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 December 31, 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 February 12, 1999, the Issuer had
             363,975 shares of Common Stock issued and outstanding.
<PAGE>
MIDLAND CAPITAL HOLDINGS CORPORATION


Part  I.  FINANCIAL INFORMATION                                             PAGE

     Item 1.  Financial Statements
              Consolidated Statements of Financial Condition -
              December 31, 1998 (unaudited) and June 30, 1998..............   1

              Consolidated Statements of Earnings -
              Three months ended December 31, 1998 and 1997 and
              Six months ended December 31, 1998 and 1997 (unaudited)......   2

              Consolidated Statements of Changes in Stockholders' Equity -
              Six months ended December 31, 1998 (unaudited)...............   3

              Consolidated Statements of Cash Flows - Six months
              ended December 31, 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.......................... 7-13


Part II.  OTHER INFORMATION................................................   14





<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

Part I ~ FINANCIAL INFORMATION
<TABLE>
<CAPTION>

Consolidated Statements of Financial Condition


Assets                                                            December 31,         June 30,
                                                                     1998                1998
                                                                -------------        -----------
                                                                  (Unaudited)
<S>                                                             <C>                  <C>      
Cash and amounts due from
  depository institutions                                       $   3,713,123          2,656,448
Interest-bearing deposits                                          28,888,367         29,337,747
                                                                -------------        -----------
Total cash and cash equivalents                                    32,601,490         31,994,195
Investment securities, held to maturity (fair value:
  December 31, 1998 - $20,128,876;
  June 30, 1998 - $20,030,469)                                     19,993,502         19,989,055
Investment securities available for sale, at fair value             1,238,750          1,195,938
Mortgage-backed securities, held to maturity (fair value:
  December 31, 1998 - $19,139,336;
  June 30, 1998 - $21,128,839)                                     18,863,062         20,844,623
Loans receivable (net of allowance for loan losses:
  December 31, 1998 - $394,804;
  June 30, 1998 - $393,884)                                        46,443,903         38,513,121
Loans receivable, held for sale                                       490,800            659,450
Real estate owned, net                                                601,372            746,522
Stock in Federal Home Loan Bank of Chicago                            571,800            554,000
Office properties and equipment, net                                1,761,712          1,567,285
Accrued interest receivable                                           608,044            619,464
Prepaid expenses and other assets                                     832,502            689,727
                                                                -------------        -----------
Total assets                                                    $ 124,006,937        117,373,380
                                                                =============        ===========


Liabilities and Stockholders' Equity

Liabilities:
Deposits                                                        $ 113,899,680        107,761,846
Advance payments by borrowers for taxes and insurance                 506,141            447,668
Other liabilities                                                     611,034            396,229
                                                                -------------        -----------
Total liabilities                                                 115,016,855        108,605,743
                                                                -------------        -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<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 December 31, 1998 and June 30, 1998                                3,640              3,640
Additional paid-in capital                                          3,271,315          3,266,315
Retained earnings - substantially restricted                        5,603,353          5,430,065
Accumulated other comprehensive income, net of income taxes           173,039            145,099
Common stock awarded by Bank Incentive Plan                           (61,265)           (77,482)
                                                                -------------        -----------
Total stockholders' equity                                          8,990,082          8,767,637
                                                                -------------        -----------
Total liabilities and stockholders' equity                      $ 124,006,937        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               Six Months Ended
                                                      December 31,                     December 31,
                                                 1998             1997             1998            1997
                                             -----------          -------       ---------       ---------
                                                       (Unaudited)                     (Unaudited)
<S>                                          <C>                <C>            <C>              <C>      
Interest income:
  Interest on loans                          $   835,645          692,302       1,634,773       1,372,856
  Interest on mortgage-backed securities         321,627          400,503         665,231         808,556
  Interest on investment securities              302,718          310,964         611,926         622,254
  Interest on interest-bearing deposits          358,738          326,376         747,972         671,848
  Dividends on FHLB stock                          9,374            9,775          18,625          19,200
                                             -----------        ---------       ---------       ---------
Total interest income                          1,828,102        1,739,920       3,678,527       3,494,714
                                             -----------        ---------       ---------       ---------

Interest expense:
  Interest on deposits                         1,064,614          958,214       2,124,389       1,929,024
                                             -----------        ---------       ---------       ---------
Total interest expense                         1,064,614          958,214       2,124,389       1,929,024
                                             -----------        ---------       ---------       ---------

Net interest income                              763,488          781,706       1,554,138       1,565,690
                                             -----------        ---------       ---------       ---------

Non-interest income:
  Loan fees and service charges                   88,013           51,722         185,426          95,642
  Commission income                               19,165           21,577          61,386          62,686
  Profit on sale of loans                          9,438            7,387          26,491          12,772
  Profit (loss) on sale of REO                    (2,375)               0           9,903               0
  Deposit related fees                           122,136          160,687         264,403         314,355
  Other income                                    39,117           33,055          73,999          69,085
                                             -----------        ---------       ---------       ---------
Total non-interest income                        275,494          274,428         621,608         554,540
                                             -----------        ---------       ---------       ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                          <C>                <C>            <C>              <C>      
Non-interest expense:
  Staffing costs                                 518,887          430,571       1,008,095         866,272
  Advertising                                     17,249           24,075          36,650          41,229
  Occupancy and equipment expenses               111,371          116,076         234,984         229,796
  Data processing                                 46,450           36,177         110,084          74,951
  Federal deposit insurance premiums              15,489           16,052          30,815          32,142
  Provision for loss on REO                        1,528                0           1,528               0
  Other                                          197,950          175,571         407,521         344,832
                                             -----------        ---------       ---------       ---------
Total non-interest expense                       908,924          798,522       1,829,677       1,589,222
                                             -----------        ---------       ---------       ---------

Income before income taxes                       130,058          257,612         346,069         531,008
Income tax provision                              44,731           87,598         118,185         180,563
                                             -----------        ---------       ---------       ---------
Net income                                   $    85,327          170,014         227,884         350,445
                                             ===========        =========         =======         =======

Earnings per share (basic)                   $      0.24             0.49             .63            1.01
                                             ===========        =========         =======         =======
Earnings per share (diluted)                 $      0.23             0.47             .62             .98
                                             ===========        =========         =======         =======
Dividends declared per common share          $     0.075            0.075            0.15            0.15
                                             ===========        =========         =======         =======
</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                                                          227,884                                       227,884

  Other comprehensive 
    income, net of tax:

  Unrealized holding gain
    during the period                                                                  27,940                        27,940
                                                                   ----------       ---------                     ---------

Total comprehensive income                                            227,884          27,940                       255,824


  Tax benefit related to
    employee stock plan                                 5,000                                                         5,000

  Amoritzation of award of
    BIP stock                                                                                        16,217          16,217

  Dividends declared on
    common stock ($0.15
    per share)                                                        (54,596)                                      (54,596)
                                   ----------      ----------      ----------     ----------     ----------      ----------
Balance at
  December 31, 1998                $    3,640       3,271,315       5,603,353        173,039        (61,265)      8,990,082
                                   ==========       =========       =========        =======        =======       =========


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

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

Consolidated Statements of Cash Flows (Unaudited)
                                                                   Six Months Ended
                                                                      December 31,
                                                                  1998           1997
                                                              ------------  -------------
<S>                                                           <C>           <C>      
Cash flows from operating activities:
Net income                                                    $    227,884        350,445
Adjustments to reconcile net income to net cash from
 operating activities:
  Depreciation                                                      79,420         70,760
  Amortization of premiums and discounts on securities               4,638         15,087
  Amortization of cost of stock benefit plan                        16,217         16,218
  Profit on sale of real estate owned                               (9,903)             0
  Provision for loss on real estate owned                            1,528              0
  Proceeds from sale of loans held for sale                      3,216,475        962,022
  Origination of loans held for sale                            (3,047,825)      (977,872)
  Profit on sale of loans                                          (26,491)       (12,772)
  Decrease in accrued interest receivable                           11,420          9,171
  Increase (decrease) in accrued interest payable                    2,844        (11,569)
  Decrease in deferred income on loans                             (73,332)       (25,860)
  (Increase) decrease in other assets                             (125,677)        95,960
  Increase in other liabilities                                    211,961         13,371
                                                              ------------  -------------
Net cash provided by operating activities                          489,159        504,961
                                                              ------------  -------------

Cash flows from investing activities:
  Purchase of mortgage backed securities, held to maturity      (1,101,593)    (4,610,445)
  Proceeds from repayments of mortgage backed securities,
    held to maturity                                             3,073,390      3,171,564
  Purchase of investment securities, held to maturity           (4,999,800)    (4,990,800)
  Proceeds from maturities of investment securities,
    held to maturity                                             5,000,000      5,000,000
  Purchase of Federal Home Loan Bank stock                         (17,800)             0
  Loan disbursements                                           (13,662,091)    (4,438,764)
  Loan repayments                                                5,804,641      4,127,966
  Proceeds from sale of real estate owned                          153,525              0
  Property and equipment expenditures                             (273,847)      (56,372)
                                                              ------------  -------------
Net cash provided for investing activities                      (6,023,575)   (1,796,851)
                                                              ------------  -------------

Cash flows from financing activities:
  Deposit receipts                                             193,917,682    174,217,414
  Deposit withdrawals                                         (189,781,894)  (178,886,987)
  Interest credited to deposit accounts                          2,002,046      1,836,258
  Payment of dividends                                             (54,596)       (52,009)
  Increase (decrease) in advance payments by borrowers
    for taxes and insurance                                         58,473         (5,440)
                                                              ------------  -------------
Net cash provided for financing activities                       6,141,711     (2,890,764)
                                                              ------------  -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                           <C>           <C>      
Increase (decrease) in cash and cash equivalents                   607,295     (4,182,654)
Cash and cash equivalents at beginning of period                31,994,195     30,902,575
                                                              ------------  -------------
Cash and cash equivalents at end of period                    $ 32,601,490     26,719,921
                                                              ============     ==========

Cash paid during period for interest                          $  2,121,545      1,940,593
Cash paid during period for income taxes                           102,260         89,000
Non-cash investing activities:
  Transfer of loans to real estate owned                      $          0         58,022
                                                              ============     ==========
</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 and six months ended December 31,
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 and six month periods ended  December 31,
1998 and 1997 were  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.


                                      -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.

In October 1998, the FASB issued Statement of Financial Accounting Standards No.
134 ("SFAS 134"),  entitled "Accounting for Mortgage-Backed  Securities Retained
after the  Securitization  of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise.  SFAS 134 is effective for the first fiscal  quarter after  December
15, 1998.  This statement  amends SFAS No. 65 "Accounting  for Certain  Mortgage
Banking   Activities."  This  statement  revises  the  accounting  for  retained
securities and beneficial  interests.  Management does not believe that adoption
of SFAS No.  134 will  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
December 31, 1998 Midland Federal had tangible and core capital of $8.1 million,
which capital  levels  exceeded all of its fully  phased-in  regulatory  capital
requirements.

FINANCIAL CONDITION
During the six months  ended  December  31,  1998,  total  assets of the Company
increased  by $6.6  million to $124.0  million  from $117.4  million at June 30,
1998. Net loans  receivable and loans  available for sale increased $7.7 million
to $46.9  million at December 31, 1998 as loan  disbursements  of $16.7  million
more than offset loan repayments of $5.8 million and loan sales of $3.2 million.
The  increase in net loans  receivable  was  primarily  funded by an increase in
deposits in the amount of $6.1  million to $113.9  million at December 31, 1998.
The balance of  mortgage-backed  securities  decreased  by $2.0 million to $18.9
million due to  repayments of  mortgage-backed  securities in the amount of $3.1
million, which exceeded purchases of mortgage-backed securities in the amount of
$1.1  million  during the six months ended  December  31,  1998.  The balance of
investment securities remained stable at $21.2 million at December 31, 1998. The
weighted  average  remaining  maturity of the  Company's  investment  securities
portfolio at December 31, 1998 was 1.8 years.


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

FINANCIAL CONDITION (continued)
As  discussed  above,  deposits  for the six  months  ended  December  31,  1998
increased  $6.1  million as deposit  activity  of $193.9  million  and  interest
credited to deposits in the amount of $1.0 million exceeded  withdrawal activity
of $189.8 million.  The net increase in savings deposits is attributed to a $3.2
million increase in certificate of deposit accounts,  a $2.3 million increase in
transaction  deposits including money market accounts and a $655,000 increase 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 six  months  ended  December  31,  1998  increased
$222,000 to $9.0 million. The increase in stockholders' equity was primarily the
result of  earnings  in the  amount of  $228,000,  a  $16,000  reduction  in the
unamortized cost of the Association's Bank Incentive Plan and a $28,000 positive
market  adjustment  from  securities  available  for sale,  net of income taxes,
offset by dividends paid on common stock in the amount of $55,000.

RESULTS OF OPERATIONS
The Company had net income of $85,000 for the quarter  ended  December  31, 1998
compared to net income of $170,000 for the quarter ended  December 31, 1997. The
decline in net income in the current quarter is the result of a $19,000 decrease
in net interest income and a $110,000 increase in non-interest expense offset by
a $1,000 increase in non-interest income and a $43,000 decrease in income taxes.
Net interest income decreased  $19,000 to $763,000 in the quarter ended December
31, 1998 from  $782,000  during the prior year  quarter as decreases in both net
interest margin and interest rate spread offset increases in the average balance
of  interest  earning  assets.  For the  quarter  ended  December  31,  1998 the
Company's net interest  margin and interest rate spread both  decreased to 2.67%
and 2.60%,  respectively,  from 3.04% and 2.96%,  respectively,  for the quarter
ended  December  31,  1997.  The  average  balance of  interest  earning  assets
increased  $11.7 million to $114.5  million for the quarter  ended  December 31,
1998  from  $102.8  million  in the prior  year  quarter.  The ratio of  average
interest earning assets to average  interest bearing  liabilities also increased
to 110.43% in the quarter ended December 31, 1998 from 110.07% in the prior year
quarter.

For the six  months  ended  December  31,  1998 the  Company  had net  income of
$228,000  compared to net income of $350,000 for the six months  ended  December
31,  1997.  The  decline in net income in the  current  six month  period is the
result of a $12,000  decrease in net interest income and a $240,000  increase in
non-interest  expense offset by a $67,000 increase in non-interest  income and a
$63,000  decrease in income  taxes.  The decrease in net interest  income in the
current six month period is attributed to decreases in both net interest  margin
and interest rate spread. Interest rate spread and net interest margin decreased
to 2.73% and 2.64%,  respectively  from 3.03% and  2.95%,  respectively,  in the
prior year period.  The declines in both net interest  margin and interest  rate
spread  offset a $10.4  million  increase  in the  average  balance of  interest
earning assets to $113.7 million for the six months ended December 31, 1998. The
ratio of average interest earning assets to average interest bearing liabilities
also increased to 110.85% from 109.94% in the prior year period.


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

Interest Income
Interest income increased  $88,000,  or 5.1%, for the quarter ended December 31,
1998 from the comparable prior year quarter.  An increase in the average balance
of interest  earning assets to $114.5 million for the quarter ended December 31,
1998 from $102.8  million for the quarter ended  December 31, 1997 was partially
offset by a decrease in the average yield earned on interest  earning  assets to
6.39% for the quarter ended  December 31, 1998 compared to 6.77% for the quarter
ended December 31, 1997.

For the six months ended December 31, 1998 interest income increased $184,000 or
5.3% from the  comparable  prior year  period as the  result of a $10.4  million
increase in the average outstanding balance of interest earning assets to $113.7
million  from the prior year  period.  The  increase in the average  outstanding
balance of interest earning assets was offset by a decrease in the average yield
earned on interest earning assets to 6.47% from 6.76% in the prior year period.

Interest on loans  receivable  increased  $144,000,  or 20.7%, as a result of an
increase in the average  outstanding  balance of net loans  receivable  to $45.0
million  for the quarter  ended  December  31,  1998 from $33.8  million for the
quarter ended December 31, 1997. The increase in the average outstanding balance
of net loans  receivable  offset a decrease in the average yield earned on loans
receivable to 7.43% for the quarter  ended  December 31, 1998 from 8.19% for the
quarter ended  December 31, 1997.  The decline in average yield is primarily due
to  increased  refinance  activity  on loans  due to the  continued  decline  in
interest rates.

Interest on mortgage backed securities  decreased $79,000, or 19.7%, as a result
of a $4.6 million reduction in the average balance of mortgage backed securities
outstanding  to $19.3 million for the quarter ended December 31, 1998 from $23.9
million for the quarter  ended  December 31, 1997.  The average  yield earned on
mortgage  backed  securities  also  decreased  slightly to 6.67% for the quarter
ended December 31, 1998 from 6.71% for the quarter ended December 31, 1997.

Interest earned on investment  securities  decreased  $8,000,  or 2.7%, due to a
decrease in the average yield on investment  securities to 5.70% for the quarter
ended  December 31, 1998 from 5.88% for the quarter ended December 31, 1997. The
average balance of investment  securities  remained stable for the quarter ended
December 31, 1998 as compared with the prior year quarter.

Interest earned on interest bearing deposits  increased  $32,000,  or 9.9%, as a
result of an  increase in the average  outstanding  balance of interest  bearing
deposits to $28.5  million for the quarter  ended  December 31, 1998 compared to
$23.4  million for the quarter  ended  December  31,  1997.  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 5.04% for the
quarter ended  December 31, 1998 from 5.57% for the quarter  ended  December 31,
1997.

For the six  months  ended  December  31,  1998  interest  on  loans  receivable
increased  $262,000  from the  comparable  prior year  period.  The  increase in
interest on loans  receivable was due to an $9.9 million increase in the average
outstanding  balance of loans receivable to $43.4 million from $33.5 million for
the six months ended December 31, 1997. The $9.9 million increase in the average
outstanding  balance of loans receivable  offset a decrease in the average yield
earned on loans  receivable to 7.54% for the six months ended  December 31, 1998
from 8.20% for the prior year period. The growth in the Company's loan portfolio
is attributed to aggressive  pricing and direct  marketing of the Company's loan
products. 

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

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)

Interest Income (continued)
For the six months ended  December 31, 1998 interest  earned on mortgage  backed
securities decreased $144,000 to $665,000 from $809,000 for the six months ended
December 31, 1997.  The primary  factor for the decrease in interest on mortgage
backed securities was a $4.2 million decrease in the average outstanding balance
of mortgage backed securities to $19.9 million for the six months ended December
31, 1998 from $24.1  million for the six months ended  December 31, 1997 as well
as a decrease in the average yield earned on mortgage backed securities to 6.67%
for the six months  ended  December 31, 1998 from 6.71% for the six months ended
December 31, 1997.  Proceeds from repayments of mortgage backed  securities were
used to partially fund the increased loan demand, discussed above.

For the six  months  ended  December  31,  1998  interest  earned on  investment
securities  decreased $10,000 to $612,000 from $622,000 for the six months ended
December 31,  1997.  The primary  factor for the decrease in interest  earned on
investment  securities  was a decrease in the average yield earned on investment
securities  to 5.76% for the six months  ended  December 31, 1998 from 5.89% for
the six months ended December 31, 1997. The decrease in the average yield on the
Association's  investment securities was the result of lower reinvestment yields
on maturing  investment  securities despite the same original terms to maturity.
The average balance of investment  securities remained constant at $21.2 million
for both the six months ended December 31, 1998 and 1997.

For the six months ended December 31, 1998 interest  earned on interest  bearing
deposits  increased  $76,000 to $748,000  from $672,000 for the six months ended
December 31, 1997. The increase in interest income is primarily  attributed to a
$4.5 million  increase in the average  outstanding  balance of interest  bearing
deposits to $28.6 million for the six months ended  December 31, 1998 from $24.1
million for the six months ended  December 31, 1997. The increase in the average
outstanding  balance of interest bearing deposits more than offset a decrease in
the  average  yield  earned on  interest  bearing  deposits to 5.24% for the six
months  ended  December  31,  1998 from 5.58% in the year  earlier  period.  The
decrease  in the  average  yield on  interest  bearing  deposits  reflected  the
decrease in  short-term  market  interest  rates that  occurred  between the two
periods. The Company has historically maintained a relatively high level of cash
equivalents and other short term  investments in an attempt to control  interest
rate risk.

Interest Expense
Interest expense increased  $107,000,  or 11.1%, due to a $10.3 million increase
in the average  balance of interest  costing  deposits to $103.7 million for the
quarter ended December 31, 1998 from $93.4 million in the quarter ended December
31, 1997.  The average yield paid on interest  costing  deposits also  increased
slightly to 4.11% for the  quarter  ended  December  31, 1998 from 4.10% for the
quarter ended December 31, 1997.

For the six months ended December 31, 1998 interest expense  increased  $195,000
from the prior year period. This increase in interest expense in the current six
month  period  was  the  result  of an  $8.6  million  increase  in the  average
outstanding  balance of interest  costing deposits to $102.6 million for the six
months  ended  December  31, 1998 from $94.0  million  for the six months  ended
December  31, 1997 as well as an increase in the average  yield paid on interest
costing  deposits to 4.14% for the six months ended December 31, 1998 from 4.10%
for the prior year period.  The  increase in the average  yield paid on interest
costing deposits is the result of deposit growth that was primarily concentrated
in certificate of deposit accounts,  which accounts are generally higher costing
than either passbook or transaction deposits.

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

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (continued)

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, totaled $261,000 at December 31,
1998 and  consisted  of $219,000 in three  single  family  residential  mortgage
loans,  $37,000  in one  multi-family  residential  mortgage  loan and $5,000 in
consumer  loans.  General loan loss reserves  totaled  $168,000 or 64.37% of net
non-performing loans at December 31, 1998. At December 31, 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 remained stable at $275,000 for the quarters ended December
31, 1998 and 1997.  During the  quarter  ended  December  31, 1998 loan fees and
service charges increased  $36,000,  which is primarily  attributed to increased
loan origination activity. Deposit related fees decreased $39,000 in the quarter
ended December 31, 1998 to $122,000. During the current quarter, Midland Federal
converted  its on-line  customer  account data  processing,  as well  as certain
other critical data processing and computer  systems,  to a new service provider
(the  "conversion".)  The  conversion  process  included  system  changes in the
processing of demand deposit in-clearings which changes took longer to implement
than had been  anticipated  resulting  in some lost fee income  associated  with
demand deposit  activity.  However,  any reduction in fee income associated with
the  implementation  of these  critical data  processing  systems was a one time
event related to the conversion process.

For the six months ended December 31, 1998 non-interest income increased $67,000
to  $622,000  from  $555,000  in  the  year  earlier  period.  The  increase  in
non-interest income in the current six month period is primarily attributed to a
$90,000  increase  in loan fees and service  charges  and a $14,000  increase in
profit on the sale of loans  offset by a $50,000  decrease  in  deposit  related
fees, compared with the prior year period.

Non-Interest Expense
Non-interest  expense  increased  $110,000  to  $909,000  in the  quarter  ended
December  31,  1998  from  $799,000  in  the  1997  quarter.   The  increase  in
non-interest  expense is primarily the result of an $88,000 increase in staffing
costs, a $17,000 increase in computer software and support expense and a $10,000
increase in data  processing  costs.  For the six months ended December 31, 1998
non-interest expense increased $241,000 to $1.8 million from $1.6 million in the
prior year period. The primary factors for the increase in non-interest  expense
in the current six month period were a $142,000  increase in staffing  costs,  a
$35,000  increase in data  processing  costs and a $29,000  increase in computer
software and support expenses, compared with the prior year period.

                                      -11-
<PAGE>
                      MIDLAND CAPITAL HOLDINGS CORPORATION
                                AND SUBSIDIARIES

Non-Interest Expense (continued)
For the six months  ended  December  31,  1998  non-interest  expense  increased
$241,000 to $1.8 million from $1.6 million in the prior year period. The primary
factors for the increase in non-interest expense in the current six month period
were a  $142,000  increase  in  staffing  costs,  a  $35,000  increase  in  data
processing  costs  and a $29,000  increase  in  computer  software  and  support
expenses, compared with the prior year period.

The  increase in staffing  costs in both the three and six month  periods  ended
December 31, 1998 is primarily  attributed to an increase in commissions paid to
staff loan  originators as a result of increased loan origination  activity,  as
discussed above. The increases in computer software and support expense and data
processing costs in both the three and six month periods ended December 31, 1998
are the result of costs associated with the conversion of the Company's  on-line
data processing systems to another service provider, as discussed above.

Income Taxes
Income taxes  decreased to $45,000 in the quarter  ended  December 31, 1998 from
$88,000 for the prior year quarter.  For the six months ended  December 31, 1998
income  taxes  decreased  to  $118,000  compared  to  $181,000 in the prior year
period.  The decreased income tax provision was due primarily to the decrease in
operating income in both periods as compared to the prior year periods.

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 December 31, 1998, the Association's  regulatory
liquidity  ratio was  53.0%.  At such  date,  the  Company  had  commitments  to
originate  $3.3 million in loans,  to sell $491,000 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 December  31, 1998 the  Association  had  tangible  and core  capital of $8.1
million, or 6.6% of adjusted total assets,  which was approximately $6.3 million
and $4.4 million above the minimum  requirements  in effect on that date of 1.5%
and 3.0%, respectively, of adjusted total assets.

At  December  31,  1998  the  Association  had  total  capital  of $8.3  million
(including  $8.1  million in core  capital)  and  risk-weighted  assets of $41.0
million, or total capital of 20.1% of risk-weighted assets. This amount was $5.0
million above the 8.0%  requirement in effect on that date. 

                                      -12-
<PAGE>
                                 MIDLAND CAPITAL
                     HOLDINGS CORPORATION AND SUBSIDIARIES

RECENT DEVELOPMENTS
The Company is currently developing Midland Federal's fourth banking facility in
Homer Township,  Will County,  Illinois, a southwest suburb of Chicago.  Midland
Federal has entered into a long term retail lease for the Homer Township  office
premises  including a lease of contiguous  vacant land for a drive-up  facility,
parking  and/or  future   expansion.   The  Homer  Township  office  will  offer
full-service  branch banking and is  anticipated to be open for business  during
the first quarter of calendar 1999.

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.

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. The
Association  converted its on-line customer account data processing,  as well as
certain other critical data  processing and computer  systems,  to a new service
provider in October 1998,  as part of its plan to address Year 2000 issues.  The
Company estimates that it has spent approximately $225,000 in the current fiscal
yera on computer system  upgrades  related to either the conversion or Year 2000
issues.  The Company  estimates  that future  expenditures  to address Year 2000
issues will be  approximately  $25,000 for additional  computer system upgrades.
Year 2000 testing of the Association's  on-line customer account data processing
system is in process.  Year 2000  testing  for the  Association's  on-line  data
processing system, as well as other mission critical data processing systems, is
anticipated to be completed by March 31, 1999.




                                      -13-
<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
On October 21, 1998 the  shareholders  held their annual meeting to consider and
act upon the  election  of Mr.  Jonas  Vaznelis  and Mr.  Paul Zogas to serve as
directors for terms of three years and the  ratification  of the  appointment of
Cobitz,  VandenBerg  & Fennessy as auditors  for the Company for the fiscal year
ending June 30, 1999.

Both of the foregoing items were approved by the  shareholders at the meeting by
the following vote totals based upon 363,975 shares  outstanding and entitled to
vote at the meeting.

I. Election of Directors - 325,091  shares voted,  as follows: 
Jonas Vaznelis:    325,091 votes FOR; -0- votes withheld. 
Paul Zogas:        325,091 votes FOR; -0- votes withheld.

II. Ratification of the appointment of Cobitz, VandenBerg & Fennessy as auditors
for the Company for the fiscal year ending June 30, 1999 - 325,091 shares voted,
as follows:

FOR:          325,091
AGAINST:      -0-
ABSTAIN:      -0-


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.


                                      -14-
<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:  February 12, 1999    BY: /s/ Paul Zogas
                                -------------------------------------
                                Paul Zogas
                                President, Chief Executive Officer
                                and Chief Financial Officer



DATE:  February 12, 1999    BY: /s/ Charles Zogas
                                -------------------------------------
                                Charles Zogas
                                Executive Vice President and
                                Chief Operating Officer