EXHIBIT 99.2
AVONDALE
FINANCIAL CORP.

                                                        AVONDALE FINANCIAL CORP.
                                                        2 N. CLARK STREET
                                                        CHICAGO, ILLINOIS 60602
                                                        (312) 782-6200
                                                        NASDAQ:  AVND



                                  PRESS RELEASE

FOR INFORMATION AT AVONDALE CONTACT:

HOWARD A. JAFFE
VICE PRESIDENT AND CFO
(312) 782-6200
E-MAIL: HJAFFE@MAIL.AVONDALEFINANCIAL.COM

FOR IMMEDIATE RELEASE

    Avondale Financial Corp. will report a loss in the third quarter of 1998
        after recording approximately $6.0 million in charges related to
                   the write-down of its Interest-Only strips

CHICAGO,  OCTOBER 13, 1998 --  AVONDALE  FINANCIAL  CORP.  (NASDAQ:  AVND),  the
holding  company for Avondale  Federal  Savings Bank,  announced today that as a
result of the current  interest rate  environment and their effect on prepayment
speeds along with current  trends in the capital  markets,  including  decreased
liquidity  of  securitized  assets,  the Company will record a writedown of $6.0
million to its interest-only strips.

In accordance  with its quarterly  process to determine  fair market value,  the
Company has reviewed its  assumptions of prepayment  speeds,  discount rates and
loan losses. As a result of this analysis,  the Company has revised its discount
rate to reflect  liquidity  and  higher  risk  premiums  being  required  by the
markets,  adjusted prepayments to be in line with both historical experience and
expectations for the future,  and adjusted loan losses to be consistent with the
Company's non-judgmental models.

Other than loans  currently  committed to  securitized  pools,  the Company,  as
economic  conditions  dictate,  will not be securitizing  its loan product,  but
rather will be selling its loans on a whole loan basis, for cash.

Avondale  expects to release  its third  quarter  financial  results on or about
October 27, 1998.

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