<PAGE> 1
SUBURBAN FEDERAL SAVINGS, A FEDERAL SAVINGS BANK
CASH OR DEFERRED PROFIT SHARING PLAN
CONTENTS
Pages
Independent Auditors' Report............................................. 1
Financial Statements for the year ended
December 31, 1996 and 1995:
Statement of Net Assets Available for Plan Benefits...................... 2
Statement of Changes in Net Assets Available
for Plan Benefits.................................................... 3
Notes to Financial Statements............................................ 4-6
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INDEPENDENT AUDITORS' REPORT
To the Trustees of
Suburban Federal Savings, A Federal Savings Bank
Cash or Deferred Profit Sharing Plan
Flossmoor, Illinois
We have audited the accompanying statements of net assets available for
plan benefits of Suburban Federal Savings, A Federal Savings Bank Cash or
Deferred Profit Sharing Plan (the "Plan") as of December 31, 1996 and 1995, and
the related statements of changes in net assets available for plan benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As disclosed in note 3 to the financial statements, the Plan records its
stock investment at current fair value whereas generally accepted accounting
principles require that this investment be carried at the lower of cost or fair
value. The effect of such departure on the financial statements is to
overstate net assets available for Plan benefits at December 31, 1996 and 1995
by $484,275 and $383,960 respectively.
In our opinion, except as noted above, the financial statements referred
to above present fairly, in all material respects, the net assets available for
plan benefits of the Plan at December 31, 1996 and 1995, and the changes in its
net assets available for plan benefits for the years then ended, in conformity
with generally accepted accounting principles.
[SIGNATURE]
March 25, 1997
Hickory Hills, Illinois
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SUBURBAN FEDERAL SAVINGS, A FEDERAL SAVINGS BANK
CASH OR DEFERRED PROFIT SHARING PLAN
Statement of Net Assets Available for
Plan Benefits
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
-------- -------
<S> <C> <C>
Assets:
Certificates of deposit held
by Suburban Federal Savings, A Federal
Savings Bank (note 2) $ 400,383 335,525
Stock investment in SuburbFed Financial Corp (note 3) 965,447 799,887
Mutual fund investments (note 4) 292,225 218,217
Life insurance and annuity contracts 9,953 61,421
Money market fund in brokerage accounts 57,983 -
-------- -------
Total investments 1,725,991 1,415,050
-------- -------
Receivables:
Employer contributions 8,931 7,431
Employee contributions - 3,046
Loans to participants 2,582 -
Due from third party administrator 15,700 -
Dividends 4,065 3,878
Other 597 -
-------- -------
Total receivables 31,875 14,355
-------- -------
Net assets available for plan benefits $ 1,757,866 1,429,405
========= =========
</TABLE>
See notes to financial statements.
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SUBURBAN FEDERAL SAVINGS, A FEDERAL SAVINGS BANK
CASH OR DEFERRED PROFIT SHARING PLAN
Statement of Changes in Net Assets
Available for Plan Benefits
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1996 1995
-------- --------
<S> <C> <C>
Increase in net assets attributed to:
Employee contributions $ 169,539 158,788
Employer matching contributions, net of
forfeitures 30,240 29,735
Income from investments 101,029 56,357
Market appreciation 100,315 133,765
-------- --------
Total additions 401,123 378,645
-------- --------
Deductions from net assets attributed to:
Participant withdrawals 72,662 39,561
-------- --------
Total deductions 72,662 39,561
-------- --------
Net increase in net assets during the year 328,461 339,084
Net assets available for plan benefits:
Beginning of year 1,429,405 1,090,321
--------- ---------
End of year $ 1,757,866 1,429,405
========= =========
</TABLE>
See notes to financial statements.
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SUBURBAN FEDERAL SAVINGS, A FEDERAL SAVINGS BANK
CASH OR DEFERRED PROFIT SHARING PLAN
Notes to Financial Statements
1. Description of the Plan
The following description of the Suburban Federal Savings, A Federal Savings
Bank Cash and Deferred Profit Sharing Plan (the "Plan") is provided for
general information purposes only. Participants should refer to the Plan
document for more complete information.
General
The Plan, which was established January 1, 1989 as amended and restated
January 1, 1994, is a defined contribution plan in which essentially all
employees of Suburban Federal Savings, A Federal Savings Bank (the "Bank")
may participate after meeting certain age and service requirements. The Plan
is intended to qualify as a salary reduction plan under Section 401(k) of the
Internal Revenue Code (the Code).
Contributions
The Bank contributes and allocates to each participant's account the amount
withheld from each participant's compensation ("employee contributions")
pursuant to his or her elective deferral agreement and within a range
specified by the Plan. The Bank matches contributions to the Plan in an
amount equal to 50 percent of each employee's contributions up to a specified
percentage of the deferred contribution. Subsequent to the Bank's conversion
from a mutual to a stock form of ownership, employees eligible under the
stock option plan who contribute to the 401(k) are no longer eligible for the
Bank's matching of their contributions. Contribution limitations may be
placed on deferred deposits of highly compensated employees (as defined in
the Plan document and amendments) to ensure that no prohibited discrimination
takes place under the Code.
Participant Accounts
Each participant's account is credited with the participant's contribution,
the Bank's matching contribution and an allocation of Plan earnings. Plan
earnings from each investment are allocated to participants based on their
proportionate share of total assets in that investment.
Vesting
Participants immediately vest in their employee contributions and the
interest thereon. Vesting in the employer matching contributions and
interest thereon is based on years of continuous service. A participant is
100 percent vested after seven years of credited service.
Payment of Benefits
Payment of benefits to a participant who terminates employment may be made in
a lump sum or rolled into another qualified plan. A participant also may
elect to defer distribution of his or her account until attaining age 70 1/2.
Payment of benefits to the beneficiary of a deceased participant may also be
made in the form of a lump sum payment or rolled into another qualified plan.
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<PAGE> 6
Loans to Participants
Under the Plan, participants may borrow one-half of their vested account
balance up to a maximum of $50,000. The interest rate charged the
participant is fixed at the time of the loan at comparable interest rates
charged by persons in the business of lending money for loans which would be
made under similar circumstances. When a loan is made, the amount borrowed
is transferred from the participant's deposit account to the participant's
loan account. Loan repayments, including interest, are immediately invested
in the participant's deposit account.
Administrative Expenses
All administrative expenses pertaining to the operation of the Plan for the
years ended December 31, 1996 and 1995 were paid by the Bank. Also, all
administrative, legal, and accounting services were performed by Bank
personnel on behalf of the Plan and no charges were made to the Plan for
these services.
2. Certificates of deposit are valued at the principal amount which
approximates market. Funds are deposited in two certificates of deposit
at the Bank which are separately designated as employee and employer
contributions. The certificates of deposit earn market rates of interest
which are determined annually in November by the Bank's Board of
Directors. The rate earned for the 1996 and 1995 plan years were 5.90%
and 6.25% respectively. The Plan's investment in certificates of deposit
is managed by the trustees of the Plan.
3. In conjunction with the Bank's conversion from a mutual to a stock form
of ownership, the Plan utilized funds from the certificate of deposit
accounts to purchase stock in SuburbFed Financial Corp., the Bank's
Holding Company (the "Company"). At the date of conversion, the Plan
purchased, 38,776 shares of stock at $10 per share for participants
indicating a desire to purchase stock in the Company. Additional employee
contributions and cash dividends are utilized to purchase additional
shares on a regular basis. At December 31, 1996 and 1995, the Plan was
the beneficial owner of 50,813 and 48,478 shares respectively. The fair
value of this stock at December 31, 1996 was $19.00 per share, or $965,447
as compared to $16.50 per share, or $799,887 at December 31, 1995. Total
return on an investment in the Company's stock for the years ended
December 31, 1996 and 1995 amounted to approximately 17% and 31%
respectively.
This investment is recorded at fair value. Recording this investment at fair
value has resulted in a market appreciation of net assets available for plan
benefits of $100,315 and $133,765 for the years ended December 31, 1996 and
1995.
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<PAGE> 7
4. Mutual fund investments of the Plan are carried at fair value which
approximates cost. These investments are comprised of the following:
<TABLE>
<CAPTION>
December 31,
-------------------
1996 1995
-------- ---------
<S> <C> <C>
Oppenheimer U.S. Government Trust $ - 7,085
MFS Lifetime Capital Growth Fund - 31,867
MFS High Income Fund - 526
MFS Government Mortgage Fund - 515
AIM Constellation Fund 48,767 30,312
AIM Utilities Fund 18,539 13,458
AIM Value Fund 26,270 18,183
Fidelity Advisor Income and Growth Fund 38,393 30,147
Fidelity Advisor Growth Opportunities Fund 132,487 66,984
Fidelity Advisor High Yield Fund 27,769 19,140
-------- ---------
$ 292,225 218,217
======== =========
</TABLE>
The AIM Constellation Fund is a diversified portfolio which seeks to provide
capital appreciation through investments in common stocks, with emphasis on
medium-sized and smaller emerging growth companies. The total return on the
fund for the years ended December 31, 1996 and 1995 was 16.3% and 35.5%
respectively. The AIM Utilities Fund seeks to achieve a high level of
current income by investing primarily in the common and preferred stocks of
public utility companies. The total return on the fund for the years ended
December 31, 1996 and 1995 was 13.3% and 27.7% respectively. The AIM Value
Fund seeks long-term capital growth with income as a secondary objective.
The total return on the fund for the years ended December 31, 1996 and 1995
was 14.5% and 34.8% respectively.
The Fidelity Advisor Income and Growth Fund seeks both income and growth of
capital by investing in a diversified portfolio of equity and fixed income
securities, with income, growth of income and capital appreciation potential.
The total return on the fund for the years ended December 31, 1996 and 1995
was 8.4% and 14.1% respectively. The Fidelity Advisor Growth Opportunities
Fund seeks to provide capital growth by investing primarily in common stocks
and securities convertible into common stocks. The total return on the fund
for the years ended December 31, 1996 and 1995 was 17.7% and 33.0%
respectively. The Fidelity Advisor High Yield Fund seeks combination of a
high level of income and the potential for capital gains by investing in a
diversified portfolio consisting primarily of high-yielding fixed income and
zero coupons such as bonds, debentures and notes, convertible securities and
preferred stocks. The total return on the fund for the years ended December
31, 1996 and 1995 was 13.3% and 17.9% respectively.
5. Although it has not expressed any intent to do so, the Bank has the right
under the Plan to terminate its participation in the Plan at any time. In
the event of termination or partial termination of the Plan, all
participants affected shall become fully vested in their accounts.
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CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No.
33-68538 of SuburbFed Financial Corp. on Form S-8 of our report dated March 25,
1997 appearing in this Annual Report on Form 11-K of SuburbFed Financial Corp.
for the year ended December 31, 1996.
[SIGNATURE]
Cobitz, VandenBerg & Fennessy
March 26, 1997
Hickory Hills, Illinois
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