) (12,441) (11,666) (8,630) Multi-family (132,815) (125,534) (102,648) (91,343) (59,545) Commercial real estate (23,814) (24,261) (27,595) (32,863) (24,792) Premiums and deferred loan costs (fees), net (477) (653) 132 131 397 Allowance for loan losses (7,307) (7,276) (7,244) (6,176) (6,135) ----------- ----------- ---------- ~~Total~~---------- ~~non~~-~~performing~~--------- ~~loans~~Loans toreceivable, ~~total~~net ~~loans~~$1,492,465 ~~0.40%~~1,526,296 ~~0.32~~1,496,564 ~~0.32~~1,464,014 ~~0.33~~1,410,689 ~~0.30~~----------- ~~Total~~----------- ~~non~~-~~performing~~--------- ~~assets~~---------- ~~to total assets 0.31% 0.28 0.28 0.24 0.21~~----------

13 Asset/Liability Management The Company's asset and liability management strategy attempts to minimize the risk of a significant decrease in net interest income caused by changes in the interest rate environment without penalizing current income. Net interest income, the primary source of the Company's earnings, is affected by interest rate movements. To mitigate the impact of changes in interest rates, a balance sheet must be structured so that repricing opportunities exist for both assets and liabilities in approximately equivalent amounts at basically the same time intervals. Imbalances in repricing opportunities at any point in time constitute an interest sensitivity gap, which is the difference between interest sensitive assets and interest sensitive liabilities. These static measurements do not reflect the results of any potential activity and are best used as early indicators of potential interest rate exposures. The following table sets forth the amounts of interest-bearing assets and interest-bearing liabilities outstanding at March 31, 2001, which are anticipated by the Company to reprice or mature in each of the future time periods shown. The amounts of assets and liabilities shown which reprice or mature during a particular period were based upon the contractual terms of the asset or liability or certain assumptions concerning the amortization and prepayment of such assets and liabilities. Savings accounts, Now accounts and money market accounts were assumed to be withdrawn at annual percentage rates of 17%, 37% and 79%, respectively. Management believes that these assumptions approximate actual experience and considers them reasonable, although the actual amortization and repayment of assets and liabilities may vary substantially. Interest Rate Sensitivity Gap Analysis

~~Quarter~~At ~~Ended~~March 31, 2001 ------------------------------------------------------------------- More Than More Than 1 Year 1 Year 3 Years More Than (Dollars in thousands) Or Less To 3 Years To 5 Years 5 Years Total --------------------------------------------------------------------------------------------------------------------- ~~September~~Interest-Earning 30Assets: Mortgage loans (1) $ 415,809 ~~June~~177,962 30194,620 ~~March~~385,555 311,173,946 ~~December~~Equity 31lines of credit (1) 112,921 ~~September~~- 30- - 112,921 Automobile loans (~~Dollars~~1) in962 ~~thousands~~39,721 91,130 6,022 137,835 Consumer loans and leases (1) ~~2000~~8,266 ~~2000~~40,793 ~~2000~~11,150 ~~1999~~10,757 ~~1999~~70,966 Mortgage-backed securities (2) 87,593 44,685 31,984 71,458 235,720 Interest-bearing deposits 64,688 - - - 64,688 Investment securities (2) 36,543 - 28,675 32,672 97,890 --------------------------------------------------------------------------------------------------------------------- ~~Balance~~Total atinterest-earning ~~beginning~~assets of726,782 ~~period~~303,161 $357,559 6506,~~176~~464 61,~~135~~893,966 6Interest-Bearing Liabilities: Savings accounts 37,~~031~~573 657,~~251~~069 637,~~307~~204 ~~Provision~~89,169 ~~for~~221,015 ~~loan~~NOW ~~losses~~interest-bearing 1accounts 23,~~200~~322 ~~200~~21,348 ~~200~~5,713 5012,649 5063,032 ~~Charge-offs~~Money ~~147~~market ~~171~~accounts ~~115~~55,388 ~~288~~7,714 ~~111~~3,672 ~~Recoveries~~3,338 1570,112 12Certificate 19accounts 546,211 324,448 18,949 5- 889,608 Borrowed funds 122,638 287,500 90,000 - 500,138 --------------------------------------------------------------------------------------------------------------------- ~~Balance~~Total atinterest-bearing ~~end~~liabilities ~~of period $ 7~~785,~~244~~132 6698,~~176~~079 6155,~~135~~538 6105,~~031~~156 61,~~251~~743,905 --------------------------------------------------------------------------------------------------------------------- ~~Ratio~~Interest ofsensitivity ~~net~~gap ~~charge-offs~~$ ~~during~~(58,350) ~~the~~(394,918) ~~period~~202,021 to401,308 ~~average~~150,061 ~~loans~~===================================================================================================================== ~~outstanding~~Cumulative ~~0.01%~~interest ~~0.01~~sensitivity ~~0.01~~gap ~~0.02~~$ ~~0.01~~(58,350) ~~Ratio~~(453,268) of(251,247) ~~allowance~~150,061 ~~for~~===================================================================================================================== ~~loan~~Cumulative ~~losses~~interest tosensitivity ~~net~~gap ~~loans~~as ~~receivable~~a atpercentage ~~end~~ of ~~period~~total 0assets (2.4890)% 0(22.4250) 0(12.4347) 07.4445 ~~0.48~~Cumulative ~~Ratio~~net ofinterest-earning ~~allowance~~assets ~~for~~as ~~loan~~a ~~losses~~percentage toof ~~non~~interest-~~performing~~bearing ~~loans~~liabilities ~~at end of period 121~~92.3257 % ~~129~~69.8744 ~~137~~84.2267 ~~132~~108.8160 ~~157.93~~---------------------------------------------------------------------------------------------------------------------

(1) For purposes of the gap analysis, loans and leases are not reduced by the allowance for loan losses and are reduced for non-performing loans. (2) Mortgage-backed and investment securities are not increased (decreased) by unrealized gains (losses) resulting from the accounting for available for sale securities under FASB No. 115. 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 14 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 ARM loans, 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. The Company seeks to reduce the volatility of its net interest income by managing the relationship of interest rate sensitive assets to interest rate sensitive liabilities. To accomplish this, the Company has attempted to increase the percentage of assets, whose interest rates adjust more frequently, and to reduce the average maturity of such assets. The Company currently originates shorter maturity fixed-rate commercial real estate loans, home equity lines of credit and consumer loans, which generally mature or reprice more quickly than fixed-rate residential real estate loans. Adjustable-rate loans are nearly as likely to refinance in low interest rate environments as fixed-rate loans. Often, interest rate cycles allow for these refinancings before the adjustable-rate loans can adjust to fully indexed market rates. In such declining interest rate environments, that result in high levels of loan refinancings, the Company may decide to acquire longer fixed-rate mortgage loans or mortgage-backed securities. To provide an acceptable level of interest rate risk, the Company will implement a funding strategy using long- term FHLB borrowings. As part of its asset/liability strategy, the Company has implemented a policy to maintain its cumulative one-year interest sensitivity gap ratio within a range of (15%) to 15% of total assets, which reflects the current interest rate environment and allows the Company to maintain an acceptable net interest rate spread. The gap ratio will fluctuate as a result of market conditions and management's expectation of future interest rate trends. Quantitative and Qualitative Disclosures About Market Risk As its primary interest rate risk planning tool, the Bank utilizes a market value model. The model measures the Bank's interest rate risk by approximating the Bank's net portfolio value ("NPV"), which is the net present value of expected cash flows from assets, liabilities and any off-balance sheet contracts, under a range of interest rate scenarios, which range from a 300 basis point increase to a 300 basis point decrease in market interest rates (measured in 100 basis point increments). The Bank's asset and liability structure results in a decrease in NPV in a rising interest rate scenario and an increase in NPV in a declining interest rate scenario. During periods of rising interest rates, the value of monetary assets declines more rapidly than the value of monetary liabilities rises. Conversely, during periods of falling interest rates, the value of monetary assets rises more rapidly than the value of monetary liabilities declines. However, the amount of change in value of specific assets and liabilities due to changes in interest rates is not the same in a rising rate environment as in a falling interest rate environment (i.e., the amount of value increase under a specific rate decline may not equal the amount of value decrease under an identical upward interest rate movement). There have been no material changes in market risk since December 31, 2000 as reported in the Company's Form 10-K for the year ended December 31, 2000. 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. 15 Average Balance Sheets The following table sets forth certain information relating to the Company's Consolidated Statements of Financial Condition and reflects the average yield on assets and the average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from average daily balances and include non-performing loans. The yields and costs include fees, which are considered adjustments to yields.

~~September~~Three ~~30,~~Months ~~June~~Ended ~~30,~~ March 31, ~~December~~At March 31, ~~September~~----------------------------------------------------------------- ~~30,~~2001 2000 ~~2000~~2001 ~~2000 1999 1999~~ -------------------- ------------------ ------------------ ------------------ ---------------~~---~~ ~~Percent~~Average ~~Percent~~Average ~~Percent~~Average ~~Percent~~Yield/ ~~Percent~~Average ofYield/ ofYield/ of(Dollars Ofin ofthousands) ~~Amount~~Balance ~~Total~~Interest ~~Amount~~Cost ~~Total~~Balance ~~Amount~~Interest ~~Total~~Cost ~~Amount~~Balance ~~Total~~Cost ~~Amount Total~~ -------------------- ------------------ ------------------ ------------------ -------------------------------------------------------- ~~(Dollars~~Assets: inInterest-earning ~~thousands)~~assets: Mortgage loans:, ~~One-to~~net ~~four-family~~$ 1,190,888 $ ~~692~~23,~~707~~784 427.0899% ~~713~~$ 1,~~377~~121,652 ~~44.42~~$ ~~724~~21,~~859~~420 487.0264% ~~723~~$ 1,~~311~~169,793 497.3975% ~~712~~Equity lines of credit 121,~~290~~161 512,567 8.9059 ~~Multi-family~~103,931 ~~210~~2,~~214~~114 128.7716 ~~205~~113,~~793~~064 127.8169 ~~176~~Automobile loans 139,~~778~~042 112,789 8.7113 ~~172~~120,~~614~~560 112,337 7.7978 ~~164~~138,~~828~~590 128.0188 ~~Commercial~~Consumer ~~real~~loans ~~estate~~and ~~149~~leases 64,~~802~~319 ~~9.10 142~~1,~~373~~344 8.8736 ~~142~~34,~~794~~177 ~~9.46~~690 ~~140,480 9~~8.5908 ~~119~~71,~~376~~018 8.7040 ~~Construction~~Mortgage-backed ~~281~~securities 239,~~746~~254 ~~17.11 246~~4,~~811~~013 156.3771 ~~191~~331,~~116~~257 ~~12.66 173~~5,~~866~~371 116.8749 ~~143~~232,~~229~~628 106.4467 ~~Land~~Interest-bearing 6deposits 51,~~551~~334 0703 5.4055 7,~~914~~189 ~~0.49~~100 5.58 64,~~680~~688 05.3822 2Investment securities 98,~~766~~783 01,840 7.1948 94,472 1,~~251~~623 06.0988 97,885 7.46 -------------------- ------------------ ------------------ ------------------ -------------------------------------------------------- Total ~~mortgage~~interest-earning ~~loans~~assets 1,~~341~~904,~~020~~781 ~~81.46 1~~37,~~316,268~~040 817.9680 1,~~241~~813,~~227~~238 8233,655 7.2343 1,~~213~~887,~~037~~666 827.8366 1Noninterest-earning assets 115,~~140~~547 91,~~974~~268 ~~83.14~~124,196 ~~Other~~---------------------------------------------------------------------------------------------------------------------------------- ~~loans:~~Total ~~Commercial~~assets ~~leases~~$ 362,~~577~~020,328 ~~2.22~~$ 301,~~263~~904,506 ~~1.89~~$ 252,~~371~~011,862 ~~1.68~~================================================================================================================================== ~~20,846~~Liabilities ~~1.42~~and ~~20,396~~Stockholders' ~~1.49~~Equity: ~~Home~~Interest-bearing ~~equity~~liabilities: ~~lines~~Deposits: ofSavings ~~credit~~accounts ~~110~~$ 1,~~714~~095,441 ~~6.72~~$ ~~107~~14,~~245~~684 65.6844% ~~102~~$ 1,~~920~~042,422 ~~6.82~~$ ~~100~~12,~~077~~483 64.8380% 93$ 1,~~958~~110,623 65.8551% ~~Automobile~~NOW ~~loans~~interest-bearing ~~138~~accounts 64,~~616~~620 8145 0.4291 ~~134~~65,~~245~~564 8154 0.3694 ~~123~~63,~~354~~032 80.1791 ~~115,004~~Money ~~7.85~~market ~~102~~accounts 69,~~212~~725 7541 3.4515 ~~Commercial~~83,460 ~~business~~670 ~~loans~~3.22 470,~~518~~112 03.2720 ~~4,080~~---------------------------------------------------------------------------------------------------------------------------------- ~~0.25~~Total 4deposits 1,~~012~~229,786 015,370 5.2707 41,~~163~~191,446 ~~0.28~~13,307 4.48 1,~~071~~243,767 05.3015 ~~Consumer~~Borrowed ~~loans~~funds 14525,~~915~~125 ~~0.91 13~~8,~~830~~165 06.8631 12471,~~510~~968 ~~0.83 11~~6,~~517~~499 05.7952 10500,~~566~~138 06.7716 -------------------- ------------------ ------------------ ------------------ -------------------------------------------------------- Total ~~loans~~interest-bearing ~~receivable~~liabilities 1,~~646~~754,~~360~~911 ~~100~~23,535 5.~~00%~~44 1,~~605~~663,~~931~~414 ~~100~~19,806 4.0078 1,~~509~~743,~~394~~905 ~~100~~5.0044 1NOW noninterest-bearing deposits 60,~~464~~932 56,~~644~~086 ~~100.00~~60,894 1Other liabilities 38,~~372~~033 31,~~177~~234 ~~100.00~~36,513 ------ ------ ------ ------ ----------------------------------------------------------------------------------------------------------- ~~Add~~Total ~~(deduct):~~liabilities ~~Loans~~1,853,876 ~~in process (142~~1,~~684)~~750,734 ~~(135~~1,~~872)~~841,312 ~~(92~~Stockholders' equity 166,~~967)~~452 ~~(95~~153,~~726)~~772 ~~(69~~170,~~225)~~550 ~~Premiums~~----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and ~~deferred~~stockholders' ~~loan~~equity ~~costs~~$ 2,020,328 ~~net~~$ ~~132~~1,904,506 ~~131~~$ ~~397~~2,011,862 ~~379~~----------------------------------------------------------------------------------------------------------------------------------- ~~485~~Net ~~Allowance~~interest ~~for~~income/ ~~loan~~interest ~~losses~~rate ~~(7,244)~~spread ~~(6,176)~~$ (613,~~135)~~505 ~~(6,031)~~2.36% (6$ 13,~~251)~~849 2.65% 2.22% ----------- ----------- ----------- ----------- -------------------------------------------------------------- ~~Loans~~-------- ~~receivable,~~Net interest-earning assets/ net interest margin $ 1149,~~496,564~~870 ~~1,464,014~~2.84% 1$ 149,~~410,689~~824 3.06% ---------------------------------------------------------------------------------------------------------- Interest-earning assets to interest-bearing liabilities 1~~,363,266~~.09 X 1~~,297,186~~.09 X ----------- ----------- ----------- ----------- --------------------------------------------------------------

16 Rate/Volume Analysis The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company's interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

AtThree ~~September~~Months 30Ended March 31, 2001 Compared To Three Months Ended March 31, 2000 --------------------------------------------~~-------------------------~~ ~~More~~Increase ~~Than More Than 1 Year 1 Year 3 Years More Than~~ (~~Dollars in thousands~~Decrease) OrIn ~~Less~~Net ToInterest 3Income ~~Years~~Due To ~~5 Years 5 Years Total~~ --------------------------------------------~~--------------------------------------------------------------------------------~~ ~~Interest-Earning Assets: Mortgage loans~~ (1)In ~~$ 382,075 199,527 198,096 411,397 1,191,095 Equity lines of credit (1~~thousands) ~~111,049~~Volume -Rate -Net - ~~111,049 Consumer loans and leases (1) 8,646 61,155 111,179 14,713 195,693 Mortgage~~-~~backed securities (2) 77,295 45,542 36,043 87,436 246,316 Interest~~-~~bearing deposits 3,202~~ - - - ~~3,202 Investment securities (2) 30,224~~ - - ~~76,690 106,914~~ --------------------------------------------------------------------------------------------------------~~--------------------~~ ~~Total interest~~Interest-~~earning~~Earning ~~assets~~Assets: ~~612,491~~Mortgage ~~306~~loans,~~224~~ ~~345,318~~net ~~590,236~~$ 1,~~854,269~~357 ~~Interest-Bearing Liabilities: Savings accounts 36~~1,~~048~~007 542,~~753~~364 ~~35,694~~Equity ~~85,551~~lines ~~212,046~~of ~~NOW~~credit ~~interest-bearing~~343 ~~accounts~~110 ~~23,745~~453 ~~21,736~~Automobile ~~5,816~~loans ~~12,879~~629 ~~64,176~~25 ~~Money~~654 ~~market~~Consumer ~~accounts~~loans ~~56,602~~and ~~7,882~~leases ~~3,753~~350 ~~3,411~~102 ~~71,648~~452 ~~Certificate~~Mortgage-backed ~~accounts~~securities ~~632~~(1,~~591~~535) ~~212,897~~177 17(1,~~735~~358) Interest-bearing ~~863,223~~deposits ~~Borrowed~~604 ~~funds~~(1) ~~193,200~~603 ~~242,394~~Investment ~~90,000~~securities -74 ~~525,594~~143 217 ----------------------------------------------------------------------------------------------------------------~~------------~~ Total ~~interest-bearing liabilities 942~~1,~~186~~822 ~~539~~1,~~662~~563 ~~152~~3,~~998~~385 ~~101,841 1,736,687~~ ----------------------------------------------------------------------------------------------------------------~~------------~~ Interest-Bearing ~~sensitivity~~Liabilities: ~~gap~~Deposits $405 ~~(329~~1,~~695)~~658 ~~(233~~2,~~438)~~063 ~~192,320~~Borrowed ~~488,395~~funds ~~117~~734 932 1,~~582~~666 ----------------------------------------------------------------------------------------------------------------~~------------~~ ~~Cumulative~~Total ~~interest sensitivity gap $ (329~~1,~~695)~~139 ~~(563~~2,~~133)~~590 ~~(370~~3,~~813)~~729 ~~117,582~~ ----------------------------------------------------------------------------------------------------------------~~------------~~ ~~Cumulative~~Net ~~interest~~change ~~sensitivity~~in ~~gap~~net asinterest aincome ~~percentage~~$ of683 ~~total assets~~ (~~16.60~~1,027) % (~~28.35~~344) ~~(18.67) 5.92 Cumulative net interest~~-~~earning assets as a percentage of interest~~-~~bearing liabilities 65.01 % 62.00 77.32 106.77~~ --------------------------------------------------------------------------------------------------------------~~--------------~~

Comparison of Operating Results for the Three Months Ended March 31, 2001 and March 31, 2000 General Net income totaled $4.6 million, or $0.47 per diluted share for the three months ended March 31, 2001, as compared to $5.2 million, or $0.52 per diluted share reported for the quarter ended March 31, 2000. During the quarter ended March 31, 2000, the Company had auctioned $125 million of FHLB of Chicago advances to other member banks of the FHLB of Chicago and recorded a pre-tax gain of $8.8 million on the sale of these advances. This gain was recorded as an "Extraordinary item-gain on early extinguishment of debt," net of tax of $5.7 million, or $0.57 per diluted share. Concurrently, the Company sold $122 million of investment and mortgage-backed securities, available for sale, recognizing losses of $6.3 million. The gain on these combined de-leveraging transactions, net of fees and tax was $1.4 million. Net interest income for the three months ended March 31, 2001 was $13.5 million, a decrease of $344,000, or 2.5%, from the March 31, 2000 quarter of $13.8 million. Interest Income Interest income for the quarter ended March 31, 2001 totaled $37.0 million, an increase of $3.4 million, or 10.1%, from the prior year's quarter. Interest income on mortgage loans, the largest component of interest-earning assets, increased $2.4 million, or 11.0%, to $23.8 million from the March 2000 quarter. The average balance of the mortgage loan portfolio increased $69.2 million. The annualized average yield on the mortgage loan portfolio 17 increased to 7.99% for the three months ended March 31, 2001 from 7.64% for the 2000 period. The increase in yields is due to the general increase in interest rates and the continued change in the mix of the loan portfolio from a one-to four-family lender to a multi-family and commercial real estate lender. Interest income on equity lines of credit increased $453,000, or 21.4%, to $2.6 million from the prior year's quarter. The average balance of equity lines of credit increased $17.3 million, to $121.2 million from $103.9 million for the March 2000 quarter. Interest income on auto loans increased $452,000 to $2.8 million for the three months ended March 31, 2001. The average balance of the auto loan portfolio increased $18.5 million, while the annualized average yield on the portfolio increased to 8.13% as compared to 7.78% for the comparable quarter a year ago. The average balance of the mortgage-backed securities portfolio decreased $92.0 million to $239.3 million from the March 2000 quarter. As previously mentioned, this was primarily as a result of the de-leveraging security sales in the first quarter of 2000. However, the annualized yield on this portfolio increased from 6.49% to 6.71% when comparing the quarters. Interest Expense Interest expense on deposit accounts increased $2.1 million, or 15.5%, to $15.4 million, for the quarter ended March 31, 2001 compared to the prior year's quarter. The increase is related to both an increase in the average deposit base and the annualized average cost of deposits. The average deposit base increased $38.3 million to $1.2 billion when comparing the quarters. The annualized average cost of deposits for the three months ended March 31, 2001 was 5.07%, an increase from the annualized average cost of 4.48% for the March 2000 period. Since March 31, 2000 and through the year ended December 31, 2000, rates on deposit accounts have generally increased, reflecting the Federal Reserve Bank's influence in increasing rates. In an effort to compete with other banks to retain deposits and improve its interest rate sensitivity position, the Bank has had to offer longer term, higher yielding certificate of deposit accounts which have increased the cost of funds. For the quarter ended March 31, 2001, the Company recorded interest expense on borrowed funds of $8.2 million on an average balance of $525 million at an annualized cost of 6.31% primarily related to FHLB borrowings. During the current quarter, the Company repaid $50 million of FHLB advances that matured. Net Interest Income Net interest income for the three months ended March 31, 2001 decreased $344,000 or 2.5%, to $13.5 million from the 2000 period. The annualized average yield on interest-earning assets increased from 7.43% to 7.80% when comparing the 2000 and 2001 quarters. The annualized average cost of interest-bearing liabilities increased from 4.78% to 5.44%. This resulted in an annualized average net interest rate spread of 2.36% for the three-month period ended March 31, 2001 compared to 2.65% for the prior year's period. During the current quarter, interest-bearing liabilities repriced faster than interest-bearing assets resulting in a decrease in the net interest rate spread. Both the average balance of interest-earning assets and interest-bearing liabilities increased during the quarter ended March 31, 2001 compared to the 2000 quarter. Provision for Loan Losses Based on management's evaluation of the loan portfolio, a provision of $200,000 for loan losses was recorded during the quarter ended March 31, 2001. The allowance for loan losses represents 0.49% of total loans receivable at March 31, 2001. The amount of non-performing loans at March 31, 2001, was $4.1 million, or 0.27% of total loans, compared to $4.5 million or 0.32% of total loans at March 31, 2000. Noninterest Income Total noninterest income for the three months ended March 31, 2001 was $2.9 million compared to an expense of $3.9 million in the 2000 quarter. The quarter ended March 31, 2000 included losses on sales of mortgage-backed and investment securities available for sale of $6.6 million. As previously mentioned, the Company sold these securities concurrently with the auction of FHLB advances as part of a de-leveraging strategy. The gain on the sale of the FHLB advances is shown as an extraordinary item-gain on early extinguishment of debt of $5.7 million, net of tax. Other fees and commissions increased $404,000, primarily due to an increase in loan origination fees contributed by Liberty Home Mortgage. Liberty Home Mortgage sold mortgages totaling $10 million in the first quarter of 2000 compared to $50 million sold in the current quarter. Other income for the quarter ended March 31, 2000, included a write-down in value of an equity investment of $112,000, reflecting a decrease in the respective 18 market value. The current quarter includes income of $413,000 from the investment in Bank Owned Life Insurance which was purchased in the third quarter of 2000. The current quarter's real estate income was $485,000, a decrease of $489,000 from the prior year's quarter. This decrease was primarily due to fewer sales in the March 2001 quarter. In the current quarter, the Bank terminated its participation in a shared ATM network primarily due to increased costs. ATM fee income, net of ATM expenses for the current quarter was $104,000, compared to $152,000 in the prior year's quarter. Noninterest Expense Noninterest expense for the quarter ended March 31, 2001 totaled $9.9 million, a decrease of $939,000, or 8.7% from the prior year's quarter. Compensation and benefits, the largest component of noninterest expense, decreased $458,000, primarily due to staff reductions at the mortgage broker subsidiary. Income Tax Provision The provision for income taxes for the three months ended March 31, 2001 was $1.7 million. The effective tax rate for the quarter was 26.9% compared to 32.9% for the 2000 quarter. The lower effective tax rate for the March 2001 quarter was due to a reduction in the provision of $225,000 as a result of the completion of a review of the Company's tax liability. Part II - Other Information Item 1. Legal Proceedings Not Applicable. Item 2. Changes in Securities Not Applicable. Item 3. Defaults Upon Senior Securities Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders Not Applicable. Item 5. Other Information Not Applicable. 19 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit No. 11 Statement re: Computation of Per Share Earnings

Three Months Ended ~~September~~March 3031, ~~---------------------------------------------------------------~~2001 2000 ~~1999~~ ----------------------------------~~------------------------------~~ ~~Average~~Net ~~Average~~income Average Yield/ Average Yield/ (Dollars in thousands) Balance Interest Cost Balance Interest Cost ------------------------------------------------------------------- ------------------------------ Assets: Interest-earning assets: Mortgage loans, net $~~1,183,831~~ $23,419 7.91% $1,063,287 $19,852 7.47% Equity lines of credit 112,643 2,572 9.06 95,985 1,812 7.49 Automobile loans 137,732 2,764 7.96 90,571 1,925 8.43 Consumer loans and leases 46,891 968 8.24 31,679 536 6.75 Mortgage-backed securities 250,055 4,~~320 6.91 447~~638,~~762~~000 ~~7,208 6.44 Interest-bearing deposits 7,611 126 6.57 34,443 447~~ 5~~.08 Investment securities 102~~,~~292 1~~152,~~929~~000 ~~7.53 101,327 1,747 6.88~~ ----------------------------------~~--------------------------------------------------------------------~~ ~~Total~~Basic ~~interest-earning~~earnings ~~assets~~per ~~1,841,055 36,098 7.83 1,865,054 33,527 7.18 Noninterest~~share-~~earning~~weighted ~~assets~~average ~~98,507~~shares 969,~~741 ------------------------------------------------------------------------------------------------------ Total assets $1~~263,~~939,562~~895 $19,961,~~795~~869 ~~------------------------------------------------------------------------------------------------------~~Effect ~~Liabilities~~of ~~and~~dilutive ~~Stockholders' Equity: Interest~~securities-~~bearing~~stock ~~liabilities:~~options ~~Deposits: Savings accounts $1~~591,~~063,~~943 ~~$14,088 5.25% $1,023,140 $11,820 4.58% NOW interest~~-~~bearing~~ ~~accounts 64,659 150 0.92 64,929 152 0.93 Money market accounts 74,559 608 3.24 86,729 727 3.33~~ ----------------------------------~~--------------------------------------------------------------------~~ ~~Total~~Diluted ~~deposits~~earnings ~~1,203,161~~per ~~14,846 4.90 1,174,798 12,699 4.29 Borrowed funds 495,591 7,780 6.23 521,397 7,070 5.31~~ share-~~-----------------------------------------------------------------------------------------------------~~adjusted ~~Total~~weighted ~~interest-bearing~~average ~~liabilities~~shares 1,698,752 22,626 5.28 1,696,195 19,769 4.60 Noninterest-bearing deposits 55,741 58,975 Other liabilities 34,072 34,944 ------------------------------------------------------------------------------------------------------ Total liabilities 1,788,565 1,790,114 Stockholders' equity 150,997 171,681 ------------------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $1,939,562 $1,961,795 ------------------------------------------------------------------------------------------------------ Net interest income/ interest rate spread $13,472 2.55% $13,758 2.58% ------------------------------------------------------------------------------------------------------ Net interest-earning assets/ net interest margin $ 142,303 2.93 % $ 168,859 2.95% ------------------------------------------------------------------------------------------------------ Interest-earning assets to interest-bearing liabilities 1.08X 1.10X ------------------------------------------------------------------------------------------------------ Nine Months Ended September 30, At September 30, ---------------------------------------------------------------- 2000 1999 2000 ---------------------------------------------------------------- --------------------- Average Average Average Yield/ Average Yield/ Yield/ (Dollars in thousands) Balance Interest Cost Balance Interest Cost Balance Cost ------------------------------------------------------------------- ------------------------------ --------------------- Assets: Interest-earning assets: Mortgage loans, net $1,151,852 $67,275 7.79% $ 1,076,690 $59,793 7.40% $ 1,188,636 7.84% Equity lines of credit 108,061 7,016 8.65 95,393 5,226 7.32 111,145 9~~.11 Automobile loans 129~~,~~941 7~~855,~~710~~838 7.90 73,112 4,681 8.56 140,784 8.65 Consumer loans and leases 40,468 2,506 8.25 32,209 1,737 7.20 55,999 8.46 Mortgage-backed securities 276,813 13,911 6.70 417,887 19,792 6.31 234,435 7.02 Interest-bearing deposits 9,~~063 422 6.20 74~~961,547 2,619 4.63 3,202 6.51 Investment securities 94,914 5,092 7.15 99,462 5,078 6.81 104,146 7.69 ------------------------------------------------------------------------------------------------------ -------------------- Total interest-earning assets 1,811,112 103,932 7.65 1,869~~,300~~ ~~98,926 7.06 1,838,347 7.97 Noninterest~~-~~earning assets 94,655 95,354 133,250~~ ---------------------------------~~---------------------------------------------------------------------~~ ~~--------------------~~Basic ~~Total~~earnings ~~assets~~per ~~$1,905,767~~share $ 1,964,654 $1,971,597 ====================================================================================================== ==================== Liabilities and Stockholders' Equity: Interest-bearing liabilities: Deposits: Savings accounts $1,049,902 $39,509 5.01% $1,043,407 $36,828 4.72% $1,075,269 5.48% NOW interest-bearing accounts 65,494 458 0.9350 ~~62,364 464~~ 0.9952 ~~64,176 0.95 Money market accounts 78,778 1,912 3.23 85,538 2,089 3.27 71,648 3.33~~ ----------------------------------~~-------------------------------------------------------------------~~ ~~---------------------~~Diluted ~~Total~~earnings ~~deposits~~per ~~1,194,174~~share ~~41,879~~$ 40.6747 ~~1,191,309 39,381 4~~0.4252 ~~1,211,093 5.11 Borrowed funds 468,791 20,792 5.91 494,109 19,803 5.29 525,594 6.21~~ ----------------------------------------------------------------------------------------------------- --------------------- Total interest-bearing liabilities 1,662,965 62,671 5.02 1,685,418 59,184 4.67 1,736,687 5.44 Noninterest-bearing deposits 56,584 63,899 56,831 Other liabilities 33,218 36,231 23,182 ----------------------------------------------------------------------------------------------------- --------------------- Total liabilities 1,752,767 1,785,548 1,816,700 Stockholders' equity 153,000 179,106 154,897 ----------------------------------------------------------------------------------------------------- --------------------- Total liabilities and stockholders' equity $1,905,767 $1,964,654 $1,971,597 ===================================================================================================== ===================== Net interest income/ interest rate spread $41,261 2.63% $39,742 2.39% 2.53% ===================================================================================================== ==== Net interest-earning assets/ net interest margin $ 148,147 3.04% $ 183,882 2.83% ===================================================================================================== Interest-earning assets to interest-bearing liabilities 1.09X 1.11X ============================================================================================

(b) Reports on Form 8-K. A report on Form 8-K was filed by the Company on February 1, 2001 for the purpose of reporting, pursuant to Items 5 and 7 of the Form 8-K, that the Company entered into an Agreement and Plan of Merger with Charter One Financial, Inc. and Charter Michigan Bancorp, Inc. as of January 22, 2001. 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Alliance Bancorp Dated: May 4, 2001 /s/ Kenne P. Bristol ------------------- ----------------------------- Kenne P. Bristol President and Chief Executive Officer Dated: May 4, 2001 /s/ Richard A. Hojnicki ------------------- ----------------------------- Richard A. Hojnicki Executive Vice President and Chief Financial Officer 21

Three Months Ended September 30, 2000 Nine Months Ended September 30, 2000 Compared To Compared To Three Months Ended September 30, 1999 Nine Months Ended September 30, 1999 --------------------------------------- ------------------------------------------- Increase (Decrease) Increase (Decrease) In Net Interest Income In Net Interest Income Due To Due To --------------------------------------- ------------------------------------------- (In thousands) Volume Rate Net Volume Rate Net ----------------------------------------------------------------------------------------------------------------------------------- Interest-Earning Assets: Mortgage loans, net $ 2,347 1,220 3,567 4,263 3,219 7,482 Equity lines of credit 344 416 760 755 1,035 1,790 Automobile loans 950 (111) 839 3,414 (385) 3,029 Consumer loans and leases 296 136 432 490 279 769 Mortgage-backed securities (3,381) 493 (2,888) (7,037) 1,156 (5,881) Interest-bearing deposits (420) 99 (321) (2,852) 655 (2,197) Investment securities 17 165 182 (236) 250 14 ----------------------------------------------------------------------------------------------------------------------------------- Total 153 2,418 2,571 (1,203) 6,209 5,006 ----------------------------------------------------------------------------------------------------------------------------------- Interest-Bearing Liabilities: Deposits 311 1,836 2,147 102 2,396 2,498 Funds borrowed (375) 1,085 710 (1,097) 2,086 989 ----------------------------------------------------------------------------------------------------------------------------------- Total (64) 2,921 2,857 (995) 4,482 3,487 ----------------------------------------------------------------------------------------------------------------------------------- Net change in net interest income $ 217 (503) (286) (208) 1,727 1,519 -----------------------------------------------------------------------------------------------------------------------------------

Three Months Ended September 30, 2000 1999 --------------------------------- Net income $ 4,646,000 4,628,000 --------------------------------- Basic earnings per share-weighted average shares 9,267,532 10,846,200 Effect of dilutive securities-stock options 368,361 526,087 --------------------------------- Diluted earnings per share-adjusted weighted average shares 9,635,893 11,372,287 --------------------------------- Basic earnings per share $ 0.50 0.43 --------------------------------- Diluted earnings per share $ 0.48 0.41 ---------------------------------

Nine Months Ended September 30, 2000 1999 ------------------------------------- Net income $ 14,369,000 13,736,000 ------------------------------------- Basic earnings per share-weighted average shares 9,589,485 11,092,453 Effect of dilutive securities-stock options 374,034 522,981 ------------------------------------- Diluted earnings per share-adjusted weighted average shares 9,963,519 11,615,434 ------------------------------------- Basic earnings per share $ 1.50 1.24 ------------------------------------- Diluted earnings per share $ 1.44 1.18 -------------------------------------

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