UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                          ----------------------------

                                  FORM 10-QSB


[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1998

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                  For the transition period from ________ to __________


                         Commission File Number 1-14343


                      MIDLAND CAPITAL HOLDINGS CORPORATION
                 (Name of Small Business Issuer in its Charter)


                  Delaware                                36-4238089
      (State or Other Jurisdiction of                 (I.R.S. Employer
       Incorporation or Organization)              Identification Number)

               8929 S. Harlem Avenue, Bridgeview, Illinois 60455
               (Address of Principal Executive Offices) (Zip Code)

Issuer's telephone number, including area code: (708) 598-9400

Check  whether  the Issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                           Yes [X]  No [ ]
          

Transitional Small Business Disclosure Format.  Yes  [   ]    No  [ X ]
                                                               

Indicate the number of shares of each of the Issuer's classes of common stock as
of the latest practicable date:

                          Common Stock, par value $.01
                                (Title of Class)

As of November  13, 1998,  the Issuer had 363,975  shares of Common Stock issued
and outstanding.
<PAGE>

MIDLAND CAPITAL HOLDINGS CORPORATION


Part  I.  FINANCIAL INFORMATION                                                 

     Item 1.  Financial Statements
              Consolidated Statements of Financial Condition -
              September 30, 1998 (unaudited) and June 30, 1998             1

              Consolidated Statements of Earnings - Three Months
              Ended September 30, 1998 and 1997 (unaudited)                2

              Consolidated Statements of Changes in Stockholders' Equity -
              Three Months Ended September 30, 1998 (unaudited)            3

              Consolidated Statements of Cash Flows - Three Months
              Ended September 30, 1998 and 1997 (unaudited)                4

              Notes to Consolidated Financial Statements                   5-6

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                          7-11


Part II.  OTHER INFORMATION                                               12


<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

                         Part I ~ FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Consolidated Statements of Financial Condition

Assets                                                        September 30,    June 30,
                                                                  1998           1998
                                                               ------------   -----------
                                                               (Unaudited)
<S>                                                           <C>              <C>      
Cash and amounts due from
  depository institutions                                     $  2,507,628     2,656,448
Interest-bearing deposits                                       29,900,197    29,337,747
                                                              ------------     ---------
Total cash and cash equivalents                                 32,407,825    31,994,195
Investment securities, held to maturity (fair value:
  September 30, 1998 - $20,207,031;
  June 30, 1998 - $20,030,469)                                  19,991,497    19,989,055
Investment securities available for sale, at fair value          1,276,563     1,195,938
Mortgage-backed securities, held to maturity (fair value:
  September 30, 1998 - $20,678,710;
  June 30, 1998 - $21,128,839)                                  20,329,910    20,844,623
Loans receivable (net of allowance for loan losses:
  September 30, 1998 - $394,354;
  June 30, 1998 - $393,884)                                     42,464,300    38,513,121
Loans receivable, held for sale                                    230,000       659,450
Real estate owned, net                                             688,400       746,522
Stock in Federal Home Loan Bank of Chicago                         554,000       554,000
Office properties and equipment, net                             1,578,156     1,567,285
Accrued interest receivable                                        634,148       619,464
Prepaid expenses and other assets                                  670,532       689,727
                                                              ------------     ---------
Total assets                                                  $120,825,331   117,373,380
                                                              ============   ===========

Liabilities and Stockholders' Equity

Liabilities:
Deposits                                                      $110,676,132   107,761,846
Advance payments by borrowers for taxes and insurance              727,506       447,668
Other liabilities                                                  477,634       396,229
                                                              ------------     ---------
Total liabilities                                              111,881,272   108,605,743
                                                              ------------     ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Financial Condition

Assets                                                        September 30,    June 30,
                                                                  1998           1998
                                                               ------------   -----------
                                                               (Unaudited)
<S>                                                           <C>              <C>      
Stockholders' equity:
Preferred stock, $.01 par value:
  authorized 1,000,000 shares; none outstanding                      -             -
Common stock, $.01 par value: authorized 5,000,000
  shares; issued and outstanding 363,975 shares
  at September 30, 1998 and June 30, 1998                            3,640         3,640
Additional paid-in capital                                       3,266,315     3,266,315
Retained earnings - substantially restricted                     5,545,324     5,430,065
Accumulated other comprehensive income, net of income taxes        198,153       145,099
Common stock awarded by Bank Incentive Plan                        (69,373)      (77,482)
                                                              ------------     ---------
Total stockholders' equity                                       8,944,059     8,767,637
                                                              ------------     ---------
Total liabilities and stockholders' equity                    $120,825,331   117,373,380
                                                              ============   ===========
</TABLE>
See accompanying notes to consolidated financial statements.

                                      -1-
<PAGE>
<TABLE>
<CAPTION>
MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES


Consolidated Statements of Earnings
                                                                      Three Months Ended
                                                                         September 30,
                                                                    ---------------------
                                                                       1998       1997
                                                                    ---------   ---------
                                                                         (Unaudited)
<S>                                                                <C>            <C>    
Interest income:
  Interest on loans                                                $  799,127     680,553
  Interest on mortgage-backed securities                              343,604     408,052
  Interest on investment securities                                   309,208     311,291
  Interest on interest-bearing deposits                               389,234     345,472
  Dividends on FHLB stock                                               9,251       9,426
                                                                   ----------     -------
Total interest income                                               1,850,425   1,754,794
                                                                   ----------     -------

Interest expense:
  Interest on deposits                                              1,059,775     970,810
                                                                   ----------     -------
Total interest expense                                              1,059,775     970,810
                                                                   ----------     -------

Net interest income                                                   790,650     783,984
                                                                   ----------     -------

Non-interest income:
  Loan fees and service charges                                        97,412      49,305
  Commission income                                                    42,221      41,109
  Profit on sale of loans                                              17,054       5,385
  Profit on sale of real estate owned                                  12,278           0
  Deposit related fees                                                142,267     153,668
  Other income                                                         34,882      30,645
                                                                   ----------     -------
Total non-interest income                                             346,114     280,112
                                                                   ----------     -------

Non-interest expense:
  Staffing costs                                                      489,208     435,702
  Advertising                                                          19,400      17,154
  Occupancy and equipment expenses                                    123,614     113,720
  Data processing                                                      63,634      38,774
  Federal deposit insurance premiums                                   15,326      16,090
  Other                                                               209,571     169,261
                                                                   ----------     -------
Total non-interest expense                                            920,753     790,701
                                                                   ----------     -------

Income before income taxes                                            216,011     273,395
Income tax provision                                                   73,454      92,964
                                                                    ----------     -------
Net income                                                         $  142,557     180,431
                                                                   ==========     =======

Earnings per share (basic)                                         $     0.39        0.52
                                                                   ==========        ====
Earnings per share (diluted)                                       $     0.39        0.51
                                                                   ==========        ====
Dividends declared per common share                                $    0.075       0.075
                                                                   ==========        ====
</TABLE>
See accompanying notes to consolidated financial statements.

                                      -2-
<PAGE>
<TABLE>
<CAPTION>
MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES


Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

                                                                                                Accumulated    Common
                                                              Additional                          Other         stock
                                                 Common         Paid-In         Retained     Comprehensive     awarded
                                                 Stock          Capital         Earnings         Income         by BIP       Total  
                                                 -----          -------         --------         ------         ------       -----  
<S>                                           <C>              <C>             <C>              <C>            <C>        <C>      
Balance at June 30, 1998                      $    3,640       3,266,315       5,430,065        145,099        (77,482)   8,767,637
                                              ----------       ---------       ---------        -------        -------    ---------
Comprehensive Income:

  Net Income                                                                     142,557                                   142,557

  Other comprehensive income, net of tax:

  Unrealized holding gain
    during the period                                                                            53,054                     53,054
                                                                             
                                                                               ---------        -------                   --------
Total comprehensive income                                                       142,557         53,054                    195,611

  Amoritzation of award of
    BIP stock                                                                                                    8,109       8,109

  Dividends declared on
    common stock ($0.075
    per share)                                                                   (27,298)                                  (27,298)
                                              ----------       ---------       ---------        -------        -------    --------- 
Balance at
  September 30, 1998                          $    3,640       3,266,315       5,545,324        198,153        (69,373)   8,944,059 
                                              ==========       =========       =========        =======        =======    ========= 



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

                                      -3-
<PAGE>
<TABLE>
<CAPTION>
MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES

Consolidated Statements of Cash Flows
                                                                  Three Months Ended
                                                                     September 30,
                                                               --------------------------
                                                                  1998           1997
                                                               -----------    -----------
                                                                      (Unaudited)
<S>                                                          <C>                 <C>    
Cash flows from operating activities:
Net income                                                   $    142,557        180,431
Adjustments to reconcile net income to net cash from
  operating activities:
  Depreciation                                                     39,461         34,676
  Amortization of premiums and discounts on securities              3,440          7,997
  Amortization of cost of stock benefit plan                        8,109          8,109
  Profit on sale of real estate owned                             (12,278)             0
  Proceeds from sale of loans held for sale                     1,833,675        408,400
  Origination of loans held for sale                           (1,404,225)      (178,000)
  Profit on sale of loans                                         (17,054)        (5,385)
  Increase in accrued interest receivable                         (14,684)       (27,034)
  Increase (decrease) in accrued interest payable                  (1,858)         1,384
  Decrease in deferred income on loans                            (40,137)        (6,058)
  Decrease in other assets                                          8,918         96,808
  Increase (decrease) in other liabilities                         83,263         (7,776)
                                                             ------------     ----------
Net cash provided by operating activities                         629,187        513,552
                                                             ------------     ----------

Cash flows from investing activities:
  Purchase of mortgage-backed securities                       (1,101,593)    (4,610,445)
  Proceeds from repayments of mortgage backed securities        1,610,184      1,886,867
  Purchase of investment securities                            (2,500,000)    (2,494,300)
  Proceeds from maturities of investment securities             2,500,000      2,500,000
  Loan disbursements                                           (6,686,783)    (1,818,743)
  Loan repayments                                               2,775,741      1,562,550
  Proceeds from sale of real estate owned                          70,400              0
  Property and equipment expenditures                             (50,332)       (26,300)
                                                             ------------     ----------
Net cash provided for investing activities                     (3,382,383)    (3,000,371)
                                                             ------------     ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MIDLAND CAPITAL HOLDINGS CORPORATION
AND SUBSIDIARIES

Consolidated Statements of Cash Flows
                                                                  Three Months Ended
                                                                     September 30,
                                                               --------------------------
                                                                  1998           1997
                                                               -----------    -----------
                                                                      (Unaudited)
<S>                                                          <C>                 <C>    
Cash flows from financing activities:
  Deposit account receipts                                     97,231,646     88,422,297
  Deposit account withdrawals                                 (95,318,756)   (91,315,661)
  Interest credited to deposit accounts                         1,001,396        918,895
  Payment of dividends                                            (27,298)       (26,005)
  Increase (decrease) in advance payments by
    borrowers for taxes and insurance                             279,838       (288,803)
                                                             ------------     ----------
Net cash provided for financing activities                      3,166,826     (2,289,277)
                                                             ------------     ----------

Increase (decrease) in cash and cash equivalents                  413,630     (4,776,096)
Cash and cash equivalents at beginning of period               31,994,195     30,902,575
                                                             ------------     ----------
Cash and cash equivalents at end of period                   $ 32,407,825     26,126,479
                                                             ============     ==========
Cash paid during the period for:
  Interest                                                   $  1,061,633        969,426
  Income taxes                                                          0              0 
                                                             ============     ==========

</TABLE>

See accompanying notes to consolidated financial statements.

                                      -4-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

Note A - Basis of Presentation
The accompanying  unaudited consolidated financial statements have been prepared
in accordance  with  instructions  to Form 10-QSB and therefore,  do not include
information or footnotes necessary for fair presentation of financial condition,
results of  operations  and changes in  financial  position in  conformity  with
generally accepted accounting principles. However, in the opinion of management,
all adjustments  (which are normal and recurring in nature) necessary for a fair
presentation  have been included.  The  preparation  of financial  statements in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities and disclosures of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting  period.  Actual results could differ from those estimates.
The results of operations for the three months ended  September 30, 1998 are not
necessarily indicative of the results which may be expected for the entire year.

Note B - Principles of Consolidation
The  accompanying   unaudited  consolidated  financial  statements  include  the
accounts  of  Midland  Capital  Holdings  Corporation  (the  "Company")  and its
wholly-owned  subsidiaries,  Midland Federal Savings and Loan  Association  (the
"Association"),  Midland  Service  Corporation,  MS Insurance  Agency,  Inc. and
Bridgeview  Development  Company.  All  significant  intercompany  accounts  and
transactions have been eliminated in consolidation.

Note C - Stock Conversion
In  January,  1993,  the  Association's  Board of  Directors  approved a plan to
voluntarily  convert  the  Association  from a federal  mutual  savings and loan
association to a federal stock savings and loan association.  The stock offering
of Midland Federal Savings and Loan Association was closed on June 30, 1993 with
the sale of 345,000 shares of $.01 par value common stock at $10.00 per share.

Note D ~ Holding Company Reorganization
On March 19, 1998 the Board of Directors of the  Association  adopted a proposal
to reorganize the  Association  into a holding  company form of  organization in
accordance   with  a  Merger   Agreement   and  Plan  of   Reorganization   (the
"Reorganization").   The   Reorganization  was  approved  by  the  Association's
shareholders on July 15, 1998 and became effective on July 23, 1998. As a result
of the  Reorganization,  the  Association  became a wholly owned  subsidiary  of
Midland Capital Holdings Corporation,  a newly formed Delaware Corporation,  and
each outstanding  share of common stock of the Association  became, by operation
of law,  one share of common  stock of  Midland  Capital  Holdings  Corporation.
Midland  Capital  Holdings  Corporation  operates  as a unitary  thrift  holding
company.

Note E - Earnings Per Share

Earnings per share for the three month periods ended September 30, 1998 and 1997
was  determined  by dividing net income for the period by the  weighted  average
number  of both  basic and  diluted  shares of  common  stock and  common  stock
equivalents outstanding (see Exhibit 11 attached). Stock options are regarded as
common stock  equivalents and are therefore  considered in diluted  earnings per
share  calculations.  Common stock  equivalents  are computed using the treasury
stock method. Earnings per share data for the three month period ended September
30,  1997  has  been   restated   for   comparative   purposes  to  reflect  the
implementation of Statement of Financial Accounting Standards No. 128.

                                      -5-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

             Notes to Consolidated Financial Statements (continued)

Note F - Effect of New Accounting Standards
In February 1998, the FASB issued  Statement of Financial  Accounting  Standards
No. 132 ("SFAS 132"),  entitled "Employers'  Disclosure about Pensions and Other
Post-retirement  Benefits".  SFAS 132  alters  current  disclosure  requirements
regarding  pensions  and  other   post-retirement   benefits  in  the  financial
statements of employers who sponsor such benefit plans.  The revised  disclosure
requirements are designed to provide additional information to assist readers in
evaluating  future  costs  related  to such  plans.  Additionally,  the  revised
disclosures  are designed to provide  changes in the  components  of pension and
benefit  costs in addition to the year end  components  of those  factors in the
resulting asset or liability  related to such plans.  The statement is effective
for fiscal years  beginning  after  December  15, 1997 with earlier  application
available.  Management  does not believe  that  adoption of SFAS 132 will have a
material impact on the Company's  consolidated financial condition or results of
operations.

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133 ("SFAS  133"),  entitled  "Accounting  for  Derivative  Instruments  and for
Hedging  Activities".  SFAS 133 provides a comprehensive and consistent standard
for the recognition and measurement of derivatives and hedging  activities.  The
statement  requires all  derivatives to be recorded on the balance sheet at fair
value and establishes special accounting for the following three different types
of hedges:  hedges of changes in the fair value of assets,  liabilities  or firm
commitments  (referred to as fair value  hedges);  hedges of the  variable  cash
flows of  forecasted  transactions  (cash  flow  hedges);  and hedges of foreign
currency  exposures  of  net  investments  in  foreign  operations.  Though  the
accounting  treatment  and  criteria  for each of the  three  types of hedges is
unique, they all result in recognizing offsetting changes in value or cash flows
of both the hedge and the hedged item in earnings in the same period. Changes in
the fair  value of  derivatives  that do not meet the  criteria  of one of these
three categories of hedges are included in earnings in the period of the change.
SFAS 133 is effective for years beginning after June 15, 1999, but companies can
early adopt as of the  beginning  of any fiscal  quarter  that begins after June
1998.  Management  does not  expect the  adoption  of this  statement  to have a
material impact on the Company's  consolidated financial condition or results of
operations.

The  foregoing  does not  constitute  a  comprehensive  summary of all  material
changes or development affecting the manner in which the Company keeps its books
and  records and  performs  its  financial  accounting  responsibilities.  It is
untended only as a summary of some of the recent pronouncements made by the FASB
which are of particular interest to financial institutions.

                                      -6-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

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

GENERAL
Midland Capital Holdings  Corporation (the "Company") is a Delaware  corporation
which was organized in 1998 by Midland Federal Savings and Loan Association (the
"Association"  or  "Midland  Federal")  for the  purpose  of  becoming  a thrift
institution  holding company.  The Company and the Association are headquartered
in  Bridgeview,  Illinois.  The  Association  began  operations  in  1914  as  a
state-chartered  mutual savings  institution.  In 1982 the Association  became a
federal mutual savings and loan  association.  On June 30, 1993 the  Association
completed a conversion to the stock form of  organization.  In that  conversion,
the Association  issued 345,000 shares of Common Stock,  raising net proceeds of
approximately  $3.1  million.   On  July  23,  1998  the  Association  became  a
wholly-owned  subsidiary of the Company.  The principal  asset of the Company is
the outstanding stock of the Association.  The Company presently has no separate
operations  and its business  consists only of the business of the  Association.
All references to the Company, unless otherwise indicated, at or before July 23,
1998 refer to the Association.  Midland Federal has been principally  engaged in
the  business of  attracting  deposits  from the  general  public and using such
deposits  to  originate  residential  mortgage  loans,  and to a lesser  extent,
consumer,  multi-family  and  other  loans  in  its  primary  market  area.  The
Association also has made substantial investments in mortgage-backed securities,
investment securities and liquid assets.

The  Association's  primary market area consists of Southwest  Chicago,  and the
southwest  suburban  communities of Bridgeview,  Oak Lawn, Palos Hills,  Hickory
Hills, Burbank and Justice which it serves through its main office in Bridgeview
and two branch banking offices in southwest  Chicago.  A fourth banking facility
is currently under development by the Association in Homer Township, Illinois, a
southwest  suburb of Chicago.  The Homer Township  office will be a full-service
branch banking  facility and is anticipated to be opened for business during the
first quarter of calendar  1999.  The  Association's  deposits are insured up to
applicable  limits by the Federal Deposit  Insurance  Corporation  ("FDIC").  At
September  30,  1998  Midland  Federal  had  tangible  and core  capital of $8.4
million,  which capital levels  exceeded all of its fully  phased-in  regulatory
capital requirements.

Forward Looking Statements
When used in this Form  10-QSB  and in future  filings by the  Company  with the
Securities and Exchange  Commission (the "SEC"), in the Company's press releases
or other public or shareholder communications,  and in oral statements made with
the approval of an  authorized  executive  officer,  the words or phrases  "will
likely  result",   "are  expected  to",  "will  continue",   "is   anticipated",
"estimate",   "project"  or  similar   expressions   are  intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform  Act of 1995.  Such  statements  are  subject  to  risks  and
uncertainties,  including  but not limited to changes in economic  conditions in
the  Company's  market  area,  changes  in  policies  by  regulatory   agencies,
fluctuations  in interest rates,  demand for loans in the Company's  market area
and  competition,  all or some of which  could  cause  actual  results to differ
materially  from  historical   earnings  and  those  presently   anticipated  or
projected.  The Company wishes to caution readers not to place undue reliance on
any such  forward-looking  statements,  which speak only as of the date made and
are subject to the above-stated  qualifications in any event. The Company wishes
to advise  readers  that the factors  listed  above could  affect the  Company's
financial  performance  and could cause the Company's  actual results for future
periods to differ  materially  from any opinions or  statements  expressed  with
respect to future periods in any current statements.

                                      -7-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

Impact of the Year 2000
All of the Company's data processing  functions are performed by the Association
or outside vendors.  The Association has conducted a comprehensive review of its
computer  systems to  identify  applications  that could be affected by the Year
2000 issue and has developed an  implementation  plan to address the issue.  The
Association  is in contact  with vendors and  providers  of critical  systems to
determine  their  progress in bringing  such systems into Year 2000  compliance,
which  compliance is  anticipated  by December 31, 1998 and the  Association  is
currently scheduling testing dates for mission critical and non-mission critical
systems.

The  Association  is  scheduled  to convert its on-line  customer  account  data
processing,  as well as certain  other  critical  data  processing  and computer
systems, to a new service provider beginning in October 1998 (the "conversion").
The  Association  has been  informed by the new service  provider  that all such
systems  will be Year 2000  compliant  by December  31,  1998.  The  Association
anticipates  that it will incur  additional  conversion costs in the approximate
amount of  $75,000,  which costs will be recorded as a charge to earnings in the
period in which the conversion services are performed.  The conversion will also
require  additional  capital  expenditures for computer and related equipment in
the approximate amount of $150,000 which costs will be amortized over the useful
life of the equipment purchased.

FINANCIAL CONDITION
During the  quarter  ended  September  30,  1998,  total  assets of the  Company
increased  by $3.4  million to $120.8  million  from $117.4  million at June 30,
1998. Net loans  receivable and loans  available for sale increased $3.5 million
to $42.7  million at September  30, 1998 as loan  disbursements  of $8.1 million
more than offset loan repayments of $2.8 million and loan sales of $1.8 million.
The  increase in net loans  receivable  was  primarily  funded by an increase in
deposits in the amount of $2.9 million to $110.7  million at September 30, 1998.
The balance of mortgage-backed securities decreased by $515,000 to $20.3 million
due to  repayments of  mortgage-backed  securities in the amount of $1.6 million
which  exceeded  purchases of  mortgage-backed  securities in the amount of $1.1
million  during the  quarter.  The balance of  investment  securities  increased
$83,000  during the  quarter  ended  September  30, 1998 to $21.3  million.  The
weighted  average  remaining  maturity of the  Company's  investment  securities
portfolio at September 30, 1998 was 1.9 years.

As discussed above,  deposits for the quarter ended September 30, 1998 increased
$2.9  million as deposit  activity  of $97.2  million and  interest  credited to
deposits in the amount of $1.0  million  exceeded  withdrawal  activity of $95.3
million.  The net increase in savings  deposits is  attributed to a $2.7 million
increase in certificate of deposit accounts,  a $484,000 increase in transaction
deposits  including  money  market  accounts  offset by a $231,000  decrease  in
passbook  accounts.  The net increase in savings  deposits is attributed to more
aggressive pricing and promotion of certificate of deposit rates.

Stockholders' equity for the quarter ended September 30, 1998 increased $177,000
to $8.9  million as earnings in the amount of $143,000,  an $8,000  reduction in
the  unamortized  cost of the  Association's  Bank  Incentive Plan and a $53,000
positive market  adjustment  from  securities  available for sale, net of income
taxes, offset dividends paid on common stock in the amount of $27,000.

                                      -8-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

RESULTS OF OPERATIONS
The Company had net income of $143,000 for the quarter ended  September 30, 1998
compared to net income of $180,000 for the quarter ended September 30, 1997. Net
interest income  increased $7,000 to $791,000 in the quarter ended September 30,
1998 from  $784,000  during the prior year quarter as an increase in the average
balance of interest  earning assets offset decreases in both net interest margin
and interest rate spread.  For the quarter ended  September 30, 1998 the average
balance of interest earning assets increased $9.0 million to $112.9 million from
$103.9  million in the prior year quarter.  For the quarter ended  September 30,
1998 the Company's net interest  margin and interest rate spread both  decreased
to 2.80% and 2.67%, respectively,  from 3.02% and 2.95%,  respectively,  for the
quarter ended September 30, 1997. The ratio of average  interest  earning assets
to average  interest  bearing  liabilities  increased  to 111.27% in the quarter
ended  September 30, 1998 from 109.70% in the prior year  quarter.  Also for the
quarter ended September 30, 1998,  non-interest income and non-interest  expense
increased $66,000 and $130,000, respectively, over the prior year period.

Interest Income
Interest income increased $96,000,  or 5.4%, for the quarter ended September 30,
1998 from the comparable prior year quarter.  An increase in the average balance
of interest earning assets to $112.9 million for the quarter ended September 30,
1998 from $103.9 million for the quarter ended  September 30, 1997 was partially
offset by a decrease in the average yield earned on interest  earning  assets to
6.56% for the quarter ended September 30, 1998 compared to 6.76% for the quarter
ended September 30, 1997.

Interest on loans receivable increased $119,000, or 17.4%, for the quarter ended
September 30, 1998 from the comparable quarter in 1997. The increase in interest
income was attributed to an increase in the average  outstanding  balance of net
loans  receivable to $41.8 million for the quarter ended September 30, 1998 from
$33.2  million for the quarter  ended  September  30, 1997.  The increase in the
average  outstanding  balance of net loans  receivable  offset a decrease in the
average  yield  earned  on loans  receivable  to  7.64%  for the  quarter  ended
September 30, 1998 from 8.21% for the quarter ended September 30, 1997.

Interest on mortgage backed  securities  decreased  $64,000,  or 15.8%,  for the
quarter  ended  September  30,  1998 from the  comparable  quarter in 1997.  The
decrease in interest  income is  attributed  to a $3.7 million  reduction in the
average balance of mortgage backed  securities  outstanding to $20.6 million for
the quarter  ended  September  30, 1998 from $24.3 million for the quarter ended
September 30, 1997. The average yield earned on mortgage backed  securities also
decreased  slightly to 6.67% for the quarter ended September 30, 1998 from 6.70%
for the quarter ended September 30, 1997.

Interest  earned on investment  securities  decreased  $2,000,  or 0.7%, for the
quarter ended  September  30, 1998 from the prior year quarter.  The decrease in
interest  income is  attributed to a decrease in the average yield on investment
securities to 5.83% for the quarter ended  September 30, 1998 from 5.90% for the
quarter ended September 30, 1997. The average  balance of investment  securities
remained  stable for the quarter  ended  September 30, 1998 as compared with the
quarter ended September 30, 1997.

Interest earned on interest bearing deposits  increased  $44,000,  or 12.7%, for
the quarter ended September 30, 1998 from the same quarter in 1997. The increase
in interest income on interest  bearing deposits is attributed to an increase in
the average  outstanding  balance of interest  bearing deposits to $28.7 million
for the  quarter  ended  September  30, 1998  compared to $24.7  million for the
quarter ended September 30, 1997.

                                      -9-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

Interest Income (continued)
The increase in the average balance of interest  bearing  deposits was partially
offset by a decrease in the average yield earned on interest bearing deposits to
5.43% for the quarter ended  September 30, 1998 from 5.59% for the quarter ended
September 30, 1997.

Interest Expense
Interest expense increased $89,000, or 9.2%, for the quarter ended September 30,
1998 compared with the prior year quarter.  The increase in interest  expense is
primarily  attributable  to a $6.9  million  increase in the average  balance of
interest  costing deposits to $101.5 million for the quarter ended September 30,
1998 from $94.6  million in the quarter ended  September  30, 1997.  The average
yield paid on interest  costing deposits also increased to 4.18% for the quarter
ended  September 30, 1998 from 4.10% for the quarter  ended  September 30, 1997.
The  increase in the  average  yield paid on  interest  costing  deposits is the
result of growth  in higher  costing  certificate  of  deposit  accounts,  which
accounts  were  primarily  responsible  for the  increase  in  interest  costing
deposits discussed above.

Provisions for Losses on Loans
The Company  maintains  an  allowance  for loan losses  based upon  management's
periodic  evaluation  of known and  inherent  risks in the loan  portfolio,  the
Company's  past  loan  loss  experience,  adverse  situations  that  may  affect
borrowers' ability to repay loans,  estimated value of the underlying collateral
and current and expected market  conditions.  The Company made no provisions for
loan  losses  out of income in  either  period  based  upon the  absence  of any
specific asset quality problems, the current level of general loan loss reserves
and  management's  assessment  of  the  inherent  risk  in the  loan  portfolio.
Non-performing  loans,  net of  specific  reserves,  increased  to  $554,000  at
September 30, 1998 and  consisted of $515,000 in five single family  residential
mortgage loans, $38,000 in one multi-family residential mortgage loan and $1,000
in consumer loans.  General loan loss reserves totaled $161,000 or 29.04% of net
non-performing  loans at September 30, 1998. At September 30, 1998,  the Company
was aware of no regulatory  directives or suggestions  that the Association make
additional  provisions  for losses on loans.  Although the Company  believes its
allowance  for loan  losses is at a level which it  considers  to be adequate to
provide for potential  losses,  there can be no assurance  that such losses will
not exceed the estimated amounts.

Non-Interest Income
Non-interest  income  increased  $66,000  to  $346,000  for  the  quarter  ended
September 30, 1998 from $280,000 for the quarter ended  September 30, 1997.  The
increase in non-interest  income was due primarily to a $48,000 increase in loan
fees and service  charges,  a $12,000  increase in profit from the sale of loans
and a $12,000 profit from the sale of a real estate owned property. The increase
in  loan  fees  and  service  charges  is  attributed  to an  increase  in  loan
origination activity from the prior year period.  Deposit related fees decreased
$12,000 to $142,000 for the quarter  ended  September  30, 1998 from $154,000 in
the prior year quarter.

Non-Interest Expense
Non-interest  expense  increased  $130,000  to  $921,000  in the  quarter  ended
September  30,  1998  from  $791,000  in  the  1997  quarter.  The  increase  in
non-interest  expense is primarily the result of a $54,000  increase in staffing
costs and a $25,000  increase in data processing  fees. The increase in staffing
costs is primarily  attributed to normal salary increases as well as an increase
in  commissions  paid to staff loan  originators  as a result of increased  loan
origination activity.

                                      -10-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

Non-Interest Expense (continued)
The increase in data processing  fees is the result of data  processing  charges
associated with the conversion of the Company's on-line data processing  systems
to another service  provider,  which conversion is scheduled to occur in October
1998. Non-interest expense was also increased as a result of an $11,000 increase
in computer  software and support  expense,  a $10,000 increase in legal expense
and a $6,000  increase  in real estate  owned  expenses as compared to the prior
year quarter.

Income Taxes
Income taxes  decreased  $20,000 to $73,000 in the quarter  ended  September 30,
1998 from $93,000 for the prior year quarter. The decreased income tax provision
was due  primarily to the decrease in operating  income as compared to the prior
year quarter.

LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of funds are deposits,  loan and mortgage backed
securities repayments, proceeds from the maturities of investment securities and
other funds  provided by operations.  In addition,  the  Association  may borrow
funds from the FHLB of Chicago.  The  Company  maintains  investments  in liquid
assets based upon  management's  assessment of (i) the Company's need for funds,
(ii) expected  deposit flows,  (iii) the yields  available on short-term  liquid
assets  and (iv) the  objectives  of the  Company's  asset/liability  management
program.  The OTS requires members of the FHLB system to maintain minimum levels
of liquid assets. OTS regulations  currently require the Association to maintain
an average daily balance of liquid assets equal to at least 4% of the sum of its
average  daily  balance of net  withdrawable  deposit  accounts  and  borrowings
payable in one year or less. At September 30, 1998, the Association's regulatory
liquidity  ratio was  54.6%.  At such  date,  the  Company  had  commitments  to
originate  $557,000 in loans,  to sell  $230,000  in loans,  no  commitments  to
purchase loans and no commitments to either purchase or sell securities.

The  Company  uses  its  capital  resources  principally  to  meet  its  ongoing
commitments to fund maturing  certificate  of deposits and deposit  withdrawals,
fund existing and continuing loan  commitments,  maintain its liquidity and meet
operating  expenses.  The Company  considers its liquidity and capital  reserves
sufficient  to meet its  outstanding  short and  long-term  needs.  The  Company
expects  to be able to  fund or  refinance,  on a  timely  basis,  its  material
commitments and long-term liabilities.

At  September  30, 1998 the  Association  had  tangible and core capital of $8.4
million, or 7.0% of adjusted total assets,  which was approximately $6.6 million
and $4.8 million above the minimum  requirements  in effect on that date of 1.5%
and 3.0%, respectively, of adjusted total assets.

At  September  30,  1998 the  Association  had  total  capital  of $8.6  million
(including  $8.4  million in core  capital)  and  risk-weighted  assets of $38.0
million, or total capital of 22.5% of risk-weighted assets. This amount was $5.5
million above the 8.0% requirement in effect on that date.

RECENT DEVELOPMENTS
At the annual meeting of shareholders held on October 21, 1998, the shareholders
approved  the  election of two  directors  for terms of three years each and the
ratification  of Cobitz,  VandenBerg & Fennessy as  independent  auditors of the
Company for the fiscal year ending June 30, 1999.

                                      -11-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION

                          PART II - OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS
From time to time, the  Association is a party to legal  proceedings  wherein it
enforces its security interest or is a defendant to certain lawsuits arising out
of the ordinary course of its business.  Neither the Company nor the Association
believes  that  it is a party  to any  legal  proceedings  which,  if  adversely
determined,  would have a material adverse effect on its financial  condition at
this time.

Item 2.  CHANGES IN SECURITIES
Not applicable.

Item 3.  DEFAULTS UPON SENIOR SECURITIES
Not applicable.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.

Item 5.  OTHER INFORMATION
Not applicable.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a) Computation of earnings per share (Exhibit 11 filed herewith). (b) Financial
data schedule (Exhibit 27 filed herewith). (c) No reports on Form 8-K were filed
this quarter.

                                      -12-
<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of  Section 13 or 15 (d) of the  Securities  and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



                            MIDLAND CAPITAL HOLDINGS CORPORATION
                            Registrant



DATE:  November 13, 1998                  BY: /s/ Paul Zogas
                                              -------------- 
                                              Paul Zogas
                                              President, Chief Executive Officer
                                              and Chief Financial Officer



DATE:  November 13, 1998                  BY: /s/ Charles Zogas
                                              ----------------- 
                                              Charles Zogas
                                              Executive Vice President and
                                              Chief Operating Officer