Exhibit 13

AJS BANCORP, INC.

2015 ANNUAL REPORT TO STOCKHOLDERS

AJS Bancorp, Inc.

Table of Contents

LETTER FROM THE CHAIRMAN OF THE BOARD, PRESIDENT, AND CHIEF EXECUTIVE OFFICER

To Our Stockholders and Customers:

We are pleased to present the Annual Report to Stockholders of AJS Bancorp, Inc. (the “Company”), and its wholly-owned subsidiary, A.J. Smith Federal Savings Bank (the “Bank”). In 2015, progress was made on improving the Bank’s financial condition, asset quality and enhancing stockholder value. With these improvements, we are proud to provide you with our Annual Report.

The Company’s net income for the year ended December 31, 2015 was $86,000, or $0.04 per share, compared to $2.1 million, or $0.96 per share in the prior year. The $2.0 million decrease in net income was primarily attributed to the reversal of all of the $1.8 million deferred tax valuation allowance in 2014, an $824,000 decrease in gains on sales of other real estate owned and securities, and higher other real estate owned expense/impairment of $360,000, partially offset by a decline in the provision for loan losses of $617,000. While disappointed in the net income results for 2015, we made substantial progress in reducing non-interest expenses, exclusive of other real estate owned expense/impairment, by $257,000, or 5.1%. In addition, we reduced the levels of nonperforming loans and nonperforming assets which should help contribute to lower credit costs in the future. Nonperforming assets declined $3.1 million, or 65.5% in 2015 to $1.6 million, or 0.78% of assets which is the lowest level of nonperforming assets since nonperforming assets peaked at $9.3 million, or 3.72% of assets at December 31, 2009.

We enter 2016 with a more optimistic outlook, improved credit quality, a lower non-interest expense base, high levels of liquidity that we hope to deploy in higher yielding assets and stronger capital ratios. The Company and its Board of Directors is committed to sustained and long-term stockholder value. In 2015, the Company repurchased 22,674 shares for a total cost of $310,000 under the second and third stock repurchase programs. The Company also declared dividends on its common stock of $410,000. The Company completed the second stock repurchase program and announced a third stock repurchase program for 110,000 shares, or approximately 5.0% of the Company’s outstanding common shares of which 107,726 shares remain. The Board of Directors and management will continue to evaluate all opportunities to enhance stockholder value.

The Company’s staff, management, and Board of Directors remain focused on executing our business plan and creating value for the communities we serve and our stockholders. I want to personally thank you for your support as a stockholder and pledge to continue to advance the interest of the Company, the Bank, our stockholders, customers and the community.

FORWARD-LOOKING STATEMENTS

This Annual Report contains written statements of AJS Bancorp, Inc., or the Company as defined below and its management that may contain, forward-looking statements as such term is defined in the Private Securities Litigation Reform Act of 1995, with respect to the financial condition, results of operations, plans, objectives, future performance and business of AJS Bancorp, Inc. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of AJS Bancorp, Inc.’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and AJS Bancorp, Inc. undertakes no obligation to update any statement in light of new information or future events.  By identifying these forward-looking statements for you in this manner, we are alerting you to the possibility that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. These forward looking statements are subject to significant risks, assumptions and uncertainties, including among other things, the following important factors that could affect the actual outcome of future events:

·                                          general economic conditions, either nationally or in our market areas, that are worse than expected;

·                                          competition among depository and other financial institutions;

·                                          inflation and changes in the interest rate environment that reduce our margins and yields or reduce the fair value of financial instruments;

·                                          adverse changes in the securities markets;

·                                          changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

·                                          our ability to manage operations in the current economic conditions;

·                                          our ability to enter new markets successfully and capitalize on growth opportunities;

·                                          changes in consumer spending, borrowing and savings habits;

·                                          changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

·                                          changes in our organization, compensation and benefit plans;

·                                          changes in the level of government support for housing finance;

·                                          significant increases in our loan losses; and

·                                          changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements after the date of this Annual Report, whether as a result of new information, future events or otherwise.

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BUSINESS OF AJS BANCORP, INC. AND A.J. SMITH FEDERAL SAVINGS BANK

A.J. Smith Federal Savings Bank (the “Bank”) was founded in 1892 by Arthur J. Smith as a building and loan cooperative organization.  In 1924 we were chartered as an Illinois savings and loan association, and in 1934 we converted to a federal charter.  In 1984 we amended our charter to become a federally chartered savings bank.

In 2001, the Bank reorganized into the two-tier mutual holding company structure and established AJS Bancorp, Inc., a federal corporation, as the parent company of the Bank. On October 9, 2013 we completed our “second-step” conversion to a fully stock company. As a result of the second step conversion, all of our outstanding common stock is held by public stockholders and AJS Bancorp, Inc. is our Maryland chartered holding company (the “Company”).

We are a customer-oriented institution, operating from our main office in Midlothian, Illinois, and two branch offices in Orland Park, Illinois.  Our primary business activity is the origination of one- to four-family real estate loans.  To a lesser extent, we originate home equity and consumer loans.  In 2014, we began to originate a limited amount of multifamily and commercial real estate loans consistent with our conservative underwriting policies and procedures. We also invest in securities, primarily United States Government sponsored enterprises and mortgage-backed securities.

The Company’s executive offices are located at 14757 S. Cicero Ave, Midlothian, Illinois 60445, our telephone number is (708) 687-7400, and our internet address is www.ajsmithbank.com.

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SELECTED FINANCIAL AND OTHER DATA

The following tables set forth selected consolidated financial and other data of AJS Bancorp, Inc. at the dates and for the years presented. Information prior to October 9, 2013 is of AJS Bancorp, Inc., a federal corporation.

(1)         Shares held by the public prior to October 9, 2013, have been restated to reflect the completion of the second-step conversion using an exchange ratio of 1.1460.

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(1)         Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost on interest-bearing liabilities.

(2)         Net interest margin represents net interest income as a percentage of average interest-earning assets.

(3)         Efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and total non-interest income.

(4)         The dividend payout ratio represents total dividends declared divided by net income.

(5)         Non-performing loans consist of non-accrual loans, non-accruing troubled debt restructurings and accruing loans greater than 90 days delinquent, while non-performing assets consist of non-performing loans and other real estate owned.

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

This discussion and analysis reviews our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations.  You should read the information in this section in conjunction with AJS Bancorp, Inc.’s consolidated financial statements and the related notes included in this Annual Report. The preparation of financial statements involves the application of accounting policies relevant to the business of AJS Bancorp, Inc. Certain of AJS Bancorp, Inc.’s accounting policies are important to the portrayal of AJS Bancorp, Inc.’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but without limitation, changes in interest rates, in the performance of the economy or in the financial condition of borrowers.

Overview

We historically have operated as a traditional thrift institution headquartered in Midlothian, Illinois. Our primary business activity is the origination of one- to four-family real estate loans.  To a lesser extent, we originate multifamily and commercial real estate, home equity and consumer loans. We also invest in securities, primarily United States Government sponsored enterprises and mortgage-backed securities.  In addition, we offer insurance and investment products and services on a limited basis.

Our results of operations depend primarily on our net interest income.  Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities.  Our results of operations also are affected by our provision for loan losses, non-interest income and non-interest expense.  Non-interest income currently consists primarily of service fee income, rental income, earnings on bank owned life insurance, gain on sale of securities, gain on sale of other real estate owned, and other income.  Non-interest expense currently consists primarily of expenses related to compensation and employee benefits, occupancy, data processing, advertising and promotion, professional and regulatory, federal deposit insurance, other real estate owned loss expense, and other operating expenses.  Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Net income for the year ended December 31, 2015 was $86,000, or $0.04 per share, compared to $2.1 million, or $0.96 per share for the year ended December 31, 2014. Net income for 2014 was significantly impacted by the reversal of our deferred tax asset valuation allowance of $1.8 million. The valuation allowance was recorded in 2009 as a result of three years of accumulated operating losses prior to 2009. The operating losses were primarily due to an increase in our non-performing assets, particularly multifamily and commercial real estate which had a negative impact on our profitability. The reversal of the valuation allowance was due to improved credit quality which led to lower credit costs, sustained profitability and expectations for future taxable income. Credit quality continued to improve in 2015 as nonperforming loans and other real estate owned declined by $1.7 million and $1.4 million, respectively compared to 2014. Other credit related factors impacting 2015 results as compared to 2014 results were a $775,000 decrease in gains on sales of other real estate owned and higher real estate owned expense/impairment of $360,000, partially offset by a $617,000 decrease in provision for loan losses.

Business Strategy

Our business strategy is to operate as a well-capitalized, profitable, community-oriented savings bank dedicated to providing quality customer service.  Historically, we implemented our business strategy by emphasizing the origination of one- to four-family residential loans and other loans secured by real estate.  We continue to be primarily a one- to four-family residential lender with the ability to originate FHA loans.  In the past, we broadened the scope of our loan products and services to include loans secured by commercial real estate.  However, in 2008, as a result of the economic downturn’s impact on commercial real estate in the Chicago market, we discontinued our commercial lending services. We started to originate multifamily and commercial real estate loans again in 2014, but on a limited basis.

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Highlights of our business strategy are as follows:

·                                          Continuing One- to Four-Family Residential Real Estate Lending.  Historically, we have emphasized one- to four-family residential lending within our market area.  As of December 31, 2015, $100.1 million, or 86.9%, of our total loan portfolio consisted of one- to four-family residential real estate loans.  During the years ended December 31, 2015 and 2014, we originated $15.6 million and $10.1 million of one- to four-family residential real estate loans, respectively.  We intend to continue to originate one- to four-family residential loans because of our expertise with this type of lending.

·                                          Focus on Relationship Banking.  We are focused on meeting the financial needs of our customer base through offering a full complement of loan, deposit and online banking solutions (i.e., internet banking).  Over the years we have introduced new products and services in order to more fully serve and deepen our relationship with customers which has enabled us to grow our core deposit base, which generally represents a customer’s primary banking relationship.  Total deposits decreased slightly to $165.6 million at December 31, 2015 from $166.2 million at December 31, 2014, with certificates of deposit declining $5.9 million, but substantially offset by growth in our lower cost core deposits, which we consider to be our checking, passbook, NOW, and money market accounts, of $5.3 million, or 5.1% to $108.9 million as of December 31, 2015 from $103.7 million as of December 31, 2014 as we continue to benefit from our customers moving maturing certificates of deposit into passbook, NOW and checking accounts in the current low interest rate environment and as a result of our focus on relationship banking.

·                                          Managing Interest Rate Risk.  Like many financial institutions during the prolonged low interest rate environment, a significant portion of our loan portfolio is comprised of fixed-rate loans which are currently preferred by borrowers.  We monitor our interest rate risk on an ongoing basis in order to be well positioned for the inevitable increase in interest rates. We manage our interest rate risk in a variety of ways. Substantially all of our investments, a significant portion of which have fixed interest rates, are classified as available for sale. We seek to maintain a portion of our investment portfolio in shorter-term instruments with a stable cash flow. The majority of our one- to four-family residential loans are underwritten to qualify for sale in the secondary market. We also have emphasized lower cost savings deposits and transaction accounts.  In addition, we have substantial borrowing capacity to access capital to be used if necessary to originate loans in a rising interest rate environment. Our Asset-Liability Committee meets quarterly to analyze our interest rate risk.

·                                          Continue to Improve Asset Quality.  We emphasize a disciplined credit culture based on market knowledge, close ties to our customers, sound underwriting standards and experienced loan officers.  While the challenging operating environment following the economic downturn contributed to an increase in problem assets, particularly multifamily and commercial real estate loans, management’s primary objective has been to expeditiously reduce the level of non-performing assets through diligent monitoring and aggressive resolution efforts. Beginning in 2008, we discontinued originating commercial real estate loans and focused on improving our asset quality. Non-performing assets declined $3.1 million to $1.6 million as of December 31, 2015 from $4.7 million at December 31, 2014. Non-performing assets to total assets decreased 139 basis points to 0.78% as of December 31, 2015 from 2.17% as of December 31, 2014. In 2014, we began to originate a limited amount of multifamily and commercial real estate loans consistent with our conservative loan underwriting policies and procedures. Asset quality continues to be the top focus for management and we continue to proactively work to resolve problem loans as they arise.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and

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the reported amounts of revenues and expenses during the reporting period. By their nature, changes in these assumptions and estimates could significantly affect our financial position or results of operations.  Actual results could differ from those estimates.

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period.  Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

Discussed below are selected critical accounting policies that are of particular significance to us.

Allowance for Loan Losses.  The allowance for loan losses is a valuation allowance for probable incurred credit losses, increased by the provision for loan losses and decreased by charge-offs less recoveries.  We estimate the allowance balance required using past loan loss experience; known and inherent losses in the nature and volume of the portfolio that are both probable and estimable; information about specific borrower situations; and estimated collateral values, economic conditions, and other factors.  Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in our judgment, should be charged off.  Loan losses are charged against the allowance when we believe that the uncollectibility of a loan balance is confirmed.

The allowance consists of specific and general components.  The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful.

Non-performing loans and impaired loans are defined differently.  A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  A loan is non-performing when it is on non-accrual or greater than 90 days past due.  Some loans may be included in both categories, whereas other loans may only be included in one category. Our policy requires that all non-homogeneous loans past due greater than 90 days be classified as impaired and non-performing.  However, performing loans may also be classified as impaired when we do not expect to collect all amounts due according to the contractual terms of the loan agreement.  Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Factors considered by us in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  We determine the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Multifamily and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.  Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception.  If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral.  For troubled debt restructurings that subsequently default, we determine the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

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The general component covers non-impaired loans and is based on actual historical loss experience determined by portfolio loan segment adjusted for current qualitative factors.  This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio loan segment, such as real estate trends and national and local economic conditions.  As greater risk is associated with loans classified as special mention and substandard that are not impaired, the Company considers the actual historical loss experience by loan segment, the levels of loans classified as special mention and substandard, and the trends in the collateral associated with these classifications.

The following portfolio segments have been identified: One —to four-family, multifamily and commercial, home equity, consumer and other.  Substantially all of the loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate.  Commercial real estate loans are expected to be repaid from cash flows from operations of businesses and consumer loans are expected to be repaid from personal cash flows.  There are no significant concentrations of loans to any one industry or customer.  Risk factors impacting loans in each of the portfolio segments include local and national real estate values, local and national economic factors affecting borrowers’ employment prospects and income levels, levels and movement of interest rates and general availability of credit, and overall economic sentiment.

Other Real Estate Owned.  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate collateralizing a consumer mortgage loan occurs when legal title is obtained on completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar agreement. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense.  Operating costs after acquisition are expensed.

Deferred Tax Valuation Allowance.  A valuation allowance should be recognized against deferred tax assets if, based on the weight of available evidence, it is more likely than not (i.e. greater than 50% probability) that some portion, or all of the deferred tax asset will not be realized.  Future realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carry-back and carry-forward periods available under the tax law.  We evaluate the future realization of the deferred tax asset on a quarterly basis and establish a valuation allowance predicated on consideration of future performance as well as tax planning strategies available to us.  Tax-planning strategies are actions that we would take in order to prevent an operating loss or tax credit carry forward from expiring unused.  In order for a tax-planning strategy to be considered, it must be prudent and feasible and result in realization of the deferred tax assets.

Fair Value of Financial Instruments.  Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 7 to our audited consolidated financial statements.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.  Some of these estimates are not necessarily indicative of an exit price. Changes in assumptions or in market conditions could significantly affect the estimates.

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Average Balances, Net Interest Income and Yields Earned and Rates Paid

The following table presents for the years indicated the total dollar amount of interest income on average interest-earning assets and the resultant yields, the interest expense on average interest-bearing liabilities, expressed both in dollars and rates for the years ended December 31, 2015, 2014 and 2013.  No tax equivalent adjustments were made.  All average balances are monthly average balances.  Non-accruing loans have been included in the table as loans carrying a zero yield.

(1)         Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(2)         Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3)         Net interest margin represents net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis

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

Comparison of Financial Condition at December 31, 2015 and December 31, 2014

Assets. Total consolidated assets as of December 31, 2015 were $208.9 million, a decrease of $8.6 million, or 3.9%, from $217.5 million at December 31, 2014.  The decrease was primarily due to decreases in securities available-for-sale of $4.3 million, $3.0 million in cash and cash equivalents, and $1.4 million in other real estate owned.

Cash and cash equivalents decreased $3.0 million, or 9.0%, to $29.9 million at December 31, 2015 from $32.9 million at December 31, 2014. The primary reasons for the decrease in cash and cash equivalents were the repayment of $7.0 million of Federal Home Loan Bank (FHLB) advances, repurchases of the Company’s common stock, and dividends paid to our stockholders partially offset by the principal repayments, calls and sales of securities available-for-sale, principal payments of loans, and proceeds from the sale of other real estate owned.

Securities available-for-sale decreased $4.3 million, or 7.9%, to $49.9 million at December 31, 2015 from $54.2 million at December 31, 2014.  The decrease was primarily due to securities available-for-sale principal repayments, calls and sales of $30.9 million exceeding new securities purchases of $27.2 million, and the unrealized loss on securities available for sale increasing by $329,000.

Net loans were relatively unchanged at $114.4 million at December 31, 2015 compared to $114.1 million at December 31, 2014 as a result of a $2.9 million increase in one-to-four family loans, substantially offset by an $830,000 decrease in multifamily and commercial real estate loans, a $1.7 million decrease in home equity loans and a $273,000 decrease in consumer loans as the Bank continues to reduce its risk profile.

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Other real estate owned decreased $1.4 million, or 82.5%, to $307,000 at December 31, 2015 from $1.7 million at December 31, 2014. The decrease was primarily due to the sale of four properties during the year, including the fourth quarter sale of a $940,000 hotel/water park property and $424,000 of write-downs on other real estate owned properties.

Liabilities. Total liabilities decreased $8.0 million, or 4.3%, to $175.4 million at December 31, 2015 from $183.4 million at December 31, 2014. The decrease in total liabilities was primarily a result of a $7.0 million decrease in FHLB advances and a $600,000 decrease in total deposits.

Total deposits decreased $600,000, or 0.4%, to $165.6 million at December 31, 2015 from $166.2 million at December 31, 2014. Certificates of deposit decreased $5.9 million, or 9.4%, to $56.7 million at December 31, 2015 from $62.6 million at December 31, 2014 which was attributable to maturing legacy certificate of deposit customers moving maturing certificate balances into core deposits in the current low interest rate environment. This decrease was partially offset by a $5.3 million increase in our core deposits, which we consider to be our checking, passbook, NOW, and money market accounts. Passbook accounts grew $4.1 million, or 6.3%, to $69.5 million at December 31, 2015 from $65.4 million at December 31, 2014. NOW and checking accounts increased $2.6 million, or 8.1%, to $34.5 million at December 31, 2015 from $31.9 million at December 31, 2014.  Money market accounts decreased $1.4 million, or 22.4%, to $5.0 million at December 31, 2015 from $6.4 million at December 31, 2014.

FHLB of Chicago advances decreased $7.0 million, or 58.3%, to $5.0 million at December 31, 2015 from $12.0 million at December 31, 2014.  We repaid maturing FHLB advances of $7.0 million with a weighted average interest rate of 2.24% during 2015. Outstanding FHLB of Chicago advances at December 31, 2015 were fixed-rate with a weighted average interest rate of 2.55% and will mature in the next six months.

Stockholders’ Equity. Total stockholders’ equity decreased $715,000, or 2.2%, to $32.5 million at December 31, 2015 from $33.2 million at December 31, 2014. The decrease primarily resulted from repurchasing 22,674 shares at an average price of $13.67 per share from the second and third stock repurchase programs for a total cost of $310,000, cash dividends on common stock of $410,000, and an increase in the unrealized loss on securities classified as available-for-sale of $201,000, offset by net income of $86,000 for the year ended December 31, 2015 and an increase of $53,000 due to the ESOP shares released in 2015. Stockholders’ equity also decreased due to an increase in the ESOP repurchase obligation of $85,000 during the year ended December 31, 2015 to $994,000 from $909,000 at December 31, 2014 reflecting the increase in the market value of the vested portion of the common stock held in the ESOP. Book value per share was $14.82 at December 31, 2015 as compared to $14.97 at December 31, 2014.

Comparison of Operating Results for the Years Ended December 31, 2015 and December 31, 2014

General.  Net income for the year ended December 31, 2015 decreased $2.0 million, or 95.9%, to $86,000, or $0.04 per share compared to net income of $2.1 million, or $0.96 per share for the year ended December 31, 2014. The decrease was primarily attributed to the $1.8 million reversal of the remaining deferred tax valuation allowance in the second quarter of 2014. In addition, the decrease was due to an $824,000 decrease in gains on sales of other real estate owned and securities, and higher other real estate owned expense/impairment of $360,000. These decreases were partially offset by a decline in the provision for loan losses of $617,000, and lower professional and regulatory expenses of $166,000 and other expense of $82,000.

Interest Income.  Total interest income decreased $378,000, or 6.7%, to $5.2 million for the year ended December 31, 2015 from $5.6 million for 2014.  The decrease was primarily due to an $8.7 million, or 4.3% decrease in average interest-earning assets along with a seven basis points decline in the average yield earned on interest-earning assets. The average yield on interest earning assets was 2.69% for the year ended December 31, 2015 as compared to 2.76% for 2014. The decline was primarily a result of the 11 basis points decrease in the average yields on loans and securities mitigated somewhat by the larger proportion of higher yielding loans in the asset mix.

Interest income from loans decreased by $217,000, or 4.6%, to $4.5 million for the year ended December 31, 2015, from $4.7 million for the year ended December 31, 2014. The decline in interest income from loans was due to decreases in the average loan yield and average loan balance for the year ended December 31, 2015 as compared to the year ended December 31, 2014. The average yield on loans decreased to 3.86% for the year ended December 31, 2015 from 3.97% for 2014. The decrease in the average yield on loans was primarily caused by lower

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yields earned on new loan originations and repayments of higher yielding seasoned loans as a result of the prolonged low interest rate environment. The average loan balance decreased by $2.1 million to $115.9 million for the year ended December 31, 2015 from $118.0 million for 2014. The decrease in the average loan balance was primarily due to continued shrinkage in the multifamily and commercial loan portfolio due in part to aggressive price competition, partially offset by growth in the one-to-four family loan portfolio. In addition, the Bank’s home equity portfolio continues to decline as lines of credit mature and either payoff or refinance.

Interest income from securities decreased $168,000, or 19.5%, to $693,000 for the year ended December 31, 2015, from $861,000 for the year ended December 31, 2014.  The decrease primarily resulted from a decrease in the average securities yield and average securities balance for the year ended December 31, 2015 as compared to 2014.  The average yield on securities decreased to 1.35% for the year ended December 31, 2015 from 1.46% for 2014 due to the prolonged low interest rate environment. The average balance of securities decreased $7.4 million to $51.3 million for the year ended December 31, 2015 from $58.7 million for 2014.  The decrease in the average securities balance was due to securities principal repayments, calls, and sales exceeding new securities purchases due to the lack of suitable higher yielding investment alternatives in the current low interest rate environment.

Interest Expense.  Interest expense decreased by $287,000, or 28.4%, to $722,000 for the year ended December 31, 2015, from $1.0 million for 2014.  The primary reasons for the decrease were due to the $9.2 million decrease in the average balance of interest-bearing liabilities and a 15 basis points decline in the average interest rate paid for interest-bearing liabilities.

Interest expense on deposits decreased by $92,000, or 13.8%, to $575,000 for the year ended December 31, 2015, from $667,000 for 2014. Average interest-bearing deposit balances decreased $355,000 to $145.0 million for the year ended December 31, 2015, from $145.4 million for 2014 due primarily to the decrease in the average balance of certificates of deposit of $3.9 million, substantially offset by growth in low cost core deposits. The decline in the average balance of certificates of deposit was attributable to legacy certificates of deposit customers moving maturing certificate balances into core deposits accounts. Our average cost of deposits decreased six basis points to 0.40% for the year ended December 31, 2015 from 0.46% for the year ended December 31, 2014. The decrease in our average cost of deposits resulted from the continued change in the mix of our average deposits from higher-cost certificates of deposit to lower-cost core deposits.

Interest expense on FHLB advances decreased $195,000, or 57.0%, to $147,000 for the year ended December 31, 2015, from $342,000 for 2014. The decrease was primarily due to the $8.8 million, or 59.9% decrease in the average balance of FHLB of Chicago advances from repaying maturing advances, slightly offset by a 16 basis points increase in the average cost of advances.

Net Interest Income.  Net interest income decreased by $91,000, or 2.0% to $4.5 million for the year ended December 31, 2015, as compared to 2014. The decrease was primarily due to an $8.7 million, or 4.3% decrease in the level of interest-earning assets, partially offset by a six basis points improvement in the net interest margin to 2.32% for the year ended December 31, 2015 from 2.26% for 2014. The increase in the net interest margin was primarily a result of the decrease in the average cost of interest-bearing liabilities outpacing the decline in average yield on interest-earning assets as higher costing Federal Home Loan Bank advances become a smaller portion of the liability funding base.

Provision for Loan Losses.  We establish a provision for loan losses, which is charged to operations, at a level management believes is appropriate to absorb probable incurred credit losses in the loan portfolio.  In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.  Based on our evaluation of these factors, we recorded a provision for loan losses of $80,000 for the year ended December 31, 2015 and a $697,000 provision for loan losses for the year ended December 31, 2014. The decrease in the provision for loans losses was primarily a function of lower net charge-offs in 2015 of $195,000 compared to $993,000 in 2014 along with an improvement in credit quality trends, a lower risk profile and a decrease in historical loss factors. The allowance for loan losses was $988,000, or 0.86% of total loans at December 31, 2015 compared to $1.1 million or 0.96% of total loans at December 31, 2014. The decrease in the

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allowance for loan losses to total loans was due to continued improvement in credit quality trends, the reduced risk profile of the loan portfolio, and improvements in economic conditions in the Bank’s market area.

Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance.  While management uses all available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination.  The allowance for loan losses as of December 31, 2015 was maintained at a level that represents management’s best estimate of inherent losses in the loan portfolio, and such losses that were both probable and reasonably estimable.

Non-Interest Income.  Non-interest income decreased $798,000 to $718,000 for the year ended December 31, 2015, from $1.5 million for the year ended December 31, 2014. The decrease was primarily due to a $775,000 decrease in gains on other real estate owned sales, and a decrease of $49,000 in gains on securities sales, partially offset by an increase of $35,000 in other non-interest income. Loss on other real estate owned was $19,000 for the year ended December 31, 2015 compared to gains on other real estate owned of $756,000 for the year ended December 31, 2014. The gain in 2014 was primarily attributed to the third quarter 2014 sale of an other real estate owned property of $1.0 million, which represented a 12.1% participation in a $9.4 million unimproved land loan located in Northbrook, Illinois and resulted in a gain on sale of $741,000. Gains on securities sales were $74,000 and $123,000 for the years ended December 31, 2015 and 2014, respectively. The decrease was due to fewer securities sales in 2015 as compared to 2014.

Non-Interest Expense.  Non-interest expense increased $103,000, or 2.0%, to $5.1 million for the year ended December 31, 2015 from $5.0 million for the year ended December 31, 2014.  The increase was primarily due to a $360,000 increase in other real estate owned expense primarily due to additional write-downs on other real estate owned; partially offset by decreases in professional and regulatory expense, Federal deposit insurance and compensation and employee benefits expense.

Provision for Income Taxes.  We recorded an income tax benefit of $67,000 and $1.7 million for the years ended December 31, 2015 and 2014, respectively. The income tax benefit recorded in 2015 is primarily related to the nontaxable bank owned life insurance income. During the year ended December 31, 2014, we reversed the deferred tax asset valuation allowance of $1.8 million and recorded income tax expense of $82,000. The reversal of the deferred tax asset valuation allowance was a result of our sustained profitability and improved credit quality that has led to significantly lower credit costs and expectations for future taxable income.

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Liquidity and Capital Resources

We maintain liquid assets at levels we consider adequate to meet our liquidity needs.  Our liquidity ratio averaged 42.7% and 44.1% for the years ended December 31, 2015 and 2014, respectively.  We adjust our liquidity levels to fund deposit outflows, pay real estate taxes on mortgage loans, repay our borrowings and to fund loan commitments.  We also adjust liquidity as appropriate to meet asset and liability management objectives.

Our primary sources of liquidity are deposits, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations.  While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition.  We set the interest rates on our deposits to maintain a desired level of total deposits.  In addition, we invest excess funds in short-term interest-earning investments and other assets, which provide liquidity to meet lending requirements.  Short-term interest-earning deposits with the Federal Reserve Bank of Chicago amounted to $26.7 million and $29.5 million at December 31, 2015 and 2014, respectively.

A significant portion of our liquidity consists of securities classified as available-for-sale and cash and cash equivalents, which are a product of our operating, investing and financing activities.  Our primary sources of cash are principal repayments on loans and mortgage-backed securities and increases in deposit accounts, along with advances from the FHLB of Chicago.

Liquidity management is both a daily and long-term function of business management.  If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB of Chicago and JP Morgan Chase which provides an additional source of funds.  At December 31, 2015, we had $5.0 million in advances outstanding and were eligible to borrow an additional $67.4 million from the FHLB of Chicago. At December 31, 2015, we had no balance outstanding on the $5.0 million line of credit at JP Morgan Chase.  The $5.0 million in FHLB advances mature in February and May of 2016.

Our cash flows are comprised of three classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $959,000 and $996,000 for the years ended December 31, 2015 and 2014, respectively.

Net cash provided by investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, proceeds from the sales, calls, repayments and maturities of securities, were $4.9 million and $15.9 million for the years ended December 31, 2015 and 2014, respectively. During the year ended December 31, 2015, we purchased $27.2 million and sold $3.3 million in securities classified as available-for sale, and during the year ended December 31, 2014, we purchased $29.1 million and sold $11.3 million in securities classified as available-for-sale.

Net cash used in financing activities, consisting primarily of deposit account activity, repayment of FHLB advances, repurchases of the Company’s common stock, and dividends paid to our stockholders, was $8.8 million and $6.3 million for the years ended December 31, 2015 and 2014, respectively primarily due to the repayment of maturing FHLB advances.

At December 31, 2015, we had outstanding commitments of $2.9 million to originate loans.  This amount does not include the unfunded portion of loans in process.  At December 31, 2015, certificates of deposit scheduled to mature in less than one year totaled $29.6 million.  Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case.  In addition, the cost of such deposits may be significantly higher upon renewal in a rising interest rate environment.

We are required to maintain liquid assets in an amount that would ensure our safe and sound operation.  Our liquidity ratio at December 31, 2015 was 43.4%.

At December 31, 2015, we exceeded all our regulatory capital requirements with a Tier 1 leverage capital level of $27.9 million, or 13.42% of adjusted total assets, a common equity Tier 1 capital level of $27.9 million, or 32.03% of risk-weighted assets, and total risk-based capital of $28.9 million, or 33.16% of risk-weighted assets. At December 31, 2014, we exceeded all our regulatory capital requirements with a Tier 1 leverage capital level of $29.5 million, or 13.67% of adjusted total assets and total risk-based capital of $30.6 million, or 32.21% of risk-weighted

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assets.  Accordingly, the Bank was classified as well-capitalized at December 31, 2015 and 2014. Management is not aware of any conditions or events since the most recent notification that would change our category.

On May 15, 2012, the board of directors of the Company adopted resolutions requested by the Federal Reserve Bank of Chicago that required written approval from the Federal Reserve Bank of Chicago prior to the declaration or payment of dividends, any increase in debt or the stock repurchase or redemption by the Company. On September 12, 2014, the Federal Reserve Bank of Chicago provided the Company with a non-objection letter allowing the board of directors to rescind the resolutions. Subsequently, the board of directors rescinded the resolutions and the Company no longer must obtain written approval from the Federal Reserve Bank of Chicago prior to the declaration or payment of dividends, any increase in debt or the stock repurchase or redemption by the Company.

In July 2013, the OCC and the other federal bank regulatory agencies issued a final rule that will revise their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act.  Among other things, effective as of January 1, 2015 the new rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), established a uniform minimum leverage ratio of 4%, increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property.  The final rule also required unrealized gains and losses on certain available for sale securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out is exercised.  The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.

The capital conservation buffer requirement will be phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective.  The impact of the final rule is not expected to have a material impact on the Bank.

Off-Balance Sheet Arrangements.  In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles are not recorded in our financial statements.  These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk.  Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, unused lines of credit and standby letters of credit.  For information about our loan commitments, letters of credit and unused lines of credit, see Note 14 of the Notes to Consolidated Financial Statements.

For the years ended December 31, 2015 and 2014, we did not engage in any off-balance-sheet transactions other than loan origination commitments, unused lines of credit and standby letters of credit in the normal course of our lending activities.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements that are applicable to AJS Bancorp, please see Note 1 of notes to the consolidated financial statements beginning on page 23.

Effect of Inflation and Changing Prices

The consolidated financial statements and related consolidated financial data presented herein regarding AJS Bancorp have been prepared in accordance with accounting principles generally accepted in the United States of America, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation.  Unlike most industrial companies, virtually all of AJS Bancorp’s assets and liabilities are monetary in nature.  As a result, interest rates generally have a more significant impact on AJS Bancorp’s performance than does the effect of inflation.  Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, because such prices are affected by inflation to a larger extent than interest rates.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

AJS Bancorp, Inc.

Midlothian, Illinois

We have audited the accompanying consolidated statements of financial condition of AJS Bancorp, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the years then ended.  These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis of designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AJS Bancorp, Inc. as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

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AJS BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

Years ended December 31, 2015 and 2014

(Dollars in thousands, except per share data)

See accompanying notes to the consolidated financial statements.

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AJS BANCORP, INC.

CONSOLIDATED STATEMENTS OPERATIONS

Years ended December 31, 2015 and 2014

(Dollars in thousands, except per share data)