HOME BANCORP OF ELGIN INC, 10-Q, 1996-11-12

HOME BANCORP OF ELGIN INC
10-Q, 1996-11-12
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 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 September 30, 1996

[ ] 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 0-28696

Home Bancorp of Elgin, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware 36-4090333
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

16 North Spring Street, Elgin, Illinois 60120
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)

(847) 742-3800
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)

N/A
____________________________________________________
(Former name, former address and former fiscal year,
if changed from last Report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve 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 common stock as of the latest practicable date.

Outstanding at
Class September 30, 1996
------------------

Common Stock,
par value $.01 7,009,250

<PAGE>

TABLE OF CONTENTS

PART I -- FINANCIAL INFORMATION
-------------------------------

Item 1. Financial Statements of Home Bancorp of Elgin, Inc.

Consolidated Balance Sheets (Unaudited) -- September 30, 1996
and December 31, 1995 .............................................. 1

Consolidated Statements of Earnings (Unaudited) -- Three and nine
months ended September 30, 1996 and 1995 ........................... 2

Consolidated Statements of Cash Flows (Unaudited) -- Three and
nine months ended September 30, 1996 and 1995 ...................... 3

Notes to Unaudited Consolidated Financial Statements ............... 4

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .............................................. 5

PART II -- OTHER INFORMATION
----------------------------

Item 1. Legal Proceedings ................................................. 18

Item 2. Changes in Securities ............................................. 18

Item 3. Defaults upon Senior Securities ................................... 18

Item 4. Submission of Matters to a Vote of Security Holders ............... 18

Item 5. Other Information ................................................. 18

Item 6. Exhibits and Reports on Form 8-K .................................. 18

Signatures

<PAGE>

Part I - FINANCIAL INFORMATION
---------------------

Item 1. Financial Statements -- The financial statements for 1995 are for Home
Federal Savings and Loan Association of Elgin ("Home Federal" or the
"Association ") only since Home Bancorp of Elgin, Inc. ("Home Bancorp" or the
"Company") was not in existence at that time. The financial statements for 1996
are for Home Bancorp and its consolidated subsidiary.

Home Bancorp of Elgin, Inc. and Subsidiary

CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>

September 30, December 31,
1996, 1995
------------- ------------
(In thousands)

<S> <C> <C>
ASSETS
Cash and due from banks ....................................................... $ 4,159 $ 10,021
Interest-earning deposits ..................................................... 84,080 8,588
Investment securities held-to-maturity ........................................ 5,970 5,948
Loans receivable, net ......................................................... 263,698 267,153
Government National Mortgage Association ......................................
mortgage-backed securities held-to-maturity ............................... 151 187
Accrued interest receivable ................................................... 1,416 1,484
Real estate owned and in judgment, at lower of cost or
fair value ................................................................ 329 496
FHLB of Chicago stock, at cost ................................................ 2,678 3,056
Office properties and equipment, net .......................................... 7,263 6,817
Prepaid expenses and other assets ............................................. 788 770
-------- --------
Total assets .............................................................. $370,532 $304,520
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Savings deposits .............................................................. $266,456 $259,971
Borrowed funds ................................................................. 0 4,000
Advance payments by borrowers for taxes and insurance ......................... 725 1,860
Accrued interest payable and other liabilities ................................ 4,391 2,006
-------- --------
Total liabilities ......................................................... $271,572 $267,837
-------- --------

Stockholders' Equity:
Preferred stock, $.01 par value, 3,000,000 shares
authorized; none outstanding .............................................. $ 0 $ 0
Common stock, $.01 par value; 12,000,000 shares
authorized 7,009,250 shares issued at
September 30, 1996 and none issued at
December 31, 1995......................................................... 70 0
Additional paid-in capital..................................................... 67,904 0
Retained earnings, substantially restricted.................................... 36,593 36,683
Unearned ESOP compensation..................................................... (5,607) 0
------- -------
Total stockholders' equity................................................. 98,960 36,683
------- -------
Total liabilities and stockholders' equity...................................... $370,532 $304,520
======== ========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

- 1 -

<PAGE>

HOME BANCORP OF ELGIN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>

For the Three For the Nine
Months Ended Months Ended
SEPTEMBER 30, SEPTEMBER 30,
---------------- ----------------
1996 1995 1996 1995
---- ---- ---- ----

(In thousands, except per share amounts)

<S> <C> <C> <C> <C>
INTEREST INCOME
Loans secured by real estate ......................................... $5,207 $5,425 $15,761 $16,339
Other loans .......................................................... 13 15 41 44
Mortgage-backed securities held to maturity .......................... 3 4 9 12
Investment securities held to maturity ............................... 90 90 270 270
Interest-earning deposits ............................................ 296 144 642 457
FHLB of Chicago stock ................................................ 46 52 140 148
----- ------ ------ ------
Total interest income ............................................ 5,655 5,730 16,863 17,270
INTEREST EXPENSE
Savings deposits ..................................................... 2,773 2,773 8,222 8,021
Borrowed funds ....................................................... 0 17 37 17
------- ------ ------ ------
Total interest expense ........................................... 2,773 2,790 8,259 8,038
----- ----- ----- -----
Net interest income before provision for loan losses ................. 2,882 2,940 8,604 9,232
Provision for loan losses ............................................ 30 45 90 135
------ ------ ------ -----
Net interest income after provision for loan losses .................. 2,852 2,895 8,514 9,097
----- ----- ----- -----
NON-INTEREST INCOME
Service fee income ................................................... 299 290 893 823
Gain on sale of real estate owned .................................... 0 0 21 0
Gain on sale of office properties and equipment ...................... 0 0 1 0
Other income ......................................................... 6 7 17 16
---- ---- ---- ----
Total non-interest income ........................................ 305 297 932 839
NON-INTEREST EXPENSE
Compensation and benefits ............................................ 964 914 3,751 2,761
Occupancy expense .................................................... 388 407 1,138 1,184
Federal deposit insurance premiums ................................... 1,951 174 2,290 536
Advertising and promotion ............................................ 97 84 270 271
Automated teller machines ............................................ 106 86 327 224
Data processing ...................................................... 227 238 720 725
Other ................................................................ 390 340 1,091 1,075
----- ----- ----- -----
Total non-interest expense ....................................... 4,123 2,243 9,587 6,776
----- ----- ----- -----
Income (loss) before income tax expense (benefit) .................... (966) 949 (141) 3,160
Income tax expense (benefit) ......................................... (375) 398 (51) 1,296
---- --- --- -----
Net income (loss) ................................................ $ (591) $ 551 $ (90) $1,864
====== ====== ======== ======

Earnings per share:
Income (loss) ........................................................ $(0.09) NA $ (0.01) NA
======= == ======== ==
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

- 2 -

<PAGE>

HOME BANCORP OF ELGIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the Three Months Ended For the Nine Months Ended
SEPTEMBER SEPTEMBER
-------------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------- ------------ ----------
(In thousands)

<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) .............................................. $ (591) $ 551 $ (90) $ 1,864
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization expense .......................... 147 181 421 478
Provision for deferred income taxes ............................ - - - 609
Provision for loan losses ...................................... 30 45 90 135
Decrease in deferred loan fees ................................. (102) (149) (286) (398)
Gain on sale of real estate owned .............................. - - (21) -
Gain on sale of office properties and equipment ................ - - (1) -
FHLB of Chicago stock dividend ................................. - - - (46)
Increase (decrease) in accrued interest receivable ............. 82 92 68 (37)
Increase (decrease) in prepaid expenses and other assets, net. . 358 (294) (18) (462)
Increase (decrease) in accrued interest payable and
other liabilities, net ....................................... 1,759 (282) 2,385 (1,344)
------- ------- -------- --------

Net cash provided by operating activities ................... 1,683 144 2,548 799
------- ------- -------- ---------

Cash flows from investing activities:
Net decrease in loans receivable ............................... 268 135 3,839 3,021
Repayment of mortgage-backed securities held-to-maturity ....... 9 17 36 42
Purchase of office properties and equipment .................... (664) (191) (889) (555)
Proceeds from the sale of office properties and equipment ...... - - 1 -
Redemption of stock in the FHLB of Chicago ..................... - - 378 -
--------- ---------- --------- ----------

Net cash provided by (used in) investing activities .......... (387) (39) 3,365 2,508
-------- --------- -------- --------

Cash flows from financing activities:
Net proceeds from the sale of common stock ..................... 62,367 - 62,367 -
Increase (decrease) in borrowed funds .......................... - 3,000 (4,000) 3,000
Net increase (decrease) in savings deposits .................... 7,834 (6,250) 6,485 (9,019)
Net decease in advance payments by
borrowers for taxes and insurance ............................ (1,234) (1,525) (1,135) (1,141)
-------- -------- -------- --------
Net cash provided by (used in) financing activities .......... 68,967 (4,775) 63,717 (7,160)
-------- -------- -------- --------
Increase (decrease) in cash and cash equivalents ............... 70,263 (4,670) 69,630 (3,853)
Cash and cash equivalents at beginning of period ............... 17,976 19,035 18,609 18,218
-------- -------- -------- --------
Cash and cash equivalents at end of period ..................... $ 88,239 $ 14,365 $ 88,239 $ 14,365
======== ======== ======== ========

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest .................................................... $2,772 $2,816 $ 8,294 $ 8,036
Income taxes ................................................ 0 339 530 1,707

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

- 3 -

<PAGE>

Home Bancorp of Elgin, Inc.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

The consolidated financial statements included herein have been prepared
by the Company without audit. In the opinion of management, the quarterly
unaudited consolidated financial statements include all adjustments, consisting
of normal recurring accruals, necessary for a fair presentation of the financial
position and results of operations at and for the periods presented. Certain
information and footnote disclosures normally included in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission. The
results for the periods presented are not necessarily indicative of results to
be expected for the entire year.

(2) Stock Conversion

On September 26, 1996, the Association completed its conversion from a
federally chartered mutual savings and loan association to a federally chartered
stock savings and loan association, and all of the capital stock of the
Association was acquired by Home Bancorp. Home Bancorp issued and sold 7,009,250
shares of its common stock, $.01 par value, at a price of $10.00 per share in a
subscription offering (the "Offering") to certain depositors of Home Federal and
to the Company's Employee Stock Ownership Plan. Net proceeds from the Offering
were $68.0 million.

(3) SAIF Assessment

On September 30, 1996, the Deposit Funds Insurance Act of 1996 (the
"1996 Act") was enacted into law, and it amended the Federal Deposit Insurance
Act in several ways to recapitalize the Savings Association Insurance Fund (the
"SAIF") and reduce the disparity in the assessment rates for the Bank Insurance
Fund (the "BIF") and the SAIF. The 1996 Act authorized the Federal Deposit
Insurance Corporation (the "FDIC") to impose a special assessment on all
institutions with SAIF-assessable deposits in the amount necessary to
recapitalize the SAIF. As implemented by the FDIC, the special assessment has
been fixed, subject to adjustment, at 65.7 basis points of an institution's
SAIF-assessable deposits, and the special assessment will be paid on November
27, 1996. The special assessment is based on the amount of SAIF-assessable
deposits held on March 31, 1995. Based on the foregoing, the special SAIF
assessment to be paid by the Association on November 27, 1996 will be
approximately $1.8 million.

In addition, the 1996 Act expanded the assessment base for the payments
on the bonds (the "FICO bonds") issued in the late 1980s by the Financing
Corporation to recapitalize the now defunct Federal Savings and Loan Insurance
Corporation to include, beginning on January 1, 1997, the deposits of both BIF-
and SAIF-insured institutions. Until December 31, 1999, or such earlier date on
which the last savings association ceases to exist, the rate of assessment for
BIF-assessable deposits shall be one-fifth of the rate imposed on
SAIF-assessable deposits. It has been estimated that the rate of assessments for
the payment of interest on the FICO bonds will be approximately 1.3 basis points
for BIF assessable deposits and approximately 6.4 basis points for
SAIF-assessable deposits beginning on January 1, 1997.

In view of the recapitalization of the SAIF, the FDIC proposed on
October 8, 1996, a reduction in the assessment rate for SAIF-assessable deposits
for periods beginning on October 1, 1996. As would be effective for the
SAIF-assessable deposits of savings associations such as the Association, the
proposed assessment rates would range from 18 to 27 basis points for the last
quarter of 1996 and would range from 0 to 27 basis points for the following
assessment periods.

- 4 -

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

Home Bancorp of Elgin, Inc. ("Home Bancorp" or the "Company") a Delaware
corporation, is the holding company for Home Federal Savings and Loan
Association of Elgin ("Home Federal" or the "Association"), a federally
chartered stock savings and loan association. On September 26, 1996, the
Association completed its conversion (the "Conversion") from a federally
chartered mutual savings and loan association to a federally chartered stock
savings and loan association, and all of the capital stock of the Association
was acquired by Home Bancorp. Home Bancorp issued and sold 7,009,250 shares of
its common stock, $.01 par value, at a price of $10.00 per share in a
subscription offering (the "Offering") to certain depositors of Home Federal and
to the Company's Employee Stock Ownership Plan ("ESOP"). Net proceeds from the
Offering amounted to $68.0 million. The business of the Company consists of the
business of the Association.

The Company's principal business is its investment in Home Federal,
which is a customer-oriented savings and loan association. The Association
attracts retail savings deposits primarily from the general public in its market
area and invests those funds primarily in mortgage loans secured by one- to
four-family owner occupied properties. To a lesser extent, the Association
invests in multifamily mortgage loans, construction and land mortgage loans,
commercial real estate mortgage loans and other loans. The Association's
revenues are derived principally from interest on mortgage loans and interest
and dividends on investments, mortgage-backed securities and, to a much lesser
extent, short-term investments. The Association also derives income from fees
and service charges. The Association's primary sources of funds are retail
savings deposits and, to a lesser extent, advances from the FHLB of Chicago. The
Association does not have any subsidiaries.

RECENT LEGISLATION/SAIF PREMIUMS AND SPECIAL ASSESSMENT

The Association is a member of the Savings Association Insurance Fund
(the "SAIF") of the Federal Deposit Insurance Corporation (the "FDIC") and pays
its deposit insurance assessments to the SAIF of the FDIC. The FDIC also
maintains another insurance fund, the Bank Insurance Fund (the "BIF"), which
primarily insures the deposits of commercial banks and state chartered savings
banks.

Applicable law requires that both the SAIF and the BIF be recapitalized
to a ratio of 1.25% of reserves to deposits. The BIF achieved the 1.25% reserve
ratio in May 1995, but the SAIF was not then expected to be recapitalized until
after 2001. In recognition of the BIF's achievement of the 1.25% reserve ration,
the FDIC reduced the deposit insurance assessment rates for BIF-assessable
deposits. Effective January 1, 1996, the FDIC reduced the annual assessments for
BIF-insured institutions to the legal minimum of $2,000, except for institutions
that were not well capitalized or that were assigned to the higher supervisory
risk categories. The FDIC estimated that 92% of the BIF-insured institutions
would pay only the minimum annual assessment.

In contrast, SAIF reserves had not grown as quickly as BIF reserves due
to a number of factors, including the fact that a significant portion of SAIF
premiums had been and are currently being used to make payments on bonds ("FICO
bonds") issued in the late 1980s by the Financing Corporation to recapitalize
the now defunct Federal Savings and Loan Insurance Corporation. Given the
undercapitalized status of the SAIF, the FDIC had continued the range of
assessment rates of $0.23 to $0.31 per $100 of SAIF-assessable deposits.

- 5 -

<PAGE>

On September 30, 1996, the Deposit Funds Insurance Act of 1996 (the
"1996 Act") was enacted into law, and it amended the Federal Deposit Insurance
Act (the "FDIA") in several ways to recapitalize the SAIF and reduce the
disparity in the assessment rates for the BIF and the SAIF. The 1996 Act
authorized the FDIC to impose a special assessment on all institutions with
SAIF-assessable deposits in the amount necessary to recapitalize the SAIF. As
implemented by the FDIC, the special assessment has been fixed, subject to
adjustment, at 65.7 basis points of an institution's SAIF-assessable deposits,
and the special assessment will be paid on November 27, 1996. The special
assessment is based on the amount of SAIF-assessable deposits held on March 31,
1995. Based on the foregoing, the special SAIF assessment to be paid by the
Association on November 27, 1996 will be approximately $1.8 million.

In addition, the 1996 Act expanded the assessment base for the payments
on the FICO bonds to include, beginning January 1, 1997, the deposits of both
BIF- and SAIF-insured institutions. Until December 31, 1999, or such earlier
date on which the last savings association ceases to exist, the rate of
assessment for BIF-assessable deposits shall be one-fifth of the rate imposed on
SAIF-assessable deposits. It has been estimated that the rate of assessments for
the payment of interest on the FICO bonds will be approximately 1.3 basis points
for BIF-assessable deposits and approximately 6.4 basis points for
SAIFassessable deposits beginning on January 1, 1997.

The 1996 Act also provides that the FDIC cannot assess regular insurance
assessments for an insurance fund unless such assessments are required to
maintain or to achieve the designated reserve ratio of 1.25%. This provision
applies to all institutions except with respect to those member institutions
that are not classified as "well capitalized" or that have been found to have
"moderately severe" or "unsatisfactory" financial, operational or compliance
weaknesses. The Association has not been so classified by the FDIC or the OTS.
Accordingly, assuming that the designated reserve ratio is maintained by the BIF
and the SAIF after the collection of the special SAIF assessment and that the
Association maintains its regulatory status, the Association will have to pay
substantially lower regular assessments on its deposits as compared to those
paid in recent years.

In view of the recapitalization of the SAIF, the FDIC proposed on
October 8, 1996, a reduction in the assessment rate for SAIF-assessable deposits
for periods beginning on October 1, 1996. As would be effective for the
SAIF-assessable deposits of savings associations, such as the Association, the
proposed assessment rates would range from 18 to 27 basis points for the last
quarter of 1996 and would range from 0 to 27 basis points for the following
assessment periods.

The 1996 Act also provides for the merger of the BIF and SAIF on January
1, 1999, with such merger being conditioned upon the prior elimination of the
thrift charter. The Secretary of the Treasury is required to conduct a study of
relevant factors with respect to the development of a common charter for all
insured depository institutions and abolition of separate charters for banks and
thrifts and to report the Secretary's conclusions and findings to the Congress
on or before March 31, 1997.

- 6 -

<PAGE>

SELECTED FINANCIAL AND OTHER DATA OF THE COMPANY

The selected financial ratios and other data of the Company set forth below
is derived in part from, and should be read in conjunction with, the Financial
Statements of the Company and Notes thereto presented elsewhere in this report.
<TABLE>
<CAPTION>

At or For the At of For the
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
(Dollars in thousands, except shares and per share amounts)

<S> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS(1):
PERFORMANCE RATIOS:
Return on average assets(2)............................. (0.73)% 0.73% (0.04)% 0.82%
Return on average equity(2)............................. (4.08) 6.03 (.27) 6.91
Average interest rate spread(3) ....................... 3.19 3.67 3.42 3.86
Net interest margin(4).................................. 3.89 4.10 3.96 4.27
Average interest-earning assets to average
interest-bearing liabilities........................ 118.71% 111.28% 114.12% 110.87%
Non-interest expense to average assets(2)............... 5.11 2.98 4.13 2.97
CAPITAL RATIOS(1):
Average equity to average assets........................ 17.93 12.14 14.25 11.83
Equity to total assets at end of period................. 26.71 12.19 26.71 12.19
Tangible capital(5)..................................... 18.98 12.12 18.98 12.12
Core capital(5)......................................... 18.98 12.12 18.98 12.12
Total risk-based capital(5)............................. 38.71 23.46 38.71 23.46
ASSET QUALITY RATIOS AND OTHER DATA(1):
Total non-performing loans (6).......................... $1,500 $ 930 $1,500 $ 930
Real estate owned, net.................................. $ 329 $ 521 $ 329 $ 521
Non-performing loans to total loans..................... 0.57% 0.35% 0.57% 0.35%
Non-performing assets to total assets................... 0.49 0.49 0.49 0.49
Allowance for loan losses to:
Non-performing loans................................ 60.99 84.34 60.99 84.34
Total loans......................................... 0.35 0.29 0.35 0.29
Number of shares outstanding............................7,009,250 NA 7,009,250 NA
Book value per share.................................... $ 14.12 NA $ 14.12 NA
</TABLE>

(1) With the exception of end-of-period ratios, all ratios are based on
average monthly balances during the indicated periods and are annualized
where appropriate. Capital Ratios and Asset Quality Ratios And Other Data
are end-of-period ratios and data.
(2) Includes one time charge of $1,777,000 ($1,088,000 net of tax effects)
associated with the recapitalization of the SAIF for the three month and
nine month periods ended September 30, 1996 and loss on termination of
pension plan of $837,000 ($512,000 net of tax effects) for the nine month
period ended September 30, 1996. Excluding the SAIF recapitalization
charge, the return on average assets and average equity would have been
0.62% and 3.43%, respectively, for the three months ended September 30,
1996 and for the nine months ended September 30, 1996 would have been
0.43% and 3.02%, respectively. Excluding the SAIF recapitalization charge
and the loss on termination of the pension plan, the return on average
assets and average equity would have been 0.65% and 4.57%, respectively,
for nine months ended September 30, 1996, and the ratio of non-interest
expense to average assets would have been 2.91% and 3.00%, respectively,
for the three months and nine months ended September 30, 1996.
(3) The interest rate spread represents the difference between the
weighted-average yield on interest-earning assets and the
weighted-average cost of interest-bearing liabilities.
(4) The net interest margin represents net interest income as a percent of
average interest-earning assets.
(5) Regulatory capital ratios are for Home Federal only.
(6) Non-performing loans consist of non-accrual loans; the Company did not
have any loans that were 90 days or more past due and still accruing at
any of the dates presented.

- 7 -

<PAGE>

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 relative amounts of interest-earning assets and
interest-bearing liabilities and the interest rates earned or paid on them.

The following tables set forth certain information relating to the
Association's statements of financial condition and the statements of operations
for the three months ended September 30, 1996 and 1995 and the nine months ended
September 30, 1996 and 1995, and reflects the average yield on assets and
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 monthly balances. The yields and costs include fees which are
considered adjustments to yields.

- 8 -

<PAGE>

For the Three Months Ended September 30,
------------------------------------------------------------------
1996 1995
------------------------------ -----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
(Dollars in thousands)

<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Real estate loans(1) ............................. $264,441 $ 5,207 7.88% $ 268,437 $ 5,425 8.08%
Other loans ...................................... 578 13 9.00 681 15 8.81
Mortgage-backed securities ....................... 154 3 7.79 206 4 7.77
Investment securities ............................ 5,968 90 6.03 5,938 90 6.06
Interest-earning deposits ........................ 22,757 296 5.20 8,240 144 6.99
FHLB of Chicago stock ............................ 2,678 46 6.87 3,056 52 6.81
-------- ------- ---- -------- ------- -----

Total interest-earning assets ................. 296,576 5,655 7.63% 286,558 5,730 8.00%
-------- ------ ---- -------- ------- ----

Allowance for loan losses .......................... 905 769
Non-interest earning assets ........................ 27,287 15,155
-------- --------

Total assets .................................. $322,958 $300,944
======== ========

LIABILITIES AND EQUITY:
Interest-bearing liabilities:
NOW/Super NOW accounts ........................... $ 41,515 $ 226 2.18% $ 43,782 $ 253 2.31%
Money market accounts ............................ 17,094 141 3.30 18,296 132 2.89
Passbook accounts ................................ 64,421 510 3.17 67,919 537 3.16
Certificates of deposit .......................... 126,809 1,896 5.98 126,525 1,851 5.85
Borrowed funds ................................... - - - 1,000 17 6.80
-------- ------- ---- --------- ------- -----

Total interest-bearing liabilities ............ 249,839 2,773 4.44% 257,522 2,790 4.33%
-------- ------ ---- -------- ------ -----

Non-interest bearing NOW accounts .................. 10,514 3,715
Other non-interest-bearing liabilities ............. 4,684 3,170
-------- --------

Total liabilities ............................. 265,037 264,407

Stockholders' equity................................ 57,921 36,537
-------- --------

Total liabilities and stockholders' equity .... $322,958 $300,944
======== ========

Net interest income ................................ $2,882 $2,940
====== ======
Interest rate spread(2) ............................ 3.19% 3.67%
==== ====
Net interest margin(3).............................. 3.89% 4.10%
==== ====

Ratio of interest-earning assets to interest-bearing liabilities 118.71% 111.28%
====== ======
</TABLE>

- ---------------------------
(1) In computing the average balance of loans, non-accrual loans have been
included.
(2) Interest rate spread represents the difference between the average yield
earned on interest-earning assets and the average cost of
interest-bearing liabilities.
(3) Net interest margin represents net interest income as a percentage of
average interest-earning assets.

- 9 -

<PAGE>

For the Nine Months Ended September 30,
------------------------------------------------------------------
1996 1995
------------------------------ -----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
(Dollars in thousands)

<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Real estate loans(1) ............................. $264,658 $15,761 7.94% $269,064 $16,339 8.10%
Other loans ...................................... 571 41 9.57 661 44 8.88
Mortgage-backed securities ....................... 165 9 7.27 220 12 7.27
Investment securities ............................ 5,960 270 6.04 5,930 270 6.07
Interest-earning deposits ........................ 15,685 642 5.46 9,523 457 6.40
FHLB of Chicago stock ............................ 2,762 139 6.71 3,041 148 6.49
-------- ------- ----- -------- ------- -----

Total interest-earning assets ................. 289,801 16,863 7.76% 288,439 17,270 7.98%
-------- ------- ---- -------- ------- ----

Allowance for loan losses .......................... 876 724
Non-interest earning assets ........................ 20,505 16,177
-------- --------

Total assets .................................. $309,430 $303,892
======== ========

LIABILITIES AND EQUITY:
Interest-bearing liabilities:
NOW/Super NOW accounts ........................... $ 42,275 $ 685 2.16% $ 43,021 $ 735 2.28%
Money market accounts ............................ 17,378 424 3.14 20,683 438 2.82
Passbook accounts ................................ 65,345 1,529 3.12 70,601 1,627 3.07
Certificates of deposit .......................... 128,073 5,584 5.81 125,529 5,221 5.55
Borrowed funds ................................... 867 37 5.69 333 17 6.81
--------- ------- ----- --------- ------- -----

Total interest-bearing liabilities ............ 253,938 8,259 4.34% 260,167 8,038 4.12%
-------- ------ ----- -------- ------ -----

Non-interest bearing NOW accounts .................. 6,541 3,077
Other non-interest-bearing liabilities ............. 4,852 4,703
-------- --------

Total liabilities ............................. 265,331 267,947

Stockholders' equity................................ 44,099 35,945
-------- --------

Total liabilities and stockholders' equity .... $309,430 $303,892
======== ========

Net interest income ................................ $8,604 $9,232
====== ======
Interest rate spread(2) ............................ 3.42% 3.86%
==== ====
Net interest margin(3).............................. 3.96% 4.27%
==== ====

Ratio of interest-earning assets to interest-bearing liabilities 114.12% 110.87%
====== ======
</TABLE>

- 10 -

<PAGE>

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1996 AND DECEMBER 31, 1995

Total assets increased $66.0 million or 21.7% from $304.5 million at
December 31, 1995 to $370.5 million at September 30, 1996. This increase was
primarily attributable to Home Federal's Conversion from mutual to stock form
and becoming a wholly-owned subsidiary of Home Bancorp on September 26, 1996. In
connection with the Conversion, the Company issued and sold 7,009,250 shares of
its common stock at a price of $10.00 per share in the Offering. The $70,000
increase in common stock and the $67.9 million increase in additional paid-in
capital were from the $68.0 million net proceeds of the Offering.

Savings deposits increased $6.5 million or 2.4% from $260.0 million at
December 31, 1995 to $266.5 million at September 30, 1996 due primarily to
activity relating to the Offering. At September 30, 1996, there were $17.5
million of savings deposits that were to be refunded to subscribers that did not
receive a stock allocation in the Offering. This was offset by a $4.7 million
decrease in savings deposits as a result of withdrawals directed by depositors
for the purchase of stock in the Offering and $6.3 million of withdrawals that
were the result of market conditions and the purchase of stock in the Offering
by account holders that paid with a check drawn on the Association.

Accrued interest payable and other liabilities increased $2.4 million or
118.9% from $2.0 million at December 31, 1995 to $4.4 million at September 30,
1996. The increase is primarily due to the accrual for pension benefits
associated with the recognition of an $837,000 expense as a result of
termination of the Association's pension plan and the $1.8 million accrual for
the recently enacted one-time special assessment to recapitalize the SAIF. At
September 30, 1996, there was $454,000 of accounts payable for Conversion
expenses. This was offset by a decline in accrued income tax payable of $606,000
at September 30, 1996 as a result of the decrease in taxable income.

The $5.6 million in unearned ESOP compensation is a result of the
purchase of stock by the Association for the ESOP in the Offering.

The Company repaid $4.0 million in borrowed funds during the nine months
ended September 30, 1996 and made payments on account of real estate taxes for
its borrowers, which reduced advance payments by borrowers for taxes by $1.1
million.

Other components of the Company's balance sheet also changed from
December 31, 1995 to September 30, 1996. Cash and due from banks decreased $5.8
million from $10.0 million at December 31, 1995 to $4.2 million at September 30,
1996. This was primarily due to funds disbursed to repay borrowed funds of $4.0
million, disbursements of $889,000 for office properties and equipment,
disbursement of $1.1 million for advance payments by borrowers for taxes and
insurance and a $13.1 million transfer to interest-earning deposits. These
decreases were offset by the funds received from the decrease in loans
receivable of $3.5 million, the increase in savings deposits of $6.5 million,
the $167,000 decrease of real estate owned and in judgment, the $378,000
decrease in Federal Home Loan Bank ("FHLB") of Chicago stock and $2.5 million
generated from operations. The increase of $889,000 in office properties and
equipment was primarily due to the payments made for the ongoing construction of
the Association's new South Elgin branch office. The $3.5 million decrease in
loans receivable resulted from loan repayments exceeding loan originations. The
$167,000 decrease of real estate owned resulted from the sale of one of the
Association's real estate owned properties. The decrease of $378,000 in FHLB of
Chicago stock was a result of a stock redemption by the FHLB of Chicago.

The increase in interest-earning deposits of $75.5 million from $8.6
million at December 31, 1995 to $84.1 million at September 30, 1996 was
primarily due to the net proceeds from the Offering and a transfer of $13.1
million from cash and due from banks.

- 11 -

<PAGE>

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
AND 1995

GENERAL. For the three months ended September 30, 1996, there was a net
loss of $591,000 compared to net income of $551,000 for the three months ended
September 30, 1995. The $1.1 million decrease was primarily due to a one time
charge of $1.8 million resulting from the recapitalization of the SAIF and was
offset by a decrease in income tax expense of $773,000. Home Bancorp's net
income for the three months ended September 30, 1996, excluding the one time
after-tax charge of $1.1 million for the recapitalization of the SAIF, was
$497,000, or $0.08 per share.

INTEREST INCOME. Interest income decreased $75,000 or 1.3% from
$5,730,000 for the three months ended September 30, 1995 to $5,655,000 for the
three months ended September 30, 1996. This was primarily due to a decrease in
the average yield on interest-earning assets. The average yield decreased 37
basis points from 8.00% for the three months ended September 30, 1995 to 7.63%
for the three months ended September 30, 1996. This was offset by an increase in
the average balance of interest-earning assets. The average balance of
interest-earning assets increased $10 million or 3.5% from $286.6 million for
the three months ended September 30, 1995 to $296.6 million for the three months
ended September 30, 1996. The average yield on interest-earning assets decreased
primarily as a result of the rates on new loan originations being lower than the
rates on loans repaid and lower average market rates on interest-earning
deposits for the three months ended September 30, 1996 compared to the three
months ended September 30, 1995. The increase in average interest-earning assets
was primarily due to the receipt of the proceeds from the Offering.

INTEREST EXPENSE. Interest expense decreased $17,000 or 0.6% from
$2,790,000 for the three months ended September 30, 1995 to $2,773,000 for the
three months ended September 30, 1996. The decrease is due to a decrease in the
average balance of interest-bearing liabilities of $7.7 million from $257.5
million for the three months ended September 30, 1995 to $249.8 million for the
three months ended September 30, 1996. This was offset by an increase of 11
basis points in the average rate paid on interest-bearing liabilities from 4.33%
for three months ended September 30, 1995 to 4.44% for the three months ended
September 30, 1996. The increase in rate was primarily due to the rates on new
certificates of deposit being higher than the rates on maturing certificates of
deposit.

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest income
before provision for loan losses decreased $58,000 or 2.0% from $2,940,000 for
the three months ended September 30, 1995 to $2,882,000 for the three months
ended September 30, 1996. This decrease was the result of a 48 basis point
decrease in the interest rate spread from 3.67% for the three months ended
September 30, 1995 to 3.19% for the three months ended September 30, 1996. This
was offset by a $10.0 million increase in average interest-earning assets from
$286.6 million for the three months ended September 30, 1995 to $296.6 million
for the three months ended September 30, 1996 and a $7.7 million decrease in
average interest-bearing liabilities from $257.5 million for the three months
ended September 30, 1995 to $249.8 million for the three months ended September
30, 1996.

PROVISION FOR LOAN LOSSES. The provision for loan losses decreased by
$15,000 or 33.3% from $45,000 for the three months ended September 30, 1995 to
$30,000 for the comparable period in 1996. Management determined that decreasing
the provision for loan losses was appropriate in light of its review of the
Association's loan portfolio, asset quality, including the Association's level
of delinquent and non-performing loans, the historically low loan loss
experience and the national and regional economies. Management also considered
the fact that the Association had a slightly smaller loan portfolio in the three
months ended September 30, 1996, as compared to the comparable period in 1995.
The ratio of the allowance for loan losses to non-performing loans was 60.99%
and 84.34% at September 30, 1996 and 1995, respectively, and the ratio of the
allowance for loan losses to total loans was 0.35% and 0.29% at

- 12 -

<PAGE>

such respective dates. Management believes that the provision for loan losses
and the allowance for loan losses are reasonable and adequate to cover any known
losses and any losses reasonably expected in the existing loan portfolio. While
management estimates loan losses using the best available information, such as
independent appraisals for significant collateral properties, no assurance can
be given that future additions to the allowance will not be necessary based on
changes in economic and real estate market conditions, further information
obtained regarding known problem loans, identification of additional problem
loans and other factors, both within and outside of management's control. The
directors of the Association and the Company have reviewed the assumptions
utilized by management in determining the provision for loan losses and the
allowance for loan losses for reasonableness and adequacy.

NON-INTEREST EXPENSE. Non-interest expense increased $1.9 million or
83.8% from $2.2 million for the three months ended September 30, 1995 to $4.1
million for the three months ended September 30, 1996. This increase was
primarily attributable to an increase in federal deposit insurance premiums of
$1.8 million from $174,000 for the three months ended September 30, 1995 to $2.0
million for the three months ended September 30, 1996. This increase in federal
deposit insurance premiums of $1.8 million resulted from the recently enacted
assessment to recapitalize the SAIF. The increase in non-interest expense was
also attributable to an increase in compensation and benefits expense and other
non-interest expense. Compensation and benefit expense increased $50,000 or 5.5%
from $914,000 for the three months ended September 30, 1995 to $964,000 for the
three months ended September 30, 1996, which was primarily due to normal salary
increases. Other non-interest expense increased $50,000 or 6.8% from $340,000
for the three months ended September 30, 1995 to $390,000 for the three months
ended September 30, 1996. This was primarily due to a one-time increase in
insurance expense for additional coverage required in connection with the
Conversion and increased real estate expense for repair of real estate owned.

INCOME TAX EXPENSE. Income tax expense decreased $773,000 from $398,000
for the three months ended September 30, 1995 to a tax benefit of $375,000 for
the three months ended September 30, 1996. This was due to the decrease in
income before income taxes of $1.9 million from income of $949,000 for the three
months ended September 30, 1995 to a loss of $966,000 for the three months ended
September 30, 1996. The effective tax rate was 38.8% for the three months ended
September 30, 1996 compared to 41.9% for the three months ended September 30,
1995.

- 13 -

<PAGE>

COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1995

GENERAL. For the nine months ended September 30, 1996 there was a net
loss of $90,000 compared to net income of $1.9 million for the nine months ended
September 30, 1995. This was primarily due to a one time charge of $1.8 million
resulting from the recapitalization of the SAIF and recognition of an $837,000
expense resulting from the termination of the Association's pension plan in
connection with the Conversion. There was also a decrease of $628,000 in net
interest income for the nine months ended September 30, 1996 compared to the
nine months ended September 30, 1995, which was offset by a decrease in income
tax expense of $1.3 million for the nine months ended September 30, 1996
compared to the nine months ended September 30, 1995. Home Bancorp's net income
for the nine months ended September 30, 1996, excluding the one time after-tax
charge of $1.1 million for the recapitalization of the SAIF and excluding the
after-tax loss of $512,000 for the termination of the Association's pension
plan, was $1.5 million or $0.23 per share, as compared to net income of $1.9
million for the nine months ended September 30, 1995.

INTEREST INCOME. Interest income decreased $407,000 or 2.4% from $17.3
million for the nine months ended September 30, 1995 to $16.9 million for the
nine months ended September 30, 1995. This was primarily due to a decrease in
the average yield on interest-earning assets of 22 basis points from 7.98% for
the nine months ended September 30, 1995 to 7.76% for the nine months ended
September 30, 1996. The average yield on interest-earning assets decreased
primarily as a result of the rates on new loan originations being lower than the
rates on loans repaid and lower average market rates on interest-earning
deposits for the nine months ended September 30, 1996 compared to the nine
months ended September 30, 1995. This decrease was offset by a $1.4 million or
0.5% increase in the average balance of interest-earning assets from $288.4
million for the nine months ended September 30, 1995 to $289.8 million for the
nine months ended September 30, 1996.

INTEREST EXPENSE. Interest expense increased $221,000 or 2.7% from
$8,038,000 for the nine months ended September 30, 1995 to $8,259,000 for the
comparable period in 1996. This was primarily due to the increase in the average
rate paid on interest-bearing liabilities of 22 basis points from 4.12% for the
nine months ended September 30, 1995 to 4.34% for the nine months ended
September 30, 1996. This is due primarily to new certificates of deposit earning
higher rates of interest than maturing certificates. This increase was offset by
a decrease in the average balance of interest-bearing liabilities of $6.3
million or 2.4% from $260.2 million for the nine months ended September 30, 1995
to $253.9 million for the nine months ended September 30, 1996.

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest income
before provision for loan losses decreased $628,000 or 6.8% from $9.2 million
for the nine months ended September 30, 1995 to $8.6 million for the comparable
period in 1996. This was primarily due to the 44 basis point decrease in
interest rate spread from 3.86% for the nine months ended September 30, 1995 to
3.42% for the nine months ended September 30, 1996. This was offset by a $1.4
million increase in average interest-earning assets from $288.4 million for the
nine months ended September 30, 1995 to $289.8 million for the nine months ended
September 30, 1996 and a decrease in average interest-bearing liabilities of
$6.3 million from $260.2 million for the nine months ended September 30, 1995 to
$253.9 million for the nine months ended September 30, 1996.

PROVISION FOR LOAN LOSSES. The provision for loan losses decreased by
$45,000 or 33.3% from $135,000 for the nine months ended September 30, 1995 to
$90,000 for the comparable period in 1996. Management determined that decreasing
the provision for loan losses was appropriate in light of its review of the
Association's loan portfolio, asset quality, delinquent and non-performing
loans, the historically low loan loss experience and the national and regional
economics. Management also considered the fact that

- 14 -

<PAGE>

the Association had a slightly smaller loan portfolio in the nine months ended
September 30, 1996 as compared to the comparable period in 1995. The ratio of
allowance for loan losses to non-performing loans was 60.99% and 84.34% at
September 30, 1996 and September 30, 1995, respectively, and the ratio of the
allowance for loan losses to total loans was 0.35% and 0.29% at such respective
dates. Management believes that the provision for loan losses and the allowance
for loan losses are reasonable and adequate to cover any known losses and any
losses reasonably expected in the existing loan portfolio. While management
estimates loan losses using the best available information, such as independent
appraisals for significant collateral properties, no assurance can be given that
future additions to the allowance will not be necessary based on changes in
economic and real estate market conditions, further information obtained
regarding known problem loans, identification of additional problem loans and
other factors, both within and outside of management's control. The directors of
the Association and the Company have reviewed the assumptions utilized by
management in determining the provision for loan losses and the allowance for
loan losses for reasonableness and adequacy.

NON-INTEREST INCOME. Non-interest income increased $93,000 or 11.1% from
$839,000 for the nine months ended September 30, 1995 to $932,000 for the nine
months ended September 30, 1996. This increase was due primarily to an increase
in service fee income of $70,000 from $827,000 for the nine months ended
September 30, 1995 to $893,000 for the nine months ended September 30, 1996. The
increase in service fee income is due to a change in the Association's ATM
processors, which resulted in service fee income and expenses being accounted
for on a gross basis as a part of both non-interest income and non-interest
expense.

NON-INTEREST EXPENSE. Non-interest expense increased $2.8 million or
41.5% from $6.8 million for the nine months ended September 30, 1995 to $9.6
million for the nine months ended September 30, 1996. The increase was primarily
due to increases in compensation and benefit expense, federal deposit insurance
premium expense and automated teller machine expense. Compensation and benefit
expense increased $1.0 million from $2.8 million for the nine months ended
September 30, 1995 to $3.8 million for the comparable period in 1996. The
increase in compensation and benefit expense was primarily attributed to pension
termination expense of $837,000 resulting from termination of the Association's
pension plan in connection with the Conversion. The remaining $153,000 was
primarily due to normal salary increases. Federal deposit insurance premiums
increased $1.8 million from $536,000 for the nine months ended September 30,
1995 to $2.3 million for the nine months ended September 30, 1996. The increase
was primarily attributable to the one time charge of $1.8 million resulting from
the recently enacted assessment to recapitalize the SAIF. Automated teller
machine expense increased $104,000 from $224,000 for the nine months ended
September 30, 1995 to $327,000 for the nine months ended September 30, 1996. The
increase in automated teller machine expense is due to a change in the
Association's ATM processors, which resulted in service fee income and expenses
being accounted for on a gross basis as a part of both non-interest income and
non-interest expense.

INCOME TAX EXPENSE. Income tax expense decreased $1,347,000 from
$1,296,000 for the nine months ended September 30, 1995 to an income tax benefit
of $51,000 for the nine months ended September 30, 1996. This was attributable
to a decrease in income before income taxes of $3,301,000. The effective tax
rate for the nine months ended September 30, 1996 was 36.2% and for the nine
months ended September 30, 1995 was 41.0%.

- 15 -

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of funds are savings deposits, principal
and interest payments on loans and securities and, to a limited extent,
borrowings from the FHLB of Chicago. While maturities and scheduled amortization
of loans and securities provide an indication of the timing of the receipt of
funds, changes in interest rates, economic conditions and competition strongly
influence mortgage prepayment rates and savings deposit flows, reducing the
predictability of the timing of sources of funds.

On September 26, 1996, the Association completed the Conversion from a
federally chartered mutual savings and loan association to a federally chartered
stock savings and loan association, and all of the capital stock of the
Association was acquired by Home Bancorp. Home Bancorp issued and sold 7,009,250
shares of its common stock, $.01 par value, at a price of $10.00 per share in a
subscription offering (the "Offering") to certain depositors of Home Federal and
to the Company's Employee Stock Ownership Plan. Net proceeds from the Offering
were $68.0 million. At September 30, 1996, total stockholders' equity of Home
Bancorp was $99.0 million. The ratio of Home Bancorp's equity to total assets at
September 30, 1996 was 26.71%.

The Association is required to maintain an average daily balance of
liquid assets and short-term liquid assets as a percentage of net withdrawable
savings deposit accounts plus short-term borrowings, as defined by the
regulations of the OTS. The minimum required liquidity and short-term liquidity
ratios are currently 5.0% and 1.0%, respectively. At September 30, 1996, the
Association's liquidity ratio was 23.4% and its short-term liquidity ratio was
21.1%. The levels of the Association's short-term liquid assets are dependent on
the Association's operating, financing and investing activities during any given
period. Management believes it will have adequate resources to fund all
commitments on a short-term and long-term basis in accordance with its business
strategy.

The primary investing activities of the Company are the origination of
mortgage and other loans and the purchase of U. S. government or U. S.
government agency securities.

See the "Statements of Cash Flows" in the Unaudited Consolidated
Financial Statements included in this Form 10-Q for the sources and uses of cash
flows for operating activities, investing activities and financing activities
for the three and nine months ended September 30, 1996 and 1995.

The Company has other sources of liquidity if a need for additional funds
arises, including the ability to obtain FHLB of Chicago advances of up to $53.6
million based on the Association's current investment in FHLB of Chicago stock.
There were no borrowings outstanding at September 30, 1996.

At September 30, 1996, the Association had outstanding loan origination
commitments of $3.7 million, undisbursed loans in process of $350,000 and unused
lines of consumer credit of $266,000. The Association anticipates that it will
have sufficient funds available to meet its current origination and other
lending commitments. Certificates of deposit scheduled to mature in one year or
less from September 30, 1996 totalled $72.0 million. Based upon the
Association's most recent experience and pricing strategy, management believes
that a significant portion of such deposits will remain with the Association.

At September 30, 1996, the Association exceeded all of its regulatory
capital requirements with a tangible capital level of $65.0 million, or 18.98%
of total adjusted assets, which is above the required level of $5.1 million or
1.5%; core capital of $65.0 million, or 18.98% of total adjusted assets, which
is above the required level of $10.3 million or 3.0%; and total risk-based
capital of $65.9 million, or 38.71% of risk-weighted assets, which is above the
required level of $13.6 million, or 8.0%.

- 16 -

<PAGE>

RECENT TAX LEGISLATION REGARDING TAX BAD DEBT RESERVES

Prior to the enactment, on August 20, 1996, of the Small Business Job
Protection Act of 1996 (the "1996 Tax Act"), for federal income tax purposes,
thrift institutions such as the Association, which met certain definitional
tests primarily relating to their assets and the nature of their business, were
permitted to establish tax reserves for bad debts and to make annual additions
thereto, which additions could, within specified limitations, be deducted in
arriving at their taxable income. The Association's deduction with respect to
"qualifying loans," which are generally loans secured by certain interests in
real property, could be computed using an amount based on a six-year moving
average of the Association's actual loss experience (the "Experience Method"),
or a percentage equal to 8.0% of the Association's taxable income (the "PTI
Method"), computed without regard to this deduction and with additional
modifications and reduced by the amount of any permitted addition to the
non-qualifying reserve.

Under the 1996 Tax Act, the PTI Method was repealed and the Association
will be required to use the Experience Method of computing additions to its bad
debt reserve for taxable years beginning with the Association's taxable year
beginning January 1, 1996. In addition, the Association will be required to
recapture (I.E., take into income) over a six-year period, beginning with the
Association's taxable year beginning January 1, 1996, the excess of the balance
of its bad debt reserves (other than the supplemental reserve) as of December
31, 1995 over the greater of (a) the balance of such reserves as of December 31,
1987 or (b) an amount that would have been the balance of such reserves as of
December 31, 1995 had the Association always computed the additions to its
reserves using the six-year moving average Experience Method. However, under the
1996 Tax Act, such recapture requirements will be suspended for each of the two
successive taxable years beginning January 1, 1996 in which the Association
originates a minimum amount of certain residential loans during such years that
is not less than the average of the principal amounts of such loans made by the
Association during its six taxable years preceding January 1, 1996. This
legislation will result in an aggregate tax liability of $1.9 million. Since the
Association has already provided a deferred income tax liability of this amount
for financial reporting purposes, there will be no adverse impact to the
Association's financial condition or results of operations from the enactment of
this legislation.

OTHER

This report contains certain forward looking statements pertaining to
non-interest expense. These projections are subject to various factors that
could cause actual results to differ materially from the estimates made in the
forward looking statements. Such factors include deposit insurance expense,
interest rates, customer preferences and general economic conditions.

- 17 -

<PAGE>

Part II -- OTHER INFORMATION
-----------------

Item 1. Legal Proceedings

None

Item 2. Changes in Securities

None

Item 3. Defaults upon Senior Securities

None

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

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibit 27 -- Financial Data Schedule*

(b) Reports on Form 8-K
None

*Submitted only with filing in electronic format.

- 18 -

<PAGE>

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.

HOME BANCORP OF ELGIN, INC.
--------------------------------------
(Registrant)

By: /s/ Lyle N. Dolan
-----------------------------------
Lyle N. Dolan
Executive Vice President and Chief
Financial and Accounting Officer

November 8, 1996

<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and the statements of income of Home Bancorp of
Elgin, Inc. and Subsidiary and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,159,159
<INT-BEARING-DEPOSITS> 84,080,342
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 151,068
<INVESTMENTS-MARKET> 151,437
<LOANS> 266,566,100
<ALLOWANCE> 914,831
<TOTAL-ASSETS> 370,532,391
<DEPOSITS> 266,455,605
<SHORT-TERM> 0
<LIABILITIES-OTHER> 0
<LONG-TERM> 0
0
0
<COMMON> 70,000
<OTHER-SE> 98,890,065
<TOTAL-LIABILITIES-AND-EQUITY> 370,532,391
<INTEREST-LOAN> 15,802,201
<INTEREST-INVEST> 1,060,411
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 16,862,612
<INTEREST-DEPOSIT> 8,221,925
<INTEREST-EXPENSE> 8,259,186
<INTEREST-INCOME-NET> 8,603,426
<LOAN-LOSSES> 90,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 9,586,212
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<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
<YIELD-ACTUAL> 3.96
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</TABLE>