SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

               For the Fiscal Year Ended June 30, 2002

                                       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 South Harlem Avenue
Bridgeview, Illinois                                              60455
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                         Zip Code

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

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None
                                      ----

           Securities Registered Pursuant to Section 12(g) of the Act:

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

     Check  whether  the Issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past twelve  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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. X

     The Issuer had  $866,000  in net income for the fiscal  year ended June 30,
2002.

     As of June 30, 2002,  there were issued and  outstanding  363,975 shares of
the Issuer's  Common  Stock.  The Issuer's  voting  stock is not  regularly  and
actively traded,  and there are no regularly quoted bid and asked prices for the
Issuer's  voting  stock.  Accordingly,  the  Issuer is unable to  determine  the
aggregate market value of the voting stock held by non-affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

     PARTS II and IV of Form  10-KSB - Annual  Report  to  Stockholders  for the
Fiscal Year Ended June 30, 2002.

     PART III of Form 10-KSB - Proxy  Statement  for the 2002 Annual  Meeting of
     -------------------------------  ---------  -------------------  ----------
Stockholders.
-------------


<PAGE>


                                     PART I


Item 1.  Description of Business
-------  -----------------------

     Midland Capital Holdings Corporation, which we refer to as Midland Capital,
is a Delaware corporation which was organized in 1998 by Midland Federal Savings
and Loan Association,  which we refer to as Midland Federal,  for the purpose of
becoming a thrift  institution  holding  company.  Midland  Capital  and Midland
Federal are headquartered in Bridgeview, Illinois.

     On June 30, 1993,  Midland Federal completed a conversion to the stock form
of organization.  In that  conversion,  Midland Federal issued 345,000 shares of
common stock,  raising net proceeds of approximately  $3.1 million.  On July 23,
1998, Midland Federal became a wholly-owned subsidiary of Midland Capital.

     The principal asset of Midland Capital is the outstanding  stock of Midland
Federal.  Midland Capital presently has no separate  operations and its business
consists  only of the business of Midland  Federal.  All  references  to Midland
Capital, unless otherwise indicated, at or before July 23, 1998 refer to Midland
Federal.

     Midland Federal has been principally  engaged in the business of attracting
deposits  from  the  general   public  and  using  such  deposits  to  originate
residential mortgage and, to a lesser extent,  consumer,  multi-family and other
loans in its primary  market  area.  Midland  Federal has also made  substantial
investments  in  mortgage-backed  securities,  investment  securities and liquid
assets.

     Midland  Federal's primary market area consists of southwest  Chicago,  and
the southwest suburban communities of Bridgeview, Oak Lawn, Palos Hills, Hickory
Hills,  Burbank,  Chicago Ridge,  Homer Glen,  Lockport,  Orland Park and Lemont
which it serves  through its main office in Bridgeview  and three branch offices
in southwest  Chicago.  Its deposits are insured up to applicable  limits by the
Federal Deposit  Insurance  Corporation.  At June 30, 2002,  Midland


                                       2
<PAGE>


Federal  had  $150.6   million  of  assets,   deposits  of  $138.4  million  and
stockholders equity of $10.4 million.

     The main offices of Midland Capital and Midland Federal are located at 8929
South Harlem Avenue,  Bridgeview,  Illinois 60455 and their telephone  number at
that address is (708) 598-9400.

Forward-Looking Statements
--------------------------

     When used in this Form 10-KSB and in future filings by Midland Capital with
the SEC, in Midland  Capital'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 Midland  Capital's market area,  changes in policies by regulatory
agencies,  fluctuations in interest rates,  demand for loans, real estate values
and  competition  in Midland  Capital's  market area, all or some of which could
cause actual results to differ  materially  from  historical  earnings and those
presently  anticipated or projected.  Midland  Capital 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.  Midland  Capital  wishes to advise  readers that the factors  listed
above could  affect  Midland  Capital's  financial  performance  and could cause
Midland  Capital's  actual results for future periods to differ  materially from
any  opinions or  statements  expressed  with  respect to future  periods in any
current statements.

     Midland Capital does not undertake and specifically declines any obligation
to  publicly  release  the  result  of any  revisions  which  may be made to any
forward-looking  statements to reflect events or circumstances after the date


                                       3
<PAGE>


of such statements or to reflect the occurrence of anticipated or  unanticipated
events.

Lending Activities
------------------

     General.  The principal  lending  activity of Midland  Federal has been the
     -------
origination for its portfolio of  conventional  first mortgage real estate loans
secured by owner  occupied one- to  four-family  residential  property.  Midland
Federal also originates  consumer,  multi-family and non-residential real estate
loans.

     Loan originations come primarily from walk-in customers, continued business
from customers and referrals from local real estate brokers.  Midland  Federal's
loan  originators  earn a base salary plus commission  based upon first mortgage
loans generated by the originator.  All completed loan applications are reviewed
by Midland Federal's salaried loan officers. As part of the application process,
information is obtained concerning the income,  financial condition,  employment
and credit history of the applicant.  If  multi-family or commercial real estate
is  involved,  information  is also  obtained  concerning  cash flow  after debt
service.  The  quality  of loan  applications  are  analyzed  based  on  Midland
Federal's credit underwriting  guidelines as well as, in the case of residential
loans, the guidelines issued by the Federal Home Loan Mortgage Corporation.

     Midland Federal has established  correspondent  lending  relationships with
other lenders in order to take  applications  which either do not conform to its
underwriting  guidelines  or are mortgage  loan products that it does not offer,
such as FHA and VA insured mortgage loans. In consideration of a loan broker fee
paid by the lender to Midland  Federal,  it processes the loan  application  and
forwards a completed loan application package to the lender, who underwrites and
originates the loan.

     All real estate loans are appraised by independent fee appraisers  approved
by the Board of Directors. Midland Federal obtains audited financial statements,
and current unaudited financial statements where appropriate,  as well as


                                       4
<PAGE>


annual financial  statements for borrowers with loans secured by commercial real
estate.

     Residential real estate loans are generally  approved by the Loan Committee
in amounts up to $350,000. Residential real estate loans may also be approved by
the Chief Lending  Officer in amounts up to $275,000 or the President in amounts
up to  $300,700,  and  then  ratified  by the  Loan  Committee  or the  Board of
Directors.  Residential  real  estate  loans in amounts  over  $350,000  must be
approved  by the  Board of  Directors.  Non-residential  real  estate  loans are
generally approved by the Board of Directors.  Non-residential real estate loans
may also be  approved  by the  President  in  amounts  up to  $275,000  and then
ratified by the Board of Directors.  The Chief Lending Officer and the President
each have approval authority for any consumer loans.

     Midland Federal generally  requires,  in connection with the origination of
real  estate  loans,  fire and  casualty  insurance  coverage,  as well as flood
insurance where appropriate, to protect its interest. The cost of this insurance
coverage is paid by the borrower.  Midland Federal also requires title insurance
coverage on all real estate  loans except for second  mortgage  loans in amounts
less than  $25,000 for which  loans it only  requires  that good and  marketable
title be verified by an independent  title search.  The cost of title  insurance
coverage  is paid for by the  borrower,  except in the case of  second  mortgage
loans for which Midland  Federal may,  from time to time,  absorb such costs for
promotional purposes.

     The  aggregate  amount of loans that  Midland  Federal is permitted to make
under  applicable  federal  regulations to any one borrower,  including  related
entities,  and the aggregate  amount that it could have invested in any one real
estate project is generally the greater of 15% of unimpaired capital and surplus
or $500,000. See "Regulation -- Federal Regulation of Savings Associations."

     At June 30, 2002,  Midland Federal had two borrowers with  outstanding loan
balances in excess of $500,000.  One loan totaled  $968,000 and was secured by a
43 unit multi-family residential property in Midland Federal's market area.


                                       5
<PAGE>


The other loan totaled  $580,000 and was secured by a single  family  residence.
Both loans were current and  performing in  accordance  with their terms at June
30, 2002. See "-- Non-Performing  Assets,  Classified Assets, Loan Delinquencies
and Defaults."


                                       6
<PAGE>


     Loan and Mortgage-backed  Securities Portfolio  Composition.  The following
     -----------------------------------------------------------
table sets forth  information  concerning the  composition of Midland  Federal's
loan  and  mortgage-backed  securities  portfolios  in  dollar  amounts  and  in
percentages as of the dates indicated

<TABLE>
<CAPTION>

                                                                                 June 30,
                                              -------------------------------------------------------------------------------------
                                                      2002                        2001                         2000
                                                      ----                        ----                         ----
                                               Amount        Percent      Amount           Percent       Amount          Percent
                                               ------        -------      ------           -------       ------          -------
                                                                       (Dollars in Thousands)
Real Estate Loans
-----------------

 One- to four-family:
<S>                                           <C>                 <C>      <C>                  <C>       <C>                 <C>
    Held for investment .................     $ 81,803           94.70%    $ 64,372            92.58%    $ 49,545            91.84%
    Held for sale .......................          740            0.86          452             0.65           --              --
 Multi-family ...........................        1,222            1.41        1,507             2.17        1,640             3.04
 Non-residential ........................          935            1.08          491             0.70          440             0.82
 Construction ...........................           --              --          828             1.19          486             0.90
                                              --------      ----------     --------       ----------     --------      ----------
    Total mortgage loans ................       84,700           98.05       67,650            97.29       52,111            96.60
                                              --------      ----------     --------       ----------     --------       ----------
Other Loans
-----------
 Consumer Loans:
  Deposit accounts ......................          397            0.46          344             0.50          277             0.51
  Student ...............................          822            0.95          876             1.26        1,016             1.88
  Automobile ............................          321            0.37          469             0.67          323             0.60
  Credit card ...........................          116            0.14          124             0.18           97             0.18
  Other .................................           20            0.02           64             0.09           81             0.15
                                             ----------       --------   ----------         --------    ----------      -----------
     Total consumer loans ...............        1,676            1.94        1,877             2.70        1,794             3.32
                                              --------      ----------     --------       ----------     --------       ----------

  Commercial business loans .............            8            0.01            6             0.01           41             0.08
                                              --------      ----------     --------       ----------     --------       ----------
     Total loans receivable .............       86,384          100.00%      69,533           100.00%      53,946           100.00%
                                              --------      ==========     --------       ==========     --------       ==========

Less
 Loans in process .......................           67                          668                           414
 Deferred yield adjustments .............         (379)                        (240)                        (128)
 Allowance for uncollected interest .....          259                          260                           261

 Allowance for loan losses ..............          350                          359                           369
                                                                           --------                    ----------
     Loans receivable, net ..............     $ 86,087                     $ 68,486                    $   53,030
                                                                           ========                    ==========

Mortgage-backed securities:
  FHLMC .................................     $  8,324           80.12%    $ 14,146            81.45%    $ 17,341           79.00%
  FNMA ..................................        1,965           18.91        3,075            17.70        4,375           19.93
  GNMA ..................................           92            0.88          135             0.78          219            1.00
  Collateralized mortgage obligations ...            9            0.09           12             0.07           15            0.07
                                                            ----------     --------       ----------     --------      ----------
    Total mortgage-backed securities ....       10,390          100.00%      17,368           100.00%      21,950          100.00%
                                                             ==========                     ========
  Net premiums ..........................          (30)                         (58)                          (96)
                                            ----------                    --------                    ----------
  Net mortgage-backed securities ........     $ 10,360                     $ 17,310                    $   21,854
                                            ==========                     ========                    ==========
</TABLE>

                                       7
<PAGE>


     The  following  table  shows the  composition  of  Midland  Federal's  loan
portfolio by fixed and adjustable-rate at the dates indicated.

<TABLE>
<CAPTION>
                                                                                June 30,
                                             ---------------------------------------------------------------------------------------
                                                       2002                        2001                         2000
                                                       ----                        ----                         ----
                                             Amount            Percent       Amount         Percent       Amount          Percent
                                             ------            -------       ------         -------       ------          -------
                                                                           (Dollars in Thousands)
Fixed-Rate Loans
<S>                                       <C>                 <C>         <C>               <C>       <C>                  <C>
Real Estate:
  One- to four-family ...................   $ 76,488              88.55%   $ 59,612            85.73%   $ 44,131              81.80%
  Multi-family ..........................        254               0.29         490             0.71         586              1.09
  Non-residential .......................        698               0.81         237             0.34         280              0.52
                                            --------         ----------    --------       ----------    --------        ----------
      Total real estate loans ...........     77,440              89.65      60,339            86.78      44,997             83.41
                                            --------         ----------    --------       ----------    --------        ----------
  Consumer ..............................        842               0.97         972             1.40         465              0.86
                                            --------         ----------    --------       ----------    --------        ----------
     Total fixed-rate loans .............     78,282              90.62      61,311            88.18      45,462             84.27
                                            --------         ----------    --------       ----------    --------        ----------

Adjustable-Rate Loans
Real estate:
  One- to four-family ...................      6,055               7.01       5,212             7.50       5,414             10.04
  Multi-family ..........................        968               1.12       1,017             1.46       1,054              1.95
  Non-residential .......................        237               0.27         254             0.36         160              0.30
  Construction ..........................       --                   --         828             1.19         486              0.90
                                            --------         ----------    --------       ----------    --------        ----------
     Total real estate loans ............      7,260               8.40       7,311            10.51       7,114             13.19
                                            --------         ----------    --------       ----------    --------        ----------
  Consumer ..............................        834               0.97         905             1.30       1,329              2.46
  Commercial business ...................          8               0.01           6             0.01          41              0.08
                                            --------         ----------    --------       ----------    --------        ----------
     Total adjustable-rate loans ........      8,102               9.38       8,222            11.82       8,484             15.73
                                            --------         ----------    --------       ----------    --------        ----------
     Total loans, net ...................     86,384             100.00%     69,533           100.00%     53,946            100.00%
                                                             ==========                     ========                     ==========

Less:
-----
  Loans in process ......................         67                            668                          414
  Deferred yield adjustments ............       (379)                          (240)                         (128)
  Allowance for uncollected interest ....        259                            260                          261

  Allowance for loan losses .............        350                            359                           369
     Loans receivable, net ..............   $ 86,087                       $ 68,486                    $   53,030
                                            ========                       ========                    ==========


</TABLE>


                                        8
<PAGE>


         The following schedule illustrates the interest rate sensitivity of
Midland Federal's loan portfolio at June 30, 2002. Mortgages which have
adjustable or renegotiable interest rates are shown as maturing in the period
during which the contract is due. The schedule does not reflect the effects of
possible prepayments or enforcement of due-on-sale clauses or interest rate
adjustments.


<PAGE>


<TABLE>
<CAPTION>

                                              Real Estate
                                              ------------   Multi-Family                       Commercial
                          One- to Four-Family                and Commercial       Consumer      Business      Total
                          -------------------                --------------       --------      --------      -----
                                 Weighted               Weighted            Weighted             Weighted          Weighted
                                  Average               Average             Average              Average           Average
                         Amount    Rate      Amount     Rate       Amount   Rate       Amount    Rate     Amount   Rate
                         ------    ----      ------     ----       ------   ----       ------    ----     ------   ----
                                                              (Dollars in Thousands)
Due During Years
Ending June 30,

<C>                    <C>         <C>    <C>          <C>    <C>            <C>    <C>         <C>    <C>            <C>
2003(1) ..........     $   632      6.69%  $   254      9.75%  $   504        8.52%  $    8      0.00%   $ 1,398        7.87%
2004 .............         445      7.84%     --          --       141        6.49%     --         --        586        7.52%
2005 .............         281      5.95%      232      8.50%      364        6.97%     --         --        877        7.05%
2006 to 2007 .....       1,685      6.11%    1,539      6.06%      398        6.71%     --         --      3,622        6.15%
2008 to 2011 .....       2,805      7.37%       --        --       233        6.64%     --         --      3,038        7.31%
2012 to 2026 .....      31,439      6.72%      131      8.50%       36        6.18%     --         --     31,606        6.73%
2027 and following     $44,516      7.03%       --        --        --          --      --         --     44,516        7.03%
                      --------             -------               -----     -------                       ------

                      $81,803              $ 2,156             $ 1,676               $    8              $85,643        6.91%
                      =======            =========             =======                =====              =======        ====

</TABLE>

-------------------------------
(1) Includes demand loans, loans having no stated maturity and overdraft loans.


     The total amount of loans due after June 30, 2003 which have  predetermined
interest rates is approximately $76.73 million,  while the total amount of loans
due


                                        9
<PAGE>


after  such  date  which  have  floating  or  adjustable  interest  rates is
approximately $7.52 million.


                                       10
<PAGE>


One- to Four-Family Residential Real Estate Lending
---------------------------------------------------

Midland Federal's primary lending activity has been the origination and purchase
of permanent  loans secured by mortgages on  owner-occupied  one- to four-family
residences.  Midland  Federal  has  recently  increased  its one to four  family
residential  lending due to more aggressive  organization  efforts, a decline in
market interest rates and increased  demand.  At June 30, 2002, $82.5 million or
95.6%, of Midland Federal's gross loan portfolio consisted of permanent loans on
one- to four-family  residences.  Most of these loans were secured by properties
located in the State of Illinois, with a substantial majority located in Midland
Federal's primary market area.

Historically,  Midland  Federal  originated  for  retention in its own portfolio
30-year fixed-rate loans secured by one- to four-family residential real estate.
Beginning  in the early  1980s,  in order to reduce its  exposure  to changes in
interest  rates,  Midland Federal began to originate  adjustable-rate  mortgages
("ARMs"),  subject to market conditions and consumer  preference.  However, as a
result of continued consumer demand,  Midland Federal has continued to originate
for retention in its portfolio primarily  fixed-rate-residential loans, although
in  amounts  and at rates  which  are  monitored  for  compliance  with  Midland
Federal's asset/liability management policy.

Midland  Federal's  fixed  rate  residential  loans  have  terms  up to 30 years
although  approximately  44% of Midland  Federal's fiscal 2002 originations have
terms of 15 year or less.  Midland  Federal  establishes  interest  rates on its
fixed rate residential  loans based on published agency pricing,  an analysis of
its asset/liability needs and competitive factors.

Midland  Federal's  current  one- to  four-family  residential  ARMs  are  fully
amortizing  loans with  contractual  maturities of up to 30 years.  The interest
rates on substantially all the ARMs originated by Midland Federal are subject to
adjustment at one-year intervals. Midland Federal's ARM products generally carry
interest  rates  which  are  reset to a stated  margin  over the  one-year  U.S.
Treasury Rate.  Adjustments  in the interest rate of Midland  Federal's


                                       11
<PAGE>


ARMs are generally  limited to 2% at any adjustment date and 6% over the life of
the loan. At June 30, 2002,  the total balance of one- to  four-family  ARMs was
$6.1 million, or 7.0% of Midland Federal's gross loan portfolio.

From time to time, Midland Federal will make  owner-occupied one- to four-family
construction  loans for a six-month  interest only term,  which Midland  Federal
will convert to a permanent  mortgage for a fee generally of one point.  Midland
Federal requires the interest on such loans during the  construction  term to be
paid or placed in escrow when the loan is funded.

Also classified as one- to four-family  residential  loans are home equity lines
of credit which were funded in the amount of $1.3 million at June 30, 2002,  and
home  equity  loans,  which  were  $1.1  million  at  June  30,  2002.  Unfunded
commitments  on home equity  lines of credit  totaled  $1.7  million at June 30,
2002.  Midland Federal's home equity lines of credit are five year interest-only
balloon loans  secured by second liens on the property,  and are made in amounts
of up to 75% of the  appraised  value  of the  property  (including  first  lien
amounts).  Midland  Federal's home equity loans are three to 15 year  fixed-rate
loans secured by second liens on the property, and are made in amounts up to 80%
of the appraised value of the property (including first lien amounts).

Midland Federal's residential loans are generally underwritten and documented to
permit their sale in the secondary  market.  Midland Federal  evaluates both the
borrower's  ability to make principal and interest payments and the value of the
property  that  will  secure  the loan.  Midland  Federal  generally  originates
residential  mortgage loans with loan-to-value ratios of up to 80%, although the
Board  of  Directors  has  authorized   originations   of  mortgage  loans  with
loan-to-value  ratios  of up to  95%.  On any  mortgage  loan  exceeding  an 80%
loan-to-value  ratio  at the  time of  origination,  Midland  Federal  generally
requires private mortgage insurance on the excess.


         Midland Federal's residential mortgage loans customarily include
"due-on-sale" clauses, which are provisions that give


                                       12
<PAGE>


Midland  Federal the right to declare a loan  immediately due and payable in the
event the borrower sells or otherwise  disposes of the real property  subject to
the mortgage and the loan is not repaid.

Multi-Family Residential Lending
--------------------------------

Midland Federal's  multi-family  residential  portfolio includes $1.2 million in
loans secured by residential  buildings (5 or more units)  located  primarily in
Midland  Federal's  primary market area.  Midland Federal  originates  primarily
adjustable-rate,  multi-family  real estate  loans.  Rates on Midland  Federal's
adjustable-rate,  multi-family  real estate loans  generally  adjust in a manner
consistent with Midland Federal's ARMs.

Multi-family  real estate loans are generally  underwritten  in amounts of up to
70% of the appraised value of the underlying property.  Appraisals on properties
securing  multi-family  real  estate  loans  originated  by Midland  Federal are
performed by a qualified  appraiser  at the time the loan is made.  In addition,
Midland Federal's underwriting  procedures generally require verification of the
borrower's   credit   history,   income  and   financial   statements,   banking
relationships,  references  and income  projections  for the property.  Personal
guarantees are generally obtained for Midland Federal's multi-family real estate
loans.

Midland  Federal  monitors the cash flow and operating  performance of borrowers
through  inspection of  collateral,  calls on borrowers,  inspection of business
premises and evaluation of interim financial statements.

Multi-family  residential real estate loans generally  present a higher level of
risk than loans secured by one- to four-family  residences.  The risk is greater
due to several  factors,  including the  concentration of principal in a limited
number of loans and  borrowers,  the effects of general  economic  conditions on
income  producing  properties  and the increased  difficulty  of evaluating  and
monitoring these types of loans. Furthermore,  the repayment of loans secured by
multi-family  residential real estate is typically dependent upon the successful
operation of the related real estate


                                       13
<PAGE>


project.  If the cash flow from the project is reduced (for  example,  if leases
are not obtained or renewed),  the  borrower's  ability to repay the loan may be
impaired.

Consumer Lending
----------------

Management believes that consumer loans help Midland Federal expand its customer
base and create  stronger  ties to its  existing  customer  base.  In  addition,
because consumer loans generally have shorter terms to maturity and carry higher
rates  of   interest   than  do   residential   loans,   they  can  be  valuable
asset/liability management tools.

Midland  Federal  offers  a  variety  of  secured   consumer  loans,   including
educational  loans (which are guaranteed from a State agency),  automobile loans
and loans  secured by savings  deposits.  In addition,  Midland  Federal  offers
unsecured  consumer  loans  through its  Visa/MasterCard  credit  card  program.
Midland Federal currently originates  substantially all of its consumer loans in
its principal market area.

Consumer loan terms vary according to the type of  collateral,  term of the loan
and  creditworthiness  of the borrower.  The underwriting  standards employed by
Midland  Federal for consumer loans include a  determination  of the applicant's
payment  history on other debts and an assessment of the  borrower's  ability to
meet payments on the proposed  loan along with his or her existing  obligations.
In addition to the  creditworthiness of the applicant,  the underwriting process
also includes a comparison of the value of the security,  if any, in relation to
the proposed loan amount.

Student  loans  are  originated  by  Midland  Federal  in  compliance  with  the
guidelines  established by the Illinois  Guaranteed Loan Program ("IGLP").  As a
result,  any loans that become  delinquent 30-90 days are sold to IGLP.  Midland
Federal's  student  loan  volume  may  decline  in the future as a result of new
legislative  proposals  that  the  U.S.  government  provide  direct  loans  for
education.  As of June 30, 2002,  student loans  amounted to $822,000 or 1.0% of
Midland Federal's gross loan portfolio.


                                       14
<PAGE>


Midland  Federal also  originates  consumer  loans secured by automobiles in its
primary  market  area.  Underwriting  standards  employed by Midland  Federal in
connection with these loans include a review of the borrowers' creditworthiness,
verification  of  collateral   value  and  perfection  of  a  lien  against  the
collateral.  Midland Federal requires vehicle  insurance on all loans secured by
automobiles.  At June 30, 2002,  Midland  Federal had  $321,000,  or .37% of its
gross loan portfolio in automobile loans.

Lines of credit extended  through Midland  Federal's Visa credit card program is
generally  limited to $10,000.  Midland Federal obtains an application  from the
borrower,  a credit  report on the borrower and verifies  employment  for credit
card  borrowers.  At June 30, 2002,  Midland Federal had $116,000 or .14% of its
gross loan portfolio in credit card loans.

Consumer  loans  may  entail  greater  risk  than  residential  mortgage  loans,
particularly  in the case of consumer  loans which are  unsecured  or secured by
rapidly  depreciable assets such as automobiles.  In such cases, any repossessed
collateral  for defaulted  consumer  loans may not provide  adequate  sources of
repayment  for  the  outstanding  loan  balances  as a  result  of  the  greater
likelihood  of  damage,  loss  or  depreciation.   In  addition,  consumer  loan
collections are dependent on the borrower's continuing financial stability,  and
thus  are  more  likely  to  be  affected  by  adverse  personal  circumstances.
Furthermore,  the  application  of various  federal  and state  laws,  including
federal and state bankruptcy and insolvency laws, may limit the amount which can
be  recovered  on such loans.  Although  the level of  delinquencies  in Midland
Federal's  consumer  loan  portfolio  has  generally  been low,  there can be no
assurance that delinquencies will not increase in the future.


                                       15
<PAGE>


Commercial Real Estate Lending
------------------------------

Midland Federal  maintains a portion of its portfolio in permanent loans secured
by commercial real estate.  Midland  Federal's  commercial real estate portfolio
consists  of  loans on a  variety  of  non-residential  property,  including  an
automobile repair center and office properties.  At June 30, 2002, $935,000,  or
1.1% of Midland  Federal's  gross loan  portfolio  consisted of permanent  loans
secured by commercial  real estate.  In the future,  Midland  Federal intends to
continue to engage in a modest level of commercial real estate lending,  subject
to regulatory  restrictions.  Management intends that any future commercial real
estate  loans  carry  adjustable  interest  rates or  balloon  maturities  and a
loan-to-value  ratio of 70% or less.  Nevertheless,  in view of the  significant
amount of risk generally  associated with commercial real estate lending,  there
can be no assurance that Midland  Federal will not experience  delinquencies  on
its commercial real estate portfolio.

Mortgage-Backed Securities
--------------------------

Midland  Federal  has a  substantial  portfolio  of  mortgage-backed  securities
totaling  $10.4  million  at  June  30,  2002.   Midland  Federal  utilizes  its
mortgage-backed  securities  to  supplement  loan  production  and to  meet  its
asset/liability management objectives. Mortgage-backed securities can also serve
as collateral for borrowings and, through repayments,  as a source of liquidity.
For  information  regarding  the carrying  and fair values of Midland  Federal's
mortgage-backed  securities  portfolio,  see Note 4 of the  Notes  to  Financial
Statements in the Annual Report to Stockholders  filed as Exhibit 13 hereto. See
"Regulation."

The following table sets forth the contractual  maturities of Midland  Federal's
mortgage-backed  securities  at June 30, 2002.  It should be noted that,  due to
prepayments,  the actual maturity of Midland Federal's long term mortgage-backed
securities will likely be significantly shorter than the contractual maturities.


                                       16
<PAGE>


<TABLE>
<CAPTION>
                                                                   Due in                 Balance Outstanding
                                                                   ------                 -------------------
                                                       1 to 5     6 to 20     Over 20
                                                       Years       Years       Years       Fixed    Adjustable
                                                       -----       -----       -----       -----    ----------
                                                                            (In Thousands)
<S>                                                  <C>        <C>         <C>         <C>          <C>
Federal Home Loan Mortgage Corporation.............. $4,709     $2,010      $1,575      $4,709       $3,585
Federal National Mortgage Association...............    115      1,828          22         504        1,461
Government National Mortgage Association............    ---         92         ---          92          ---
Collateralized Mortgage Obligations.................    ---          9         ---           9          ---

     Total.......................................... $4,824     $3,939      $1,597      $5,314       $5,046
                                                     ======     ======      ======      ======       ======

</TABLE>


                                       17
<PAGE>


Loan Originations, Purchases and Sales
--------------------------------------

Real estate loans are  originated  by Midland  Federal's  staff of salaried loan
officers.  In addition,  in order to increase loan volumes,  commencing in 1995,
Midland Federal hired commissioned loan originators. Loan applications are taken
at each office, processed in Midland Federal's main office and then submitted to
the Chief Lending Officer, the President or the Loan Committee for approval.


While Midland Federal originates both  adjustable-rate and fixed-rate loans, its
ability to originate  loans is dependent upon the relative  customer  demand for
loans in its market.  Demand is also affected by the interest rate  environment.
During the years ended June 30, 2002, 2001 and 2000,  Midland Federal sold loans
to the Illinois Housing Development  Authority and other lenders,  under various
programs.

        The following tables set forth Midland Federal's loan origination and
mortgage-backed securities purchases, sales and principal repayments for the
periods indicated.

<TABLE>
<CAPTION>
                                                                            Year Ended June 30,
                                                                            -------------------

                                                                     2002         2001           2000
                                                                     ----         ----           ----
                                                                        (Dollars in Thousands)
<S>                                                              <C>            <C>             <C>
Originations by type:
 Adjustable-Rate:
   Real estate - one- to four-family ..........................   $  4,062       $  1,154        $  3,305
   Construction ...............................................         --            342             486
   Non-real estate - consumer .................................         51             38              61
                                                                  --------       --------        --------
          Total adjustable rate ...............................      4,113          1,534           3,852
                                                                  --------       --------        --------
 Fixed-Rate:
   Real estate - One- to four-family ..........................     35,565         24,179          10,357
   Non-residential ............................................        474            240             243
   Non-real estate - consumer .................................      1,076          1,374           1,044
                                                                  --------       --------        --------
          Total fixed-rate ....................................     37,115         25,793          11,644
                                                                  --------       --------        --------
          Total loans originated ..............................     41,228         27,327          15,496
                                                                  --------       --------        --------

Purchases:
 Fixed-Rate:
  Real estate - one-to-four-family ............................         --            984              --
                                                                  --------       --------        --------
         Total loans purchased ................................         --            984              --
                                                                  --------       --------        --------
         Total additions ......................................     41,228         28,311          15,496
                                                                  --------       --------        --------

Sales:
 Real estate loans sold .......................................     (3,160)          (534)         (3,173)
 Principal repayments .........................................    (21,217)       (12,190)         (8,261)
                                                                  --------       --------        --------

 Net increase (decrease) ......................................   $ 16,851       $ 15,587        $  4,062
                                                                  ========       ========        ========
</TABLE>


                                       18
<PAGE>


<TABLE>
<CAPTION>

<S>                                                               <C>           <C>             <C>
Mortgage-backed securities:
 Mortgage-backed securities purchased .........................         --             --        $ 10,007
 Mortgage-backed securities sold ..............................         --             --              --
 Amortization and repayments ..................................   $ (6,950)        (4,544)         (4,035)
                                                                  --------       --------        --------

 Net increase (decrease) ......................................   $ (6,950)      $ (4,544)       $  5,972
                                                                  ========       ========        ========
</TABLE>


Midland Federal's total loan originations increased significantly from the prior
year primarily as a result of favorable  interest rates which  increased  demand
for mortgage loans and aggressive origination efforts.

Non-Performing Assets, Classified Assets, Loan Delinquencies and Defaults
-------------------------------------------------------------------------

When a borrower  fails to make a required  payment  on a loan,  Midland  Federal
attempts to cause the  deficiency  to be cured by  contacting  the  borrower.  A
notice is mailed to the borrower  and late charges are assessed  after a payment
is 30 days past due. Five days after the late notice is mailed, the Loan Service
Counselor/Collector  will contact the borrower by telephone.  After a payment is
60 days past due,  the Loan  Service  Counselor/Collector  conducts  a  personal
interview  with the borrower after which if the loan continues to be delinquent,
it is referred to the Loan Service  Manager.  After the 90th day of delinquency,
Midland Federal  institutes action to foreclose on the property or to acquire it
by deed in lieu of  foreclosure.  If  foreclosed  on, real property is sold at a
public sale and may be  purchased by Midland  Federal.  A decision as to whether
and when to initiate  foreclosure  proceedings  is based on such  factors as the
amount of the outstanding loan in relation to the original  indebtedness and the
current  value of the property,  the extent of  delinquency  and the  borrower's
ability and willingness to cooperate in curing delinquencies.  Generally, when a
loan becomes  delinquent 90 days or more, Midland Federal will place the loan on
a non-accrual status and, as a result, previously accrued interest income on the
loan is taken out of current  income.  Future interest income is recognized on a
cash basis. The loan will remain on a non-accrual  status as long as the loan is
90 days delinquent, unless a repayment plan is being followed.



                                       19
<PAGE>


The amounts presented  represent the total remaining  principal  balances of the
related  loans,  rather than actual  payment  amounts  which are overdue and are
reflected  as a  percentage  of total  loans.  The  following  table  sets forth
information  concerning delinquent mortgage and other loans at June 30, 2002 and
June 30,  2001.  The  balances  included  in the table do not  reflect  specific
reserves

<TABLE>
<CAPTION>

                                                                     At June 30, 2002
                                                                   Loans Delinquent For:
                             ------------------------------------------------------------------------------------------------------
                                        30 - 59 days                      60 - 89 days            90 days and over    Total
                                        ------------                      ------------            ----------------    -----
                             Number  Amount  Percent  Number  Amount  Percent   Number Amount  Percent  Number  Amount Percent
                             ------  ------  -------  ------  ------  -------   -------------  -------  ------  --------------
                                                                      (Dollars in Thousands)
Real estate:
<S>                            <C>   <C>      <C>        <C> <C>         <C>        <C> <C>         <C>       <C>  <C>        <C>
  One- to four-family .......  14    $1,151   1.41%      3   $   78      0.09%      5   $   148     0.18%     22   $   1,377  1.68%
Consumer ....................   2        17   1.01      --       --        --       8        15     0.90      10          32   1.91
Commercial business .........  --        --     --      --       --        --       1         1     6.76       1           1   6.76
     Total ..................  16    $1,168   1.37%      3   $   78      0.09%     14   $   164     0.19%     33   $   1,410  1.65%
                               ==    ======   ====      ==   ======      ====      ==   =======     ====      ==   =========  ====
</TABLE>


<TABLE>
<CAPTION>
                                                                    At June 30, 2001
                                                                  Loans Delinquent For:
                             ------------------------------------------------------------------------------------------------------
                                        30 - 59 days                      60 - 89 days            90 days and over    Total
                                        ------------                      ------------            ----------------    -----
                             Number  Amount  Percent  Number  Amount  Percent   Number Amount  Percent  Number  Amount Percent
                             ------  ------  -------  ------  ------  -------   -------------  -------  ------  --------------

                                                                                        (Dollars in Thousands)
Real estate:
<S>                            <C>   <C>      <C>        <C> <C>         <C>        <C>   <C>        <C>      <C>     <C>     <C>
  One- to four-family........  13    $1,065   1.65%      1   $   30      0.05%      5     $ 218      0.34%    19      $1,313  2.04%
  Multi-family............... ---       ---    ---     ---      ---       ---       1        61     0.40       1          61   0.40
Non-residential..............  --        --    ---     ---      ---       ---     ---       ---      ---     ---         ---    ---
Consumer..................... ---       ---    ---     ---      ---       ---      27        62     3.30      27          62   3.30
Commercial business.......... ---              ---     ---      ---       ---       2         3    43.79       2           3  43.79
                                        ---
     Total...................  13    $1,065   1.54%      1   $   30      0.04%     35     $ 344     0.50%     49      $1,439  2.08%
                              ===    ======   ====      ==   ======      ====      ==     =====     ====      ==      ======  ====

</TABLE>


                                       20
<PAGE>


     The table  below sets forth the amounts and  categories  of  non-performing
assets,  shown net of specific  reserves,  in Midland  Federal's loan portfolio.
Loans are placed on non-accrual  status when the collection of principal  and/or
interest  becomes  doubtful,  generally  when the loan is  delinquent 90 days or
more. Foreclosed assets include assets acquired in settlement of loans.

<TABLE>
<CAPTION>

                                                                   At June 30,
                                                         ---------------------------------
                                                         2002         2001         2000
                                                         ----         ----         ----
                                                              (Dollars in Thousands)
<S>                                                    <C>            <C>           <C>
Non-Accruing Loans:
  One- to four-family .................................. $148          $218          $232
  Multi-family .........................................   --            61           155
  Consumer .............................................   15            62            76
   Commercial business .................................    1             3             4
                                                         ----          ----          ----
     Total .............................................  164           344           467
                                                         ----          ----          ----

Foreclosed Assets:
  One- to four-family ..................................   --            --            --
                                                         ----          ----          ----
     Total .............................................   --            --            --
                                                         ----          ----          ----

Total non-performing assets ............................ $164          $344          $467
                                                         ====          ====          ====

Total as a percentage of total assets .................  0.11%         0.24%         0.34%
                                                         ====          ====          ====
</TABLE>


     As of June 30, 2002, there were no  concentrations of loans in any types of
industry  which  exceeded  10% of  Midland  Federal's  total  loans that are not
included as a loan category in the preceding table.

     For the fiscal year ended June 30, 2002,  gross interest income which would
have been recorded had the  non-accruing  loans been current in accordance  with
their original terms amounted to $5,000,  which interest  income was not accrued
into interest income for the fiscal year ended June 30, 2002.

     Non-Accruing  Loans. As of June 30, 2002,  non-accruing  one-to-four family
loans totaled $148,000 and consisted of four loans secured by properties located
in Midland Federal's primary market area.

     As of June 30, 2002, there were no other loans not included in the table or
discussed  above where known


                                       21
<PAGE>


information about the possible credit problems of borrowers caused management to
have  serious  doubts as to the ability of the  borrower to comply with  present
loan  repayment  terms and which may result in  disclosure  of such loans in the
future.

     Classified   Assets.   Federal   regulations   require  that  each  savings
institution  classify  its own  assets  on a  regular  basis.  In  addition,  in
connection with  examinations of savings  institutions,  OTS and Federal Deposit
Insurance  Corporation  examiners have authority to identify problem assets and,
if appropriate,  require them to be classified.  There are three classifications
for problem assets:  "substandard," "doubtful" or "loss." An asset is considered
"substandard"  if it is  inadequately  protected  by the  current  net worth and
paying  capacity  of  the  obligor  or  of  the  collateral   pledged,  if  any.
"Substandard"  assets include those characterized by the "distinct  possibility"
that the savings  association  will sustain "some loss" if the  deficiencies are
not  corrected.  Assets  classified  as  "doubtful"  have all of the  weaknesses
inherent in those classified  "substandard," with the added  characteristic that
the weaknesses present make "collection or liquidation in full," on the basis of
currently  existing facts,  conditions,  and values,  "highly  questionable  and
improbable."  Assets  classified as "loss" are those considered  "uncollectible"
and  of  such  little  value  that  their  continuance  as  assets  without  the
establishment  of a specific loss reserve is not warranted.  Assets which do not
currently  expose  the  savings   association  to  sufficient  risk  to  warrant
classification in one of the aforementioned  categories, but possess weaknesses,
are required to be designated "special mention" by management.

     When a savings association  classifies problem assets as either substandard
or doubtful,  it may establish  general  allowances for loan losses in an amount
deemed prudent by management. General allowances represent loss allowances which
have been  established  to recognize the inherent risk  associated  with lending
activities,  but  unlike  specific  allowances,   have  not  been  allocated  to
particular problem assets. When a savings association  classifies problem assets
as a "loss," it is required either to establish a specific  allowance for losses
equal to 100% of that portion of the asset so classified  or to charge-off  such
amount.  An association's


                                       22
<PAGE>


determination  as to the  classification  of its  assets  and the  amount of its
valuation allowances is subject to review by Midland Federal's District Director
at the  regional  OTS  office,  who may order the  establishment  of  additional
general or specific loss allowances.

     In connection  with the filing of its periodic  reports with the OTS and in
accordance with its  classification of assets policy,  Midland Federal regularly
reviews the assets in its  portfolio  to  determine  whether any assets  require
classification  in  accordance  with  applicable  regulations.  On the  basis of
management's  review  of its  assets,  at June 30,  2002,  Midland  Federal  had
classified a total of $218,000 of its assets as  substandard,  none as doubtful,
none as loss and none as special mention.

Allowance for Losses on Loans and Real Estate
---------------------------------------------

     The allowance for loan losses is  established  through a provision for loan
losses  based  on  management's  evaluation  of the  risk  inherent  in its loan
portfolio  and  changes  in the nature  and  volume of its loan  activity.  Such
evaluation,  which includes a review of all loans where full  collectibility may
not be reasonably  assured,  considers  among other matters,  the estimated fair
value of the underlying  collateral,  economic conditions,  historical loan loss
experience  and other  factors that  warrant  recognition  in  providing  for an
adequate loan loss allowance.

     Midland Capital's allowance for loan losses decreased by $9,000 to $350,000
at June 30, 2002 from  $359,00 at the prior fiscal year end. At fiscal year end,
the  $350,000 in general  allowance  for loan losses was  determined  by Midland
Capital to be consistent with its policy for the  establishment  and maintenance
of adequate levels of general loan loss allowances.  The $9,000 decrease in loan
loss allowances was the result of $38,000 in loan charge-offs  offset by $14,000
in loan loss recoveries and $15,000 in loan loss provisions  during fiscal 2002.
Although  management  believes  that it uses the best  information  available to
determine  the  allowances,   unforeseen   market  conditions  could  result  in
adjustments and net earnings could be  significantly  affected if  circumstances
differ   substantially   from  the


                                       23
<PAGE>

assumptions used in making the final determination.  Future additions to Midland
Federal's  allowances  will  be  the  result  of  periodic  loan,  property  and
collateral  reviews and thus cannot be  predicted  in advance.  At June 30, 2002
Midland Federal had a total allowance for losses on loans of $350,000 or .41% of
total  loans.  See Note 5 of the Notes to  Financial  Statements  in the  Annual
Report to Stockholders filed as Exhibit 13 hereto.

         The following table sets forth an analysis of Midland Federal's
allowance for loan losses.

<TABLE>
<CAPTION>

                                                                       Year Ended June 30,
                                                              --------------------------------------
                                                               2002           2001          2000
                                                               ----           ----          ----
                                                                      (Dollars in Thousands)
<S>                                                            <C>            <C>             <C>
Balance at beginning of period ..............................  $ 359          $ 369          $ 366
                                                               -----          -----          -----

Charge-offs:
 One- to four-family ........................................     --             --             --
 Consumer ...................................................     35             11             --
 Commercial business ........................................      3             13             --
                                                               -----          -----          -----
      Total charge-offs .....................................     38             24             --
                                                               -----          -----          -----

Recoveries:
 One- to four-family ........................................     14             14             --
 Consumer ...................................................     --             --              3
                                                               -----           -----         -----
     Total recoveries .......................................     14             14              3
                                                               -----           -----         -----

Net charge-offs .............................................    (24)           (10)             3
                                                                              -----          -----
Additions charged to operations .............................     15             --             --
Balance at end of period ....................................  $ 350          $ 359          $ 369
                                                               =====          =====          =====

Ratio of net charge-offs during the period to
 average loans outstanding during the period ................   0.03%          0.04%           ---%

Ratio of net charge-offs during the period to
 average non-performing assets ..............................   9.60%          2.93%           ---%

Allowance for loan losses to
 non-performing loans) ......................................  213.29%        104.63%        78.91%

Allowance for loan losses to total loans ....................   0.41%          0.52%          0.69%

</TABLE>


                                       24
<PAGE>


     The following  table presents the portions of the allowance for loan losses
applicable to each loan category.

<TABLE>
<CAPTION>

                                                                 June 30,
                                 ----------------------------------------------------------------------
                                               2002                    2001                    2000
                                               ----                    ----                    ----
                                               Percent                Percent                 Percent
                                              of Loans               of Loans                of Loans
                                               in Each                in Each                 in Each
                                              Category               Category                Category
                                              to Total                to Total                to Total
                                   Amount      Loans      Amount       Loans       Amount      Loans
                                   ------      -----      ------       -----       ------      -----
                                                          (Dollars in Thousands)
<S>                               <C>         <C>         <C>          <C>          <C>          <C>
One- to four-family.............. $113        95.56%      $  96        93.23%       $102         91.84%
Multi-family.....................    2         1.41          64         2.17         126         3.04
Non-residential..................    2         1.08           1         0.70           1          0.82
Construction.....................  ---                      ---         1.19         ---         0.90
                                                ---
Consumer.........................    4                       55         2.70          67         3.32
                                                ---
Commercial business..............  ---         1.94           2         0.01           3          0.08
Unallocated......................  229         0.01         141          ---          70
                                  ----         ----        ----          ---

     Total....................... $350       100.00%       $359       100.00%       $369        100.00%
                                  ====       ======        ====       ======        ====        ======

</TABLE>

                                       25
<PAGE>

Investment Activities
---------------------

     As a part of its asset/liability management strategy and as a response to a
high  level of  competition  for loans and low level of loan  demand in parts of
Midland  Federal's  market area,  Midland  Federal  invests in various  types of
liquid assets,  short and medium term  government  securities as well as smaller
amounts of other  assets.  Cash flow  projections  are  regularly  reviewed  and
updated to assure that adequate liquidity is provided.

     At June 30,  2002,  Midland  Federal's  interest-bearing  deposits in other
financial  institutions totaled $28.5 million, or 18.9% of its total assets, and
investment securities totaled $16.0 million, or 10.6% of its total assets. As of
such date, Midland Federal also had a $897,000 investment in the common stock of
the FHLB of Chicago in order to satisfy the  requirement  for membership in this
institution.  At June 30, 2002, the average term to maturity or repricing of the
investment securities portfolio was approximately two years.


                                       26
<PAGE>


     The  following  table  sets  forth the  composition  of  Midland  Federal's
investment portfolio at the dates indicated.

<TABLE>
<CAPTION>

                                                                          At June 30,
                                            ---------------------------------------------------------------------
                                                      2002                    2001                   2000
                                                      ----                    ----                   ----
                                              Carrying      Fair      Carrying      Fair     Carrying      Fair
                                                Value       Value       Value      Value       Value       Value
                                                -----       -----       -----      -----       -----       -----
                                                                         (In Thousands)
<S>                                         <C>         <C>         <C>          <C>          <C>         <C>
Investment Securities:
 U.S. government securities.................      $980      $1,205      $8,477      $8,741     $18,469     $18,508
 U.S. agency securities.....................    15,025      15,257      22,614      22,907       6,500       6,431
 FHLB - Chicago stock.......................       897         897         783         783         728         728
                                               -------    --------    --------    --------  ----------   ---------
   Total investment securities..............   $16,902     $17,359     $31,874     $32,431     $25,697     $25,667
                                               =======     =======     =======     =======     =======     =======

Interest-bearing deposits:

 FHLB daily investment......................    $3,569    $  3,569    $  2,424      $2,424     $17,625     $17,625
 Other daily investments....................    24,913      24,913      14,015      14,015      12,005      12,005
                                                ------     -------      ------      ------    --------     -------
  Total interest-bearing deposits...........   $28,482     $28,482     $16,439     $16,439     $29,630     $29,630
                                               =======     =======     =======     =======     =======     =======

</TABLE>

     The  composition  and  maturities of the investment  securities  portfolio,
excluding FHLB of Chicago stock, are indicated in the following table.

<TABLE>
<CAPTION>

                                                                  June 30, 2002
                                           ---------------------------------------------------------------------
                                               1 Year     1 to 5       Over       Total Investment
                                              or Less      Years     10 Years        Securities
                                              -------      -----     --------        ----------
                                                                    (Dollars in Thousands)
                                                                                                        Weighted
                                                Book       Book        Book        Book       Fair       Average
                                               Value       Value      Value       Value       Value       Yield
                                               -----       -----      -----       -----       -----       -----
                                                                        (In Thousands)
<S>                                          <C>        <C>          <C>          <C>       <C>
U.S. government and agency securities        $ ---      $  ---       $980         $ 980      $1,205
U.S. Agency securities                      10,027       4,998        ---        15,025      15,257
                                            ------      ------     ------        ------      ------
                                            $10,027     $4,998       $980       $16,005      $16,462       5.43%
                                            =======     ======       ====       =======      =======      =====

</TABLE>


                                       27
<PAGE>


Sources of Funds
----------------

     General.  Deposit accounts have  traditionally been the principal source of
Midland  Federal's  funds  for use in  lending  and for other  general  business
purposes.  In addition to  deposits,  Midland  Federal  derives  funds from loan
repayments and cash flows generated from operations. Scheduled loan payments are
a relatively stable source of funds,  while deposit inflows and outflows and the
related cost of such funds have varied.  Borrowings  may be used on a short-term
basis to compensate  for seasonal  reductions in deposits or deposit  inflows at
less than  projected  levels  and may be used on a longer  term basis to support
expanded lending activities.

     Deposits.    Midland   Federal   attracts   principally    short-term   and
intermediate-term  deposits from Midland Federal's primary market area.  Midland
Federal offers regular  passbook  accounts,  NOW accounts,  money market deposit
accounts,  fixed interest rate certificates of deposit with varying  maturities,
and negotiated rate $100,000 jumbo certificates of deposit.

     Deposit account terms vary, according to the minimum balance required,  the
time period the funds must remain on deposit and the interest rate,  among other
factors. Midland Federal has not actively sought deposits outside of its primary
market area.

     The flow of  deposits  is  influenced  significantly  by  general  economic
conditions,  changes in money market and prevailing interest rates,  competition
and Midland Federal's pricing policies and capital requirements. Midland Federal
regularly  evaluates  the  internal  cost of funds,  surveys  rates  offered  by
competing  institutions,  reviews its cash flow  requirements  for liquidity and
executes rate changes when deemed appropriate.

     Midland  Federal has utilized high quality service and promotion to attract
and retain passbook and  transaction  accounts.  Midland  Federal  believes that
these  accounts are less  interest  rate  sensitive  and, in most  interest rate
environments,  carry lower interest  charges than  certificate  accounts.  While
there are costs associated with offering transaction  accounts,  Midland Federal
believes  that the fee  income  and  enhanced  spread  outweigh  any  additional


                                       28
<PAGE>


administrative expense.  Midland Federal does not have any brokered deposits and
has no present intention to accept or solicit such deposits.

     The following  table sets forth the savings flows at Midland Federal during
the periods indicated.

<TABLE>
<CAPTION>

                                                                     Year Ended June 30
                                                         --------------------------------------------
                                                            2002             2001             2000
                                                            ----             ----             ----
                                                                    (Dollars in Thousands)
<S>                                                       <C>              <C>              <C>
Opening balance ........................................  $ 131,504        $ 126,871        $ 120,225
Deposits ...............................................    421,210          423,623          438,125
Withdrawals ............................................   (417,924)        (424,012)         (436,191)
                                                          ---------        ---------          -------
Balance before interest credited .......................    134,790          126,506          122,159
Interest credited ......................................      3,654            4,998            4,712
                                                          ---------        ---------          -------

Ending balance .........................................  $ 138,444        $ 131,504        $ 126,871
                                                          =========        =========        =========

Net increase ...........................................  $   6,940        $   4,633        $   6,646
                                                          =========        =========        =========
Percent increase .......................................      5.28%             3.65%            5.53%
                                                          =========        =========        =========

</TABLE>


                                       29
<PAGE>


     The following table sets forth the dollar amount of savings deposits in the
various  types of  deposit  programs  offered  by  Midland  Federal at the dates
indicated.

<TABLE>
<CAPTION>

                                                                         June 30,
                                         --------------------------------------------------------------------------
                                                  2002                     2001                    2000
                                                  ----                     ----                    ----
                                                       Percent                 Percent                  Percent
                                           Amount     of Total      Amount     of Total     Amount     of Total
                                           ------     --------      ------     --------     ------     --------
                                                                 (Dollars in Thousands)
Interest Rate Range:
-------------------

<S>                                      <C>              <C>       <C>             <C>      <C>             <C>
Passbook accounts .....................  $ 51,592         37.27%    $ 43,581        33.14%   $ 42,814        33.75%
NOW accounts ..........................    14,140         10.21       11,107         8.45       9,829        7.75
Money market accounts .................     7,793          5.63        7,962         6.05       8,364        6.59
Non-interest bearing deposits .........     9,998          7.22       10,009         7.61       9,109        7.18
---------------------------------------  --------        ------     --------       ------    --------      ------
  Total non-certificates ..............    83,523         60.33       72,659        55.25      70,116       55.27
---------------------------------------  --------        ------     --------       ------    --------      ------

Certificates:
-------------

Interest rate range:
 2.01-3.00% ...........................    40,561         29.30           --                       --          --
 3.01-4.00% ...........................     7,647          5.52        8,316         6.32          --          --
 4.01-5.00% ...........................     2,670          1.93       29,201        22.21      16,284       12.84
 5.01-6.00% ...........................     3,943          2.85       16,649        12.66      36,309       28.62
 6.01-7.00% ...........................       100          0.07        4,679         3.56       4,162        3.28
                                         --------        ------     --------       ------    --------      ------
   Total certificates .................    54,921         39.67       58,845        44.75      56,755       44.73
                                         --------        ------     --------       ------    --------      ------
   Total deposits .....................  $138,444        100.00%    $131,504       100.00%   $126,871       100.00%
                                         ========        ======     ========       ======    ========      ======

</TABLE>


                                       30
<PAGE>


     The  following  table  shows  rate and  maturity  information  for  Midland
Federal's time deposits as of June 30, 2002.

<TABLE>
<CAPTION>

<S>                                 <C>       <C>        <C>        <C>
                                    2.01-         3.01-        4.01-       5.01-                 Percent
                                    3.00%         4.00%        5.00%       6.00%       Total     of Total
                                    --------- ---------- ----------   ----------   ----------   --------
                                                           (Dollars in Thousands)
</TABLE>

<TABLE>
<CAPTION>

Certificate Accounts Maturing
in Quarter Ending:
------------------
<S>                               <C>          <C>          <C>            <C>        <C>              <C>
September 30, 2002 ............... $17,814      $ 2,574      $   770        1,174      $22,332          40.66
December 31, 2003 ................  16,021          494          376          535       17,426          31.73
March 31, 2003 ...................   4,252        2,346          875        1,870        9,343          17.01
June 30, 2003 ....................   2,306        1,458           35          324        4,123           7.51
September 30, 2003 ...............      54         --            184          140          378           0.69
December 31, 2003 ................      60           71          166         --            297           0.54
March 31, 2004 ...................      50           67          264         --            381           0.69
June 30, 2004 ....................       4          193         --           --            197           0.36
September 30, 2004 ...............    --            252         --           --            252           0.46
December 31, 2004 ................    --            192         --           --            192           0.35
                                   -------      -------      -------      -------      -------         ------

     Total ....................... $40,561      $ 7,647      $ 2,670      $ 4,043      $54,921         100.00%
                                   =======      =======      =======      =======      =======         ======

     Percent of total ............   73.85%       13.93%        4.86%        7.36%      100.00%
                                     =====        =====         ====         ====       ======

</TABLE>

     The following table indicates the amount of Midland Federal's  certificates
of deposit and other  deposits by time  remaining  until maturity as of June 30,
2002.

<TABLE>
<CAPTION>

                                                                       Maturity
                                                 -------------------------------------------------------
                                                               Over        Over       Over
                                                 3 Months     3 to 6     6 to 12       12
                                                  or Less     Months      Months     Months       Total
                                                  -------     ------      ------     ------       -----

                                                                      (Dollars in Thousands)

<S>                                                <C>         <C>         <C>        <C>         <C>
Certificates of deposit less than $100,000......... $18,949     $13,925     $11,335    $1,579      $45,788

Certificate of deposit of $100,000 or more.........   3,383       3,501       2,131       118       9,133
                                                     ------      ------      ------    ------      ------

   Total certificates of deposit................... $22,332     $17,426     $13,466    $1,697      $54,921
                                                    =======     =======     =======    ======      =======
</TABLE>


                                       31
<PAGE>


Borrowings
----------

     Midland  Federal's other available  sources of funds include  advances from
the Federal Home Loan Bank ("FHLB") of Chicago and collateralized borrowings. As
a member of the FHLB of  Chicago,  Midland  Federal is  required  to own capital
stock in the FHLB of Chicago and is  authorized  to apply for advances  from the
FHLB of Chicago.  Each FHLB credit program has its own interest rate,  which may
be fixed or variable, and range of maturities. The FHLB of Chicago may prescribe
the acceptable  uses for these  advances,  as well as limitations on the size of
the advances and repayment  provisions.  Midland Federal has not had significant
borrowings in recent years.

Competition
-----------

     Midland  Federal  faces  strong  competition  in  originating  loans and in
attracting deposits. Competition in originating loans comes primarily from other
thrift  institutions,  commercial  banks and mortgage  bankers  which make loans
secured by real estate located in Midland Federal's primary market area. Midland
Federal  competes for loans  principally  on the basis of the interest rates and
loan  fees it  charges,  the types of loans it  originates  and the  quality  of
service it provides to borrowers.

     Midland Federal faces substantial  competition in attracting  deposits from
other thrift  institutions,  commercial  banks,  money market and mutual  funds,
credit unions and other investment  vehicles.  The ability of Midland Federal to
attract  and retain  deposits  depends on its  ability to provide an  investment
opportunity  that satisfies the  requirements of investors as to rate of return,
liquidity,  risk and other factors.  Midland Federal competes for these deposits
by offering a variety of deposit  accounts at  competitive  rates and convenient
business hours.  Midland Federal  estimates its share of deposits in its primary
market area to be less than 3%.


                                       32
<PAGE>


Service Corporation
-------------------

     Federal  associations  generally  may  invest  up to 2% of their  assets in
service corporations, plus an additional 1% of assets if for community purposes.
In  addition,  federal  associations  may  invest up to 50% of their  regulatory
capital in  conforming  loans to their  service  corporations.  In  addition  to
investments  in service  corporations,  federal  associations  are  permitted to
invest  an  unlimited  amount  in  operating   subsidiaries  engaged  solely  in
activities which a federal association may engage in directly.

     Midland Federal has one service  corporation,  Midland Service Corporation,
located in Bridgeview,  Illinois, which was organized by Midland Federal in 1976
to act as a holding company for Midland  Federal's other  subsidiaries.  At June
30, 2002, Midland Federal's equity investment in Midland Service Corporation was
approximately 195,000.  During fiscal 2002, Midland Service Corporation recorded
a profit of $18,000.

     Midland Service  Corporation owns MS Insurance  Agency, an insurance agency
which provides insurance products to customers of Midland Federal and to members
of the general  public in Midland  Federal's  market  area.  Insurance  products
offered by this agency, include credit life, health, homeowners' and disability.
MS  Insurance  Agency had a profit of $15,000 for the 2002 fiscal  year,  all of
which is included in the Midland  Service  Corporation  income amounts  reported
above.

                                   REGULATION

     General.  Midland  Federal  is  a  federally  chartered  savings  and  loan
association,  the deposits of which are federally insured and backed by the full
faith and  credit  of the U. S.  government.  Accordingly,  Midland  Federal  is
subject  to  broad  federal  regulation  and  oversight  extending  to  all  its
operations. Midland Federal is a member of the FHLB of Chicago and is subject to
certain  limited  regulation  by the Board of Governors  of the Federal  Reserve
System  ("Federal  Reserve  Board").  Midland Federal is a member of the Savings
Association Insurance Fund ("SAIF"), which together with the Bank Insurance Fund
(the "BIF") are the two deposit  insurance  funds  administered by the FDIC, and
the deposits of Midland  Federal are insured by the FDIC. As a result,  the


                                       33
<PAGE>


FDIC has certain regulatory and examination authority over Midland Federal.

     Certain of these  regulatory  requirements  and  restrictions are discussed
below or elsewhere in this document.

     Federal Regulation of Savings Associations. The OTS has extensive authority
over the operations of savings associations.  As part of this authority, Midland
Federal is  required  to file  periodic  reports  with the OTS and is subject to
periodic  examinations by the OTS. The last OTS examination commenced on January
2, 2001 using financial data as of September 30, 2000.  When these  examinations
are conducted,  the examiners may require  Midland Federal to provide for higher
general or specific loan loss reserves. Midland Federal is also subject to joint
examination by the FDIC and the OTS.

     All savings associations are subject to semi-annual assessments, based upon
the savings associations total assets.  Midland Federal's paid assessment during
the fiscal year ended June 30, 2002 was $42,000.

     The  OTS  also  has  extensive   enforcement  authority  over  all  savings
institutions,  including Midland Federal.  This enforcement  authority includes,
among other  things,  the  ability to assess  civil  money  penalties,  to issue
cease-and-desist  or  removal  orders and to  initiate  injunctive  actions.  In
general,  these enforcement  actions may be initiated for violations of laws and
regulations  and unsafe or unsound  practices.  Other  actions or inactions  may
provide  the basis for  enforcement  action,  including  misleading  or untimely
reports  filed  with  the  OTS.  Except  under  certain  circumstances,   public
disclosure of final enforcement actions by the OTS is required.

     In addition,  the  investment and lending  authority of Midland  Federal is
prescribed by federal laws and  regulations,  and it is prohibited from engaging
in any activities not permitted by such laws and regulations.  For instance,  no
savings  association may invest in corporate debt securities not rated in one of
the  four  highest  rating


                                       34
<PAGE>


categories by a nationally  recognized  rating  organization.  In addition,  the
permissible  level of  investment  by federal  associations  in loans secured by
non-residential real property may not exceed 400% of regulatory capital,  except
with approval of the OTS.  Midland  Federal is in compliance  with each of these
restrictions.

     Midland Federal's  permissible lending limit for  loans-to-one-borrower  is
equal to the  greater of  $500,000  or 15% of  unimpaired  capital  and  surplus
(except for loans fully secured by certain  readily  marketable  collateral,  in
which case this limit is increased to 25% of unimpaired capital and surplus). At
June 30, 2002,  Midland  Federal's lending limit under this restriction was $1.4
million.  Midland  Federal  is  in  compliance  with  the  loans-to-one-borrower
limitation.

     The  OTS,  as well as the  other  federal  banking  agencies,  has  adopted
guidelines  establishing  safety and soundness standards on such matters as loan
underwriting  and  documentation,  asset  quality,  internal  controls and audit
systems,  interest  rate risk  exposure  and  compensation  and  other  employee
benefits. Any institution which fails to comply with these standards must submit
a  capital  compliance  plan.  A failure  to submit a plan or to comply  with an
approved plan will subject the institution to further enforcement action.

     Insurance  of Accounts and  Regulation  by the FDIC.  Midland  Federal is a
member of the SAIF,  which is  administered  by the FDIC.  Savings  deposits are
insured up to applicable  limits by the FDIC and such insurance is backed by the
full faith and  credit of the U.S.  government.  As  insurer,  the FDIC  imposes
deposit insurance  premiums and is authorized to conduct  examinations of and to
require  reporting  by  FDIC-insured  institutions.  It also  may  prohibit  any
FDIC-insured  institution  from engaging in any activity the FDIC  determines by
regulation or order to pose a serious risk to the SAIF or the BIF. The FDIC also
has the authority to initiate enforcement actions against savings  associations,
after giving the OTS an opportunity  to take such action,  and may terminate the
deposit  insurance  if it  determines  that the  institution  has  engaged or is
engaging  in  unsafe  or  unsound  practices,  or  is in an  unsafe  or  unsound
condition.


                                       35
<PAGE>


     The FDIC's  deposit  insurance  premiums are assessed  through a risk-based
system under which all insured  depository  institutions  are placed into one of
nine  categories  and  assessed  insurance  premiums  based upon their  level of
capital and supervisory evaluation. Under the system, institutions classified as
"well-capitalized"  (i.e.,  a core capital ratio of at least 5%, a ratio of core
capital to risk-weighted assets (Tier 1 Risk-Based Capital) of at least 6% and a
risk-based  capital ratio of at least 10%) and considered  healthy would pay the
lowest premium while  institutions  that are less than "adequately  capitalized"
(i.e., a core capital or core capital to risk-based  capital ratios of less than
a Tier 1 Risk-Based  Capital  ratio of 4% or a risk-based  capital ratio of less
than 8%) and considered of substantial supervisory concern would pay the highest
premium.  Risk  classification  of all insured  institutions will be made by the
FDIC for each semi-annual assessment period.

     The FDIC is  authorized  to increase  assessment  rates,  on a  semi-annual
basis, if it determines that the reserve ratio of the SAIF will be less than the
designated  reserve  ratio of 1.25% of SAIF insured  deposits.  In setting these
increased  assessments,  the FDIC must seek to restore the reserve ratio to that
designated  reserve  level,  or such higher  reserve ratio as established by the
FDIC.  The FDIC may also impose  special  assessments  on SAIF  members to repay
amounts  borrowed  from  the U. S.  Treasury  or for  any  other  reason  deemed
necessary by the FDIC.

     At fiscal year end 2002,  the premium  schedule for BIF- and SAIF-  insured
institutions  ranged from 0 to 27 basis points,  and both BIF- and  SAIF-insured
institutions are required to pay a Financing  Corporation (FICO) assessment,  in
order to fund the  interest on bonds  issued to resolve  thrift  failures in the
1980s,  equal to about 1.76 basis  points  for each $100 in  domestic  deposits.
These  assessments,  which may be  revised  based upon the level of BIF and SAIF
deposits, will continue until the bonds mature in the years 2017 through 2019.

     Regulatory Capital  Requirements.  Federally insured savings  associations,
such as Midland Federal,  are required to maintain a minimum level of regulatory
capital. The OTS has established capital standards, including a tangible capital
requirement,  a leverage  ratio (or core capital)  requirement  and a risk-based
capital  requirement  applicable  to such savings  associations.  These  capital
requirements


                                       36
<PAGE>


must be  generally  as  stringent as the  comparable  capital  requirements  for
national  banks.  The OTS is also  authorized to impose capital  requirements in
excess of these standards on individual associations on a case-by-case basis.

     The  capital  regulations  require  tangible  capital  of at least  1.5% of
adjusted total assets (as defined by  regulation).  Tangible  capital  generally
includes  common   stockholders'   equity  and  retained  income,   and  certain
noncumulative  perpetual  preferred stock and related income.  In addition,  all
intangible  assets,  other than a limited amount of purchased mortgage servicing
rights,  must be deducted from tangible capital for calculating  compliance with
the requirement.  Further, any unrealized holding gains or losses, net of income
taxes,  on securities  classified as available for sale in accordance  with SFAS
No. 115 are excluded from  regulatory  capital  calculations.  At June 30, 2002,
Midland  Federal  had  deductible  retained  mortgage  servicing  assets  and an
unrealized gain, net of tax, under SFAS No. 115 in the amount of $210,000.

         The OTS regulations establish special capitalization requirements for
savings associations that own subsidiaries. In determining compliance with the
capital requirements, all subsidiaries engaged solely in activities permissible
for national banks or engaged in certain other activities solely as agent for
its customers are "includable" subsidiaries that are consolidated for capital
purposes in proportion to Midland Federal's level of ownership. For excludable
subsidiaries the debt and equity investments in such subsidiaries are deducted
from assets and capital.

     At June 30, 2002, Midland Federal had tangible capital of $9.3 million,  or
6.15% of adjusted total assets,  which is  approximately  $7.0 million above the
minimum requirement of 1.5% of adjusted total assets in effect on that date.

     The capital  standards also require core capital or Tier 1 Capital equal to
at least 3% of adjusted  total assets (as defined by  regulation).  Core capital
generally consists of tangible capital plus certain intangible assets, including
supervisory goodwill and a limited amount of purchased credit card relationships
and purchased  mortgage


                                       37
<PAGE>

servicing  rights.  As a result of the prompt  corrective  action  provisions of
FDICIA,  discussed  below,  a savings  association  must maintain a core capital
ratio  of at least  4% to be  considered  "adequately  capitalized"  unless  its
supervisory  condition  is such to allow it to maintain a 3% ratio.  At June 30,
2002,  Midland Federal had retained mortgage servicing assets which were subject
to these tests.

     At June 30, 2002,  Midland  Federal had core capital equal to $9.3 million,
or 6.15% of  adjusted  total  assets,  which is $4.8  million  above the minimum
leverage ratio  requirement  of 3% in effect on that date. In addition,  on such
date Midland Federal had Tier 1 Risked-Based  Capital equal to $9.3 million or a
11.49% of Risk-Weighted  Assets,  which is $6.1 million above the requirement of
4% on effect on that date.

     The OTS risk-based  requirement requires savings associations to have total
capital of at least 8% of risk-weighted  assets.  Total capital consists of core
capital,  as defined above, and  supplementary  capital.  Supplementary  capital
consists of certain  permanent  and  maturing  capital  instruments  that do not
qualify as core capital and general  valuation loan and lease loss allowances up
to a maximum of 1.25% of risk-weighted assets. Supplementary capital may be used
to satisfy the  risk-based  requirement  only to the extent of core capital.  At
June 30,  2002,  Midland  Federal  had no capital  instruments  that  qualify as
supplementary capital and $350,000 of general loss reserves, which was less than
1.25% of risk-weighted assets.

     Certain  exclusions from capital and assets are required to be made for the
purpose  of  calculating  total  capital.  Such  exclusions  consist  of  equity
investments  (as  defined  by  regulation)  and that  portion  of land loans and
nonresidential  construction  loans in excess of an 80% loan-to-value  ratio and
reciprocal  holdings of qualifying  capital  instruments.  There were $15,000 in
equity investments at June 30, 2002.

     In determining the amount of risk-weighted  assets,  all assets,  including
certain  off-balance sheet items,  will be multiplied by a risk weight,  ranging
from 0% to 100%,  based on the risk inherent in the type of asset.  For example,
the OTS has


                                       38
<PAGE>


assigned  a risk  weight of 50% for  prudently  underwritten  permanent  one- to
four-family  first  lien  mortgage  loans not more than 90 days  delinquent  and
having a loan-to-value ratio of not more than 80% at origination unless the loan
amount in excess of such ratio is insured by an insurer  approved by the FNMA or
FHLMC.

     OTS regulations also require that every savings  association with more than
normal  interest  rate risk  exposure  to deduct  from its  total  capital,  for
purposes of determining compliance with such requirement, an amount equal to 50%
of its  interest-rate  risk  exposure  multiplied  by the  present  value of its
assets. This exposure is a measure of the potential decline in the net portfolio
value of a savings  association,  greater  than 2% of the  present  value of its
assets,  based upon a  hypothetical  200 basis  point  increase  or  decrease in
interest rates (whichever results in a greater decline).  Net portfolio value is
the  present  value  of  expected  cash  flows  from  assets,   liabilities  and
off-balance  sheet  contracts.  The rule will not become effective until the OTS
evaluates the process by which savings  associations may appeal an interest rate
risk deduction determination.  It is uncertain as to when this evaluation may be
completed.  Any savings  association with less than $300 million in assets and a
total capital ratio in excess of 12% is exempt from this requirement  unless the
OTS determines otherwise.

     On June 30,  2002,  Midland  Federal  had  total  capital  of $9.6  million
(including $9.3 million in core capital and $350,000 of qualifying  general loss
reserves) and  risk-weighted  assets of $80.9 million or total capital of 11.90%
of risk-weighted  assets.  This amount was $3.2 million above the 8% requirement
in effect on that date.

     The OTS and the  FDIC  are  authorized  and,  under  certain  circumstances
required,  to take certain actions against  associations that fail to meet their
capital  requirements.  The OTS is generally required to take action to restrict
the activities of an "undercapitalized association" (generally defined to be one
with less than either a 4% core ratio,  a 4% Tier 1 risk based capital  ratio, a
Tier 1 risked-based  capital ratio or an 8% risk-based  capital ratio). Any such
association  must  submit a  capital  restoration  plan and  until  such plan


                                       39
<PAGE>


is approved by the OTS may not increase its assets, acquire another institution,
establish a branch or engage in any new  activities,  and generally may not make
capital   distributions.   The  OTS  is  authorized  to  impose  the  additional
restrictions that are applicable to significantly undercapitalized associations.

     Any savings  association  that fails to comply with its capital  plan or is
"significantly  undercapitalized"  (i.e.,  Tier 1 or Tier 1  risk-based  or core
capital  ratios of less than 3% or a risk-based  capital  ratio of less than 6%)
must be subject to one or more of  additional  specified  actions and  operating
restrictions, which may cover all aspects of its operations and include a forced
merger or acquisition of Midland Federal.

     An association that becomes "critically undercapitalized" (i.e., a tangible
capital ratio of 2% or less) is subject to further mandatory restrictions on its
activities  in addition to those  applicable to  significantly  undercapitalized
associations.  In addition, the OTS must appoint a receiver (or conservator with
the  concurrence of the FDIC) for a savings  association,  with certain  limited
exceptions,  within 90 days after it becomes  critically  undercapitalized.  Any
undercapitalized association is also subject to the general enforcement activity
of the OTS and the FDIC, including the appointment of a receiver or conservator.

     The  imposition by the OTS or the FDIC of any of these  measures on Midland
Federal may have a substantial  adverse effect on Midland  Federal's  operations
and  profitability and the value of its stock. If the OTS or the FDIC require an
association  such as Midland Federal,  to raise  additional  capital through the
issuance of stock or other capital  instruments  such issuance may result in the
dilution in the percentage of ownership of Midland Federal.

     Limitations on Dividends and Other Capital  Distributions.  OTS regulations
impose  various  restrIictions  on savings  associations  with  respect to their
ability  to make  distributions  of  capital,  which  include  dividends,  stock
redemptions or repurchases,  cash-out mergers and other


                                       40
<PAGE>


transactions  charged to the capital  account.  OTS regulations  also prohibit a
savings  association from declaring or paying any dividends or from repurchasing
any of its stock if, as a result,  the  regulatory  capital of  Midland  Federal
would be reduced below the amount  required to be maintained for the liquidation
account established in connection with its mutual to stock conversion.

     Generally,  savings associations,  such as Midland Federal, that before and
after  the  proposed  distribution  remain  well-capitalized,  may make  capital
distributions  during  any  calendar  year  equal to the  greater of 100% of net
income for the year-to-date plus retained net income for the two preceding years
that is available for dividend.  However, an institution deemed to be in need of
more  than  normal  supervision  by the  OTS may  have  its  dividend  authority
restricted by the OTS. Midland Federal may pay dividends in accordance with this
general authority.

     Any  savings  association  that is a  subsidiary  of a holding  company and
proposes to make any capital distribution need only submit written notice to the
OTS 30 days prior to such  distribution.  Savings  associations  that do not, or
would not meet their current minimum capital  requirements  following a proposed
capital  distribution,  however,  must obtain OTS approval  prior to making such
distribution.  The OTS may object to the distribution  during that 30-day notice
period  based on safety  and  soundness  concerns.  See "--  Regulatory  Capital
Requirements."

     Accounting.  An OTS policy statement applicable to all savings associations
clarifies  and  re-emphasizes  that  the  investment  activities  of  a  savings
association  must be in  compliance  with  approved  and  documented  investment
policies and  strategies,  and must be accounted  for in  accordance  with GAAP.
Under the policy  statement,  management must support its  classification of and
accounting for loans and securities (i.e., whether held for investment,  sale or
trading) with appropriate documentation.

     OTS accounting  regulations,  which may be made more stringent than GAAP by
the OTS,  require that  transactions  be reported in a manner that best reflects
their underlying economic substance and inherent risk and that financial reports
must  incorporate any other accounting


                                       41
<PAGE>


regulations or orders  prescribed by the OTS.  Midland  Federal is in compliance
with these rules.

     Qualified Thrift Lender Test. All savings  associations,  including Midland
Federal,  are required to meet a qualified  thrift  lender test to avoid certain
restrictions on their  operations.  This test requires a savings  association to
have at  least  65% of its  portfolio  assets  (as  defined  by  regulation)  in
qualified thrift investments for nine out of every 12 months on a rolling basis.
As an  alternative,  the savings  association  may maintain 60% of its assets in
those assets specified in Section 7701(a)(19) of the 1986 Internal Revenue Code,
as amended.  Under either test,  such assets  primarily  consist of  residential
housing related loans and  investments.  At June 30, 2002 Midland Federal was in
compliance with the test.

     Any savings  association  that fails to meet the QTL test must convert to a
national bank charter,  unless it requalifies as a QTL and thereafter  remains a
QTL. If an association  that fails the test has not yet  requalified and has not
converted to a national bank, its new  investments and activities are limited to
those permissible for both a savings  association and a national bank, and it is
limited to  national  bank  branching  rights in its home  state.  In  addition,
Midland Federal is immediately ineligible to receive any new FHLB borrowings and
is subject to national bank limits for payment of dividends. If such association
has not requalified or converted to a national bank within three years after the
failure, it must divest all investments and cease all activities not permissible
for a national bank.

     Community  Reinvestment  Act. Under the Community  Reinvestment  Act, every
FDIC insured institution has a continuing and affirmative  obligation consistent
with safe and sound  banking  practices  to help  meet the  credit  needs of its
entire community, including low and moderate income neighborhoods.  The CRA does
not  establish   specific   lending   requirements  or  programs  for  financial
institutions nor does it limit an institution's  discretion to develop the types
of products  and  services  that it believes  are best suited to its  particular
community, consistent with the CRA. The CRA requires the OTS, in connection with
the


                                       42
<PAGE>


examination of Midland Federal,  to assess the  institution's  record of meeting
the credit  needs of its  community  and to take such record into account in its
evaluation of certain  applications,  such as a merger or the establishment of a
branch, by Midland Federal.  An  unsatisfactory  rating may be used as the basis
for the denial of an application  such as a branch or merger  application by the
OTS.

     Due to the  heightened  attention  being  given  to the CRA in the past few
years, Midland Federal may be required to devote additional funds for investment
and  lending  in its local  community.  Midland  Federal  was  examined  for CRA
compliance in 2002 and received a rating of "satisfactory."

     Transactions  with Affiliates.  Generally,  transactions  between a savings
association or its  subsidiaries  and its affiliates are required to be on terms
as  favorable  to  Midland  Federal  as  transactions  with  non-affiliates.  In
addition,  certain of these  transactions  are  restricted  to a  percentage  of
Midland  Federal's  capital.  Affiliates of Midland  Federal include any company
which is under  common  control  with Midland  Federal.  In addition,  a savings
association may not lend to any affiliate  engaged in activities not permissible
for a bank holding company or acquire the securities of most affiliates. Midland
Federal's  subsidiaries  are not  deemed  affiliates,  however;  the OTS has the
discretion to treat subsidiaries as affiliates on a case-by-case basis.

     Certain  transactions with directors,  officers or controlling  persons are
also  subject to  conflict of interest  regulations  enforced by the OTS.  These
conflict of interest  regulations and other statutes also impose restrictions on
loans to such persons and their  related  interests.  Among other  things,  such
loans must be made on terms  substantially the same as for loans to unaffiliated
persons.

Holding Company Regulation

     Midland  Capital is a unitary  savings and loan holding  company subject to
regulatory  oversight  by the OTS.  As such,  Midland  Capital  is  required  to
register  and  file  reports  with  the OTS and is  subject  to  regulation  and
examination  by the OTS. In addition,  the OTS has  enforcement  authority  over


                                       43
<PAGE>


Midland Capital and its non-savings association  subsidiaries which also permits
the OTS to restrict or prohibit  activities  that are determined to be a serious
risk to the subsidiary savings association.

     As a unitary savings and loan holding company, Midland Capital generally is
not subject to activity  restrictions.  If Midland Capital  acquires  control of
another savings association as a separate subsidiary, it would become a multiple
savings and loan holding company,  and the activities of Midland Capital and any
of its  subsidiaries  (other  than  Midland  Federal  or any other  SAIF-insured
savings association) would become subject to such restrictions unless such other
associations  each  qualify  as  a  QTL  and  were  acquired  in  a  supervisory
acquisition.

     If Midland  Federal  fails the QTL test,  Midland  Capital  must obtain the
approval of the OTS prior to continuing after such failure,  directly or through
its other  subsidiaries,  any business  activity  other than those  approved for
multiple savings and loan holding companies or their subsidiaries.  In addition,
within one year of such  failure  Midland  Capital  must  register  as, and will
become subject to, the restrictions  applicable to bank holding  companies.  The
activities  authorized for a bank holding  company are more limited than are the
activities  authorized  for a  unitary  or  multiple  savings  and loan  holding
company. See "- Qualified Thrift Lender Test."

     Midland Capital must obtain approval from the OTS before acquiring  control
of  any  other  SAIF-insured   association.   Such  acquisitions  are  generally
prohibited  if they  result  in a  multiple  savings  and loan  holding  company
controlling  savings  associations  in  more  than  one  state.   However,  such
interstate  acquisitions are permitted based on specific state  authorization or
in a supervisory acquisition of a failing savings association.


                                       44
<PAGE>


     Federal Securities Law. The stock of Midland Capital is registered with the
SEC under the Securities  Exchange Act of 1934, as amended.  Midland  Capital is
subject to the information, proxy solicitation, insider trading restrictions and
other requirements of the SEC under the Exchange Act.

     Midland  Capital  Holdings  Corporation  stock  held  by  persons  who  are
affiliates (generally officers, directors and principal stockholders) of Midland
Capital may not be resold without registration or unless sold in accordance with
certain resale  restrictions.  If Midland Capital meets specified current public
information  requirements,  each affiliate of Midland Capital is able to sell in
the  public  market,  without  registration,  a limited  number of shares in any
three-month period.

     Federal Reserve  System.  The Federal Reserve Board requires all depository
institutions  to maintain  non-interest  bearing  reserves at  specified  levels
against  their  transaction  accounts  (primarily  checking,  NOW and  Super NOW
checking  accounts) and  non-personal  time  deposits.  At June 30, 2002 Midland
Federal was in compliance with these reserve requirements.

     Savings associations are authorized to borrow from the Federal Reserve Bank
"discount window," but Federal Reserve Board regulations require associations to
exhaust  other  reasonable   alternative   sources  of  funds,   including  FHLB
borrowings, before borrowing from the Federal Reserve Bank.

     Federal Home Loan Bank System.  Midland  Federal is a member of the FHLB of
Chicago,  which is one of 12 regional FHLBs that  administers the home financing
credit  function  of  savings  associations.  Each FHLB  serves as a reserve  or
central bank for its members within its assigned region.  It is funded primarily
from  proceeds  derived from the sale of  consolidated  obligations  of the FHLB
System.  It makes loans to members (i.e.,  advances) in accordance with policies
and procedures established by the board of directors of the FHLB. These policies
and  procedures  are  subject to the  regulation  and  oversight  of the Federal
Housing  Finance  Board.  All  advances  from the FHLB are  required to be fully
secured by sufficient  collateral  as  determined by the FHLB.


                                       45
<PAGE>


In  addition,   all  long-term  advances  are  required  to  provide  funds  for
residential  home  financing.  While a member of the FHLB of Chicago at June 30,
2002, Midland Federal had not entered into a credit arrangement with the FHLB of
Chicago and, as such, could not obtain funds from the FHLB of Chicago.

         As a member, Midland Federal is required to purchase and maintain stock
in the FHLB of Chicago. At June 30, 2002 Midland Federal had $897,000 in FHLB
stock, which was in compliance with this requirement. In past years, Midland
Federal has received substantial dividends on its FHLB stock. Over the past five
calendar years such dividends have averaged 6.79% and were 6.34% for calendar
year 2002.

     Under  federal  law,  the  FHLBs  are  required  to  provide  funds for the
resolution  of  troubled  savings  associations  and to  contribute  to low- and
moderately priced housing programs through direct loans or interest subsidies on
advances targeted for community investment and low- and moderate-income  housing
projects.  These  contributions  have  affected  adversely  the  level  of  FHLB
dividends  paid and could continue to do so in the future.  These  contributions
could also have an adverse  effect on the value of FHLB stock in the  future.  A
reduction in value of Midland Federal's FHLB stock may result in a corresponding
reduction in its capital.

     For the year ended June 30, 2002,  dividends paid by the FHLB of Chicago to
Midland Federal totaled $44,000, which was a $10,000 decrease from the amount of
dividends  received in fiscal year 2001. The $11,000  dividend  received for the
quarter ended June 30, 2002 reflects an annualized rate of 5.00%, or 1.34% below
the rate for calender year 2001.

     Federal Taxation.  Savings institutions that met certain definitional tests
relating to the  composition  of assets and other  conditions  prescribed by the
Internal  Revenue  Code of 1986,  as amended,  had been  permitted  to establish
reserves  for bad  debts  and to  make  annual  additions  which  could,  within
specified  formula limits,  be taken as a deduction in computing  taxable income
for federal income tax purposes. As a result of tax legislation enacted in 1996,
the  amount  of the  bad  debt  reserve  deduction  is now  computed  under  the
experience method.


                                       46
<PAGE>


     In addition to the regular  income  tax,  corporations,  including  savings
institutions  generally are subject to a minimum tax. An alternative minimum tax
is imposed at a minimum tax rate of 20% on alternative  minimum  taxable income,
which is the sum of a  corpoioration's  regular  taxable  income  (with  certain
adjustments)  and tax  preference  items,  less  any  available  exemption.  The
alternative  minimum tax is imposed to the extent it exceeds  the  corporation's
regular  income  tax and net  operating  losses  can  offset no more than 90% of
alternative minimum taxable income.

     To the extent  earnings  appropriated  to a savings  institutions  bad debt
reserves for  "qualifying  real property  loans" and deducted for federal income
tax purposes  exceed the allowable  amount of such reserves  computed  under the
experience method and to the extent of the institution's  supplemental  reserves
for losses on loans, such excess may not, without adverse tax  consequences,  be
utilized  for  the  payment  of  cash  dividends  or  other  distributions  to a
shareholder (including distributions on redemption,  dissolution or liquidation)
or for any other  purpose  (except  to absorb bad debt  losses).  As of June 30,
2002,  Midland  Federal's  excess for tax purposes  totaled  approximately  $1.1
million.

     Midland Capital and its subsidiaries file  consolidated  federal income tax
returns on a fiscal year basis using the accrual method of accounting.

     Midland Capital and its consolidated  subsidiaries  have never been audited
by the  IRS  with  respect  to  federal  income  tax  returns.  The  statute  of
limitations  has passed for tax years ending on or prior to June 30,  1999,  for
Midland Capital and its consolidated subsidiaries.

     Illinois  Taxation.  Midland  Capital and its  subsidiaries  file  separate
Illinois income tax returns.  For Illinois income tax purposes,  Midland Capital
and its  subsidiaries  are taxed at an effective rate equal to 7.18% of Illinois
taxable income.  For these purposes,  "Illinois  Taxable Income" generally means
federal taxable income,  subject to certain adjustments  (including the addition
of interest  income on state and  municipal  obligations  and the  exclusion  of
interest income on United States Treasury obligations).  The exclusion of


                                       47
<PAGE>


income  on  United  States  Treasury  obligations  has the  effect  of  reducing
significantly the Illinois taxable income of savings associations.

     Impact of New  Accounting  Standards.  The following  does not constitute a
comprehensive  summary of all material  changes or  developments  affecting  the
manner in which  Midland  Capital  keeps its books and records and  performs its
financial accounting responsibilities.  It is intended only as a summary of some
of the recent  pronouncements made by the Financial  Accounting Standards Board,
which we refer  to as  FASB,  which  are of  particular  interest  to  financial
institutions.

     In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses the financial  accounting and reporting for
obligations  related to the  retirement  of tangible  long-lived  assets and the
related  asset  retirement  costs.  SFAS  No.  143 is  effective  for  financial
statements  issued for fiscal  year's  beginning  after June 15, 2002.  As such,
Midland  Capital  will  adopt the  provisions  of SFAS  No.143 on July 1,  2002.
Midland  Capital does not expect these  provisions to have a material  impact on
its consolidated financial statements.

     In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment
and  Disposal of  Long-Term  Assets."  This  Statement  supercedes  SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of" as well as the  accounting  and  reporting  of the  Accounting
Principles  Board (APB) Opinion No. 30,  "Reporting  the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and  Infrequently  Occurring  Events and  Transactions."  This statement
eliminates  the  allocation  of goodwill to  long-lived  assets to be tested for
impairment and details both a probability-weighted  and "primary-asset" approach
to estimate cash flows in testing for impairment for long-lived assets. SFAS No.
144 is effective for financial statement issued for fiscal years beginning after
December 15, 2001. As such,  Midland  Capital will adopt the  provisions of SFAS
No. 144 on July 1, 2002 The Company does not expect these  provisions  to have a
material impact on its consolidated financial statements.


                                       48
<PAGE>


     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections."  This Statement  rescinds SFAS No. 4, "Reporting  Gains and Losses
from  Extinguishment of Debt," and an amendment of that Statement,  SFAS No. 64,
"Extinguishments  of  Debt  Made to  Satisfy  Sinking-Fund  Requirements."  This
Statement also rescinds SFAS No. 44,  "Accounting for Intangible Assets of Motor
Carriers."  This  Statement  amends  SFAS No. 13,  "Accounting  for  Leases," to
eliminate an inconsistency  between the required  accounting for  sale-leaseback
transactions and the required  accounting for certain lease  modifications  that
have  economic  effects that are similar to  sale-leaseback  transactions.  This
Statement  also  amends  other  existing  authoritative  pronouncements  to make
various technical corrections, clarify meanings, or describe their applicability
under changed conditions. This Statement is effective for fiscal years beginning
after May 15, 2002. As such,  Midland  Capital will adopt the provisions of SFAS
No. 145 on July 1, 2002.  Adoption of this  statement  is not expected to have a
material effect on Midland Capital's consolidated financial statements.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  costs
Associated with Exit or Disposal Activities." This Statement addresses financial
accounting and reporting for costs  associated with exit or disposal  activities
and  nullifies  Emerging  Issues Task Force (EITF)  Issue No.  94-3,  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."  This Statement
is effective for exit or disposal  activities which are initiated after December
31, 2002.  Adoption of this statement is not expected to have a material  effect
on Midland Capital's consolidated financial statements.

Employees
---------

     At June 30, 2002, Midland Federal had a total of 43 full-time employees and
41 part-time  employees.  None of Midland Federal's employees are represented by
any collective bargaining group.  Management considers its employee relations to
be good.


                                       49
<PAGE>


Item 2.  Description of Property
--------------------------------

Offices
-------

     Midland  Federal  owns the  building  and land for its main  office at 8929
South Harlem Avenue,  Bridgeview,  Illinois.  This office has 18,000 square feet
and a net book value of $893,000 at June 30, 2002. Midland Federal also has a 99
year  easement on land  adjacent to its main  office  which  expires in the year
2078.  Midland  Federal owns the building and land for its two branch offices in
Chicago at 4040 South Archer  Avenue in Brighton  Park and 2657 West 69th Street
in  Marquette  Park which  have 2,000 and 2,500  square  feet and  $652,000  and
$17,000  net book  values at June 30,  2002,  respectively.  The  Brighton  Park
branch,  Midland Federal's original office, was completely  remodeled during the
current year and features a new drive-up banking facility, banking lobby, facade
and signage.

     Midland  Federal  owns a parcel  of  vacant  land  located  in Homer  Glen,
Illinois  which  has a net book  value of  $180,500  at June 30,  2002.  Midland
Federal has also  entered into a lease for retail  space and  additional  vacant
land  adjacent to the same  location in Homer Glen,  Illinois.  Midland  Federal
established a full service branch banking facility at this location which opened
for business  during April 1999.  The net book value of remodeling and leasehold
improvement  costs at this 32,846 square foot location  amount to  approximately
$414,000 at June 30, 2002.

Computer Equipment
------------------

         Midland Federal's recordkeeping activities are maintained on an on-line
basis with an independent service bureau. Midland Federal's accounting and loan
origination activities are maintained on an in-house computer network. The net
book value of Midland Federal's computer equipment at June 30, 2002 was
$151,000.


                                       50
<PAGE>


Item 3.  Legal Proceedings
--------------------------

     Midland  Federal is, from time to time,  a  defendant  to certain  lawsuits
arising in the ordinary course of its business.  Midland  Federal  believes that
there is no litigation  pending  which,  if adversely  determined,  would have a
material adverse effect on its financial condition.

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

     No  matter  was  submitted  to a vote  of  security  holders,  through  the
solicitation  of proxies or  otherwise,  during the three  months ended June 30,
2002.

                                     PART II
                                     -------


Item 5. Market for Common Equity and Related Stockholder Matters
-----------------------------------------------------------------

     Page 20 of the 2002 Annual Report to Stockholders is herein incorporated by
reference.

Item 6. Management's Discussion and Analysis or Plan of Operation
-----------------------------------------------------------------

     Pages 6 through  20 of the 2002  Annual  Report to  Stockholders  is herein
incorporated by reference.

Item 7. Financial Statements
----------------------------
     Pages 22 through 46 of the 2002 Annual  Report to  Stockholders  are herein
incorporated by reference.

Item 8.  Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure
              ------------------------

     There have been no  changes  in or  disagreements  with  Midland  Federal's
accountants on accounting and financial disclosure matters.


                                       51
<PAGE>


                                    PART III
                                    --------

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act
        --------------------------------------

     Information  concerning  Directors of the Issuer is incorporated  herein by
reference  from Midland  Capital's  definitive  proxy  statement  for the Annual
Meeting of  Stockholders,  a copy of which will be filed not later than 120 days
after the close of the fiscal year.


                                       52
<PAGE>


Item 10.  Executive Compensation
--------------------------------

     Information  concerning  executive  compensation is incorporated  herein by
reference  from Midland  Capital's  definitive  proxy  statement  for the Annual
Meeting of  Stockholders,  a copy of which will be filed not later than 120 days
after the close of the fiscal year.

Item 11. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------
     Information  concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from Midland Capital's definitive
Proxy Statement for the Annual Meeting of Stockholders,  a copy of which will be
filed not later than 120 days after the close of the fiscal year.

     The following table sets forth information with respect to securities to be
issued under Midland Capital's equity compensation plans as of June 30, 2002.


                                       53
<PAGE>


                      Equity Compensation Plan Information

<TABLE>
<CAPTION>

===================================================================================================================================
Plan Category                                                  (a)                             (b)                       (c)
                                                Number of securities to be issued  Weighted-average exercise  Number of securities
                                                upon exercise of outstanding       price of outstanding       remaining available
                                                options, warrants and rights       options, warrants and      for future issuance
                                                                                   rights                     under equity
                                                                                                              compensation plans
                                                                                                              (excluding securities
                                                                                                              reflected in column
                                                                                                              (a))

===================================================================================================================================
Equity compensation plans approved by security holders:

<C> <C>                                         <C>           <C>                 <C>                         <C>
1.  1993 Stock Option and Incentive Plan(1)     1.  8,625                          1. 11.25                    1. 6,900
2.  Recognition and Retention Plan(1)           2. N/A                             2.  N/A(2)                  2. N/A


===================================================================================================================================
Equity compensation plans not approved by
security holders                                               N/A

===================================================================================================================================
Total                                                         8,625                           11.25                     6,900
===================================================================================================================================

</TABLE>

(1)  Information  regarding  these  plans  is set  forth  under  Item 10 to this
     Report.

(2)  Awards under plan consist of restricted stock.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

     Information  concerning  relationships  and  transactions  is  incorporated
herein by reference from Midland  Capital's  definitive  proxy statement for the
Annual Meeting of Stockholders, a copy of which will be filed not later than 120
days after the close of the fiscal year.

                                     PART IV
                                     -------

Item 13.  Exhibits and Reports on Form 8-K
------------------------------------------
         (a) Exhibits:
         ------------

<TABLE>
<CAPTION>
                                                                                              Reference to
                                                                                              Prior Filing
                                                                                               or Exhibit
   Regulation                                                                               Number Attached
  S-K Exhibit                                                                                    Hereto
    Number         Document
    ------         --------

    <S>          <C>                                                                             <C>
     2           Plan of acquisition, reorganization, arrangement, liquid, or succession          None
     3           Articles of Incorporation and Bylaws...................................           ***
     4           Instruments defining the rights of security holders,
                 including indentures:
                  Common Stock Certificate..............................................           ***
     9           Voting trust agreement.................................................          None
    10           Material contracts:
                  Employee Stock Ownership Plan.........................................           ***
                  1993 Stock Option and Incentive Plan..................................            **
                  Employment Agreements.................................................           ***

</TABLE>

                                       54
<PAGE>


<TABLE>
<CAPTION>

   <S>           <C>                                                                           <C>
                 Recognition and Retention Plan........................................            ***
                 401(k) Retirement/Savings Plan........................................            ***
    11           Statement re computation of per share earnings.........................          ****
    13           Annual Report to Security Holders......................................            13
    16           Letter on change in certifying accountant..............................          None
    18           Letter on change in accounting principles..............................          None
    21           Subsidiaries of Registrant.............................................          None
    22           Published report regarding matters submitted to vote of security                 None
                 holders................................................................
    23           Consent of Experts and Counsel.........................................          None
    24           Power of Attorney......................................................      Not required
    99           Section 906 Certification under the Sarbanes-Oxley Act of 2002.........           99
--------------------

</TABLE>

     *Filed on January 15, 1993 as an exhibit to Midland  Federal's initial Form
          AC.

     **Filed on March 19, 1993 as an exhibit to Midland Federal's  Pre-Effective
          Amendment No. One to the Form AC.

     ***Filed on June 22,  1998 as exhibits  to Midland  Capital's  Registration
          Statement  No.  333-57399  on Form S-4. All of such  previously  filed
          documents  are hereby  incorporated  herein by reference in accordance
          with Item 601 of Regulation S-B.

     ****See Note 1 of the Notes to Consolidated  Financial  Statements included
          in the Annual Report under Exhibit 13.



                                       55
<PAGE>

     (b)  Reports on Form 8-K:

     No reports on Form 8-K have been filed during the three-month  period ended
June 30, 2002.

Item 14. Controls and Procedures
--------------------------------

     Page 18 of the 2002  Annual  Report  to  Stockholders  is  incorporated  by
     reference herein.


                                       56
<PAGE>


                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                           MIDLAND CAPITAL HOLDINGS CORPORATION


Date:   September 25, 2002                   By: /s/ Paul M. Zogas
                                                ---------------------
                                                Paul M. Zogas
                                                Chairman, President
                                                and Chief Executive Officer
                                               (Duly Authorized Representative)

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  Registrant and in the capacities and on
the dates indicated.

<TABLE>
<CAPTION>


<S>                                                           <C>
/s/ Paul M. Zogas                                              /s/ Charles A. Zogas
---------------------------------------------------            -------------------------------------------
Paul M. Zogas, Chairman, President and Chief                   Charles A. Zogas, Director, Executive Vice
Executive and Financial Officer                                President and Secretary
(Principal Executive and Financial and Accounting
Officer)

Date:  September 25, 2002                                      Date:  September 25, 2002



/s/ Jonas Vaznelis, Director                                   /s/ Richard Taylor
---------------------------------------------------             ------------------------------------------
Jonas Vaznelis, Director                                       Richard Taylor, Director and Vice President

Date:  September 25, 2002                                      Date:  September 25, 2002



/s/ Michael J. Kukanza                                         /s/ Algerd Brazis
---------------------------------------------------            -------------------------------------------
Michael J. Kukanza, Director                                   Algerd Brazis, Director

Date:  September 25, 2002                                      Date: September 25, 2002

</TABLE>

                                       57

<PAGE>


                      MIDLAND CAPITAL HOLDINGS CORPORATION

               CHIEF EXECUTIVE AND FINANCIAL OFFICER CERTIFICATION

I, Paul Zogas, certify that:

1.   I have  reviewed  this  annual  report on Form  10-KSB of  Midland  Capital
     Holdings Corporation;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c)   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: September 25, 2002                                 /s/ Paul Zogas
                                                         ----------------------
                                                         Paul Zogas
                                                         President and Chief
                                                         Executive Officer and
                                                         Chief Financial Office


                                       58