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

                                    FORM 10-Q

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

         For the quarterly period ended March 31, 2000

[   ]    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:   0-25509

                          First Federal Bankshares,Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               Delaware                                42-1485449
--------------------------------------------------------------------------------
     (State or other jurisdiction of                (I.R.S. Employer
      incorporation or organization)            Identification Number)

                    329 Pierce Street, Sioux City, Iowa 51101
                    (Address of principal executive offices)

         Registrant's telephone number, including area code 712-277-0200

        ----------------------------------------------------------------
         Former name, former address and former fiscal year, if changed
                                since last report

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

              Class                               Outstanding at May 9, 2000
             -------                             ---------------------------
  (Common Stock, $.01 par value)                         4,683,678



<PAGE>

                         FIRST FEDERAL BANKSHARES, INC.


                                      INDEX

                                                                         Page

Part I.  Financial Information
   Item I.  Financial Statements of First Federal
            Bankshares, Inc. and Subsidiaries                             1

            Consolidated Condensed Balance Sheets
            at March 31, 2000 and June 30, 1999                           1

            Consolidated Condensed Statements of Operations
            for the three- and nine-month periods ended
            March 31, 2000 and 1999                                       2

            Consolidated Condensed Statements of Changes in
            Stockholders' Equity for the nine-month periods
            ended March 31, 2000 and 1999                                 3

            Consolidated Condensed Statements of Comprehensive
            Income for the three- and nine-month periods ended
            March 31, 2000 and 1999                                       4

            Consolidated Condensed Statements of Cash Flows
            for the nine-month periods ended
            March 31, 2000 and 1999                                       5

            Notes to Consolidated Financial Statements                    6

   Item 2.  Management's Discussion and Analysis of
            Financial Condition and Results of Operations                 8

Part II. Other Information                                                16


<PAGE>
PART I.  FINANCIAL  INFORMATION
  ITEM 1.  FINANCIAL  STATEMENTS

  FIRST FEDERAL BANKSHARES, INC AND SUBSIDIARIES
  CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                             March 31,            June 30,
                                                                              2000                  1999
                                                                      -----------------------------------------
                                                                             (Unaudited)
<S>                                                                           <C>                  <C>
Assets
------
Cash and interest bearing deposits                                            $18,096,581          $15,067,956
Securities available for sale                                                 118,819,812          122,047,213
   (amortized cost $126,091,221 and $125,558,397)
Securities held to maturity                                                    28,377,077           32,006,095
   (fair value of $27,592,632 and $31,756,870)
Loans receivable, net                                                         496,157,555          457,058,054
Real estate owned and in judgement, net                                           244,887               32,350
Real estate held for development                                                  870,479              599,311
Office property and equipment, net                                             15,483,595           15,411,818
Federal Home Loan Bank stock, at cost                                           8,928,900            8,094,300
Accrued interest receivable                                                     4,770,871            4,602,258
Deferred tax asset                                                              3,020,197            1,197,000
Excess of cost over fair value of assets acquired                              20,142,221           20,946,396
Other assets                                                                    4,904,137            3,608,987
                                                                      -----------------------------------------
Total assets                                                                 $719,816,312         $680,671,738
                                                                      =========================================

Liabilities
Deposits                                                                     $483,469,104         $464,169,478
Advances from Federal Home Loan Bank                                          160,941,478          138,617,385
Advance payments by borrowers for
    taxes and insurance                                                         1,202,732            2,557,118
Accrued taxes on income                                                           791,982              419,106
Accrued interest payable                                                        4,363,084            4,172,328
Accrued expenses and other liabilities                                          2,178,562            2,463,316
                                                                      -----------------------------------------
Total liabilities                                                             652,946,942          612,398,731
                                                                      -----------------------------------------

Stockholders' equity
Common stock, $.01 par value                                                       48,277               48,178
Additional paid-in capital                                                     35,994,165           35,957,560
Treasury stock, at cost  - 144,050 shares                                      (1,273,138)           -
Unearned ESOP shares                                                           (1,675,250)          (1,813,758)
Unearned recognition and retention plan                                          (539,800)           -
Retained earnings, substantially restricted                                    38,873,525           36,283,211
Accumulated other comprehensive income (loss)                                  (4,558,409)          (2,202,184)
                                                                      -----------------------------------------
Total stockholders' equity                                                     66,869,370           68,273,007
                                                                      -----------------------------------------
Total liabilities and stockholders' equity                                   $719,816,312         $680,671,738
                                                                      =========================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.

                                       -1-

<PAGE>
FIRST FEDERAL BANKSHARES, INC.  AND SUBSIDIARIES
CONSOLIDATED  CONDENSED  STATEMENTS  OF  OPERATIONS
<TABLE>
<CAPTION>
                                                                      For the three months            For the nine months
                                                                         ended March 31,                ended March 31,
                                                                      2000            1999           2000             1999
                                                                 --------------------------------------------------------------
                                                                                           (Unaudited)
<S>                                                               <C>            <C>             <C>             <C>
Interest income:
      Loans receivable                                            $  9,441,789   $  7,819,221    $ 27,318,136    $ 24,044,530
      Mortgage-backed securities                                       525,111        505,977       1,742,741       1,687,373
      Investment securities                                          2,172,213      1,173,437       6,301,350       3,839,780
      Other interest-earning assets                                     41,617         96,057         123,568         152,805
                                                                 --------------------------------------------------------------
           Total interest income                                    12,180,730      9,594,692      35,485,795      29,724,488
                                                                 --------------------------------------------------------------
Interest expense:
      Deposits                                                       5,125,659      4,071,435      15,079,871      13,037,947
      Borrowings                                                     2,528,222      1,601,726       6,810,712       5,030,350
                                                                 --------------------------------------------------------------
           Total interest expense                                    7,653,881      5,673,161      21,890,583      18,068,297
                                                                 --------------------------------------------------------------
      Net interest income                                            4,526,849      3,921,531      13,595,212      11,656,191
      Provision for loan losses                                        159,000        105,000         399,000         255,000
                                                                 --------------------------------------------------------------
      Net interest income after provision                            4,367,849      3,816,531      13,196,212      11,401,191
                                                                 --------------------------------------------------------------
Noninterest income:
      Service charges and other fees                                   668,350        555,823       2,129,439       1,515,135
      Gain on sale of branch deposits                                       --             --              --       1,087,884
      Gain on sale of loans held for sale                               12,497         59,258         138,207         233,669
      Gain (loss) on sale of fixed assets                               90,242        (10,122)        106,537          (1,529)
      Gain on sale of real estate owned and held for investment         43,157         41,247         404,331          41,247
      Loss on sale of securities available for sale                         --             --         (50,535)             --
      Real estate-related activities                                   329,464        193,242       1,061,047         548,908
      Other income, net                                                356,685        176,902       1,073,982         615,805
                                                                 --------------------------------------------------------------
           Total noninterest income                                  1,500,395      1,016,350       4,863,008       4,041,119
                                                                 --------------------------------------------------------------
Noninterest expense:
      Compensation and employee benefits                             2,245,467      1,872,776       6,734,877       5,532,888
      Office property and equipment                                    565,052        463,009       1,718,712       1,341,543
      Deposit insurance premiums                                        25,044         60,367         165,149         178,512
      Data processing expense                                          110,814        100,285         333,164         296,357
      Advertising                                                      103,987        143,483         363,825         430,587
      Amortization of intangibles                                      243,156         85,989         737,741         257,967
      Other general and administrative                                 766,650        554,743       2,415,751       1,963,664
                                                                 --------------------------------------------------------------
           Total noninterest expense                                 4,060,170      3,280,652      12,469,219      10,001,518
                                                                 --------------------------------------------------------------

      Earnings before taxes on income                                1,808,074      1,552,229       5,590,001       5,440,792
      Taxes on income                                                  644,000        563,079       1,962,000       1,982,079
                                                                 --------------------------------------------------------------
      Net earnings                                                $  1,164,074   $    989,150    $  3,628,001    $  3,458,713
                                                                 ==============================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                               <C>            <C>             <C>             <C>
Per share data: (1)
      Basic earnings                                              $       0.26   $       0.21    $       0.79    $       0.74
                                                                 ==============================================================
      Diluted earnings                                            $       0.26   $       0.21    $       0.79    $       0.73
                                                                 ==============================================================
      Dividends declared                                          $      0.075   $      0.146    $      0.225    $      0.291
                                                                 ==============================================================
</TABLE>

      --------------------------------------------------------------
      (1)  Adjusted for April 1999 second step offering and exchange.

See accompanying notes to consolidated condensed financial statements.

                                       -2-

<PAGE>
FIRST FEDERAL BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                         Nine months ended March 31,
                                                                                        2000                   1999
                                                                                       ------------------------------
                                                                                                  (Unaudited)
<S>                                                                                    <C>                <C>
Capital Stock
   Beginning of year balance                                                              $48,178            $46,773
   Stock options exercised                                                                     99                167
--------------------------------------------------------------------------------------------------------------------
End of period balance                                                                      48,277             46,940
--------------------------------------------------------------------------------------------------------------------
Additional paid-in capital
   Beginning of year balance                                                           35,957,560         11,059,966
   Stock options exercised                                                                 30,429             54,691
   Stock depreciation of allocated ESOP shares                                            (12,074)               -
   Grant of RRP shares at market                                                           18,250                -
--------------------------------------------------------------------------------------------------------------------
End of period balance                                                                  35,994,165         11,114,657
--------------------------------------------------------------------------------------------------------------------
Treasury stock, at cost
   Beginning of year balance                                                                 -                   -
   Treasury stock purchased                                                            (1,930,138)               -
   RRP shares granted                                                                     657,000                -
--------------------------------------------------------------------------------------------------------------------
End of period balance                                                                  (1,273,138)               -
--------------------------------------------------------------------------------------------------------------------
Unearned ESOP shares
   Beginning of year balance                                                           (1,813,758)               -
   ESOP shares allocated                                                                  138,508                -
--------------------------------------------------------------------------------------------------------------------
End of period balance                                                                  (1,675,250)               -
--------------------------------------------------------------------------------------------------------------------
Unearned recognition and retention plan shares
   Beginning of year balance                                                                 -                   -
   RRP shares granted                                                                    (675,250)               -
   Amortization of RRP expense                                                            135,450                -
--------------------------------------------------------------------------------------------------------------------
End of period balance                                                                    (539,800)               -
--------------------------------------------------------------------------------------------------------------------
Retained earnings, substantially restricted
   Beginning of year balance                                                           36,283,211         30,678,991
   Net earnings                                                                         3,628,001          3,458,713
   Dividends paid on common stock                                                      (1,037,687)          (817,510)
--------------------------------------------------------------------------------------------------------------------
End of period balance                                                                  38,873,525         33,320,194
--------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income
   Beginning of year balance                                                           (2,202,184)           234,353
   Net change in unrealized losses on securities available for sale                    (2,356,225)          (389,579)
--------------------------------------------------------------------------------------------------------------------
End of period balance                                                                  (4,558,409)          (155,226)
--------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                            $66,869,370        $44,326,565
--------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.

                                       -3-


<PAGE>
FIRST FEDERAL BANKSHARES, INC.  AND SUBSIDIARIES
CONSOLIDATED  CONDENSED STATEMENTS  OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
                                                                         Three Months Ended                 Nine months ended
                                                                              March 31,                         March 31,
                                                                       ---------------------------   ----------------------------
                                                                       2000             1999             2000              1999
                                                                       ----             ----             ----              ----
                                                                                               (Unaudited)
<S>                                                                    <C>                <C>            <C>             <C>
Net earnings                                                           $1,164,074         $989,150       $3,628,001      $3,458,713
Other comprehensive income:
        Unrealized holding losses arising during
              the period, net of tax                                     (233,399)        (240,236)      (2,330,171)       (389,579)
        Less: reclassification adjustment for net realized
              gains included in net income (net of tax expense)           (26,054)          -               (26,054)        -
                                                                         --------         --------       ----------        --------
Other comprehensive income (loss), net of tax                            (259,453)        (240,236)      (2,356,225)       (389,579)
                                                                         --------         --------       ----------        --------
                                                                         --------         --------       ----------        --------
Comprehensive income                                                     $904,621         $748,914       $1,271,776      $3,069,134
                                                                         ========         ========       ==========      ==========
</TABLE>


See accompanying notes to consolidated condensed financial statements.

                                       -4-


<PAGE>
  FIRST FEDERAL BANKSHARES, INC. AND SUBSIDIARIES
  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                        Nine months ended March 31,
                                                                                        2000                1999
                                                                                    ----------------------------------
                                                                                                 (Unaudited)
<S>                                                                                    <C>                 <C>
Cash flows from operating activities:
Net earnings                                                                           $3,628,001          $3,458,713
Adjustments to reconcile net earnings to net cash
     provided by operating activities:
   Loans originated for sale to investors                                             (17,190,882)        (27,189,689)
   Proceeds from sale of loans originated for sale                                     17,463,178          27,386,792
   Provision for losses on loans and other assets                                         399,000             255,000
   Depreciation and amortization                                                        1,955,935             926,431
   Provision for deferred taxes                                                          (467,197)            190,000
   Net gain on sale of loans                                                             (138,207)           (233,669)
   Net realized loss on sale of securities available for sale                              50,535                -
   Net gain on sale of branch deposits                                                       -             (1,087,884)
   Net gain on sales of real estate owned and held for development                       (404,331)            (41,247)
   Net loan fees deferred                                                                  98,805              36,236
   Amortization of premiums and discounts on loans,
     mortgage-backed securities, and investment securities, net                           608,945             (16,555)
   Increase in other assets                                                            (1,509,117)           (227,958)
   Increase in accrued expenses and other liabilities                                     316,378             498,338
                                                                                      --------------------------------
Net cash provided by operating activities                                               4,811,043           3,954,508
                                                                                      --------------------------------
Cash flows from investing activities:
   Purchase of securities held to maturity                                               (519,205)        (10,527,262)
   Proceeds from maturities of securities held to maturity                              4,134,358          16,415,656
   Purchase of securities available for sale                                           (8,875,000)        (62,031,575)
   Proceeds from sale of securities available for sale                                  3,131,067                -
   Purchase of Federal Home Loan Bank Stock                                              (834,600)           (623,700)
   Proceeds from maturities of securities available for sale                            5,222,473          45,800,271
   Loans purchased                                                                    (15,654,000)         (3,672,000)
   (Increase) decrease in loans receivable                                            (26,571,111)         16,606,228
   Proceeds from sale of real estate owned and held for development                     2,592,036             657,198
   Net expenditures on real estate owned and held for development                        (824,173)               -
   Proceeds from sale of office property and equipment                                    152,264                -
   Purchase of office property and equipment                                           (1,020,473)         (2,052,439)
                                                                                      --------------------------------
Net cash (used in) provided by investing activities                                   (39,066,364)            572,377
                                                                                      --------------------------------
Cash flows from financing activities:
   Increase in deposits                                                                19,299,626          27,436,896
   Branch deposits transferred due to sale, net                                              -            (18,281,111)
   Proceeds from advances from FHLB                                                    57,500,000          29,000,000
   Repayment of advances from FHLB                                                    (35,223,997)        (30,103,479)
   Issuance of common stock                                                                30,528              54,858
   Purchase of treasury stock                                                          (1,930,138)               -
   Cash dividends paid                                                                 (1,037,687)           (475,497)
   Net decrease in advances from borrowers for taxes and insurance                     (1,354,386)         (1,210,069)
                                                                                      --------------------------------
Net cash provided by financing activities                                              37,283,946           6,421,598
                                                                                      --------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                    <C>                 <C>
Net increase in cash and cash equivalents                                               3,028,625          10,948,483
Cash and cash equivalents at beginning of period                                       15,067,956          17,225,007
                                                                                      --------------------------------
Cash and cash equivalents at end of period                                            $18,096,581         $28,173,490
                                                                                      ================================
</TABLE>


See accompanying notes to consolidated condensed financial statements.

                                       -5-


<PAGE>
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                 FIRST FEDERAL BANKSHARES, INC. AND SUBSIDIARIES

1. BASIS OF PRESENTATION

The  consolidated  condensed  balance  sheet  information  for June 30, 1999 was
derived from the Company's  audited  Consolidated  Balance Sheets for the fiscal
year ended June 30, 1999. The consolidated condensed financial statements at and
for the  three  months  and  nine  months  ended  March  31,  2000  and 1999 are
unaudited.  The financial statements at and for the three months and nine months
ended March 31, 1999 are those of First Federal  Savings Bank of Siouxland  (the
"Bank" or "First Federal") rather than those of First Federal  Bankshares,  Inc.
(the  "Registrant"  or the  "Company").  The  Registrant was formed as a holding
company to own all of the capital stock of the Bank following its  "second-step"
offering in April 1999, in which each share of First Federal's  common stock was
exchanged for 1.64696 shares of Company common stock.

In the opinion of management of the Company these financial  statements  reflect
all  adjustments,  consisting  only of normal  recurring  accruals  necessary to
present fairly these consolidated condensed financial statements. The results of
operations  for the interim  periods are not  necessarily  indicative of results
that may be  expected  for an entire  year.  Certain  information  and  footnote
disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted.

This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.   The  Company  intends  such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for the purposes of these safe harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally  identifiable  by use  of the  words  "believe,"  "expect,"  "intend,"
"anticipate,"  "estimate,"  "project"  or  similar  expressions.  The  Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain.  Factors which could have a material adverse effect on the
Company's future activities and operating  results include,  but are not limited
to, changes in: interest rates,  general  economic  conditions,  legislative and
regulatory changes,  U.S. monetary and fiscal policies,  demand for products and
services,  deposit flows,  competition and accounting  policies,  principles and
guidelines.  These risks and  uncertainties  should be  considered in evaluating
forward-looking  statements  and  undue  reliance  should  not be placed on such
statements.

2. REORGANIZATION, CONVERSION AND ACQUISITION

Prior to April  13,  1999,  the Bank was  owned  approximately  53.49%  by First
Federal  Bankshares,  M.H.C. (the "Mutual Holding Company") and 46.51% by public
shareholders.  On  April  13,  1999,  pursuant  to  a  plan  of  conversion  and
reorganization,  and after a series of transactions:  (1) the Company was formed
to own all of the capital stock of the Bank,  (2) the Company sold the ownership
interest in the Bank previously held by the Mutual Holding Company to the public
in a subscription and community  offering (the "Offering"),  (3) previous public
shareholders of the Bank had their shares exchanged (the "Exchange") into common
shares  of the  Company  (exchange  ratio of  1.64696  to 1) and (4) the  Mutual
Holding Company ceased to exist.

                                       -6-
<PAGE>

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)

As a result of the  reorganization,  the consolidated  financial  statements for
prior  periods  have been  restated  to reflect  the changes in the par value of
common stock from $1.00 to $.01 per share and in the number of authorized shares
of common stock from 20,000,000 to 12,000,000.

The primary  purpose of the  Offering  was to fund the  acquisition  of Mid-Iowa
Financial Corp. ("MIFC") and its wholly-owned subsidiary, Mid-Iowa Savings Bank,
FSB located in Newton,  Iowa.  The  shareholders  of MIFC received $28.3 million
cash for all  outstanding  shares on April 13, 1999,  the  effective  date.  The
acquisition  was accounted  for as a purchase;  accordingly,  MIFC's  results of
operations are included in the financial  statements from the  acquisition  date
forward.  The  excess  of  purchase  price  over  the  fair  value  of  the  net
identifiable  assets of $12.6  million was  recorded  as  goodwill  and is being
amortized on a straight-line basis over 25 years.

3. EARNINGS PER SHARE

The following information was used in the computation of net earnings per common
share on both a basic and diluted basis for the periods presented.  Prior period
information was restated for the Offering and Exchange.
<TABLE>
<CAPTION>
                                        Three months ended             Nine months ended
                                              March 31,                     March 31,
                                       2000             1999           2000            1999
                                  -----------------------------   ----------------------------
<S>                                 <C>             <C>            <C>             <C>
Basic earnings per share:
------------------------
   Net earnings                     $ 1,164,074     $   989,150    $ 3,628,001     $ 3,458,713
   Weighted average shares
         outstanding                  4,655,030       4,690,372      4,763,638       4,685,797
   Less: unearned ESOP shares          (171,533)             --       (175,808)             --
                                    -----------     -----------    -----------     -----------
      Weighted average common
        shares - basic                4,483,497       4,690,372      4,587,830       4,685,797

 Basic earnings per share           $       .26     $       .21    $       .79     $       .74
                                    ===========     ===========    ===========     ===========

Diluted earnings per share:
---------------------------
   Weighted average common
     shares outstanding - basic       4,483,497       4,690,372      4,587,830       4,685,797
   Assumed incremental common
       shares issued upon:
       vesting of RRP shares             12,985              --          4,816              --
       exercise of stock options          8,254          47,108         14,494          44,473
                                    -----------     -----------    -----------     -----------
   Weighted average diluted
     shares outstanding               4,504,736       4,737,480      4,607,140       4,730,270

 Diluted earnings per share         $       .26     $       .21    $       .79     $       .73
                                    ===========     ===========    ===========     ===========
</TABLE>
<PAGE>

4. DIVIDENDS

On January 20, 2000 the Company  declared a cash  dividend on its common  stock,
equal to $.075 per share. On February 29, 2000, dividends totaling $353,979 were
paid to  stockholders  of record as of February 15, 2000.

                                      -7-

<PAGE>

 On April 20, 2000 the
Company declared a cash dividend on its common stock, payable on May 31, 2000 to
stockholders of record as of May 17, 2000, equal to $.075 per share.


5. EMPLOYEE BENEFIT PLANS

On October 21, 1999, the First Federal  Bankshares,  Inc. 1999  Recognition  and
Retention Plan ("RRP") and the First Federal Bankshares,  Inc. 1999 Stock Option
Plan ("SOP") were approved by the stockholders of the Company at its 1999 annual
meeting. In December 1999, the Company acquired 79,050 shares of common stock to
be reserved  for RRP awards to certain  officers and  directors.  On October 21,
1999,  73,000  shares were awarded under the RRP.  Shares  awarded under the RRP
vest in five equal annual installments beginning on the first anniversary of the
award.  RRP  expense for the three  months and nine months  ended March 31, 2000
totaled $81,000 and $135,000, respectively.

The SOP permits the board of directors to grant options to certain  officers and
directors to purchase up to 263,500  shares of the Company's  common stock.  The
price at which  options may be  exercised  cannot be less than the fair value of
the shares at the date the options are awarded. On October 21, 1999, the Company
awarded 240,000  options under the SOP to certain  officers and directors of the
Company.  The exercise  price of these  options is $9.25 per share.  The options
become  exercisable  at a rate of 20% each year for five years after the date of
the award and have a fixed maximum term of ten years.

6. SHARE REPURCHASE PLAN

On December 10, 1999 the Company announced a stock repurchase program to acquire
up to 241,239 shares,  or 5%, of the Company's common stock.  During the quarter
ended March 31, 2000 the Company purchased 100,000 shares of its common stock at
an average cost of $8.75 per share. Since the program was announced, the Company
has repurchased a total of 138,000 shares at a cost of $1.2 million.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

FINANCIAL CONDITION

Total assets increased by $39.1 million, or 5.8%, to $719.8 million at March 31,
2000 from $680.7  million at June 30,  1999.  The  increase in total  assets was
primarily due to an increase in loans receivable.  Loans receivable increased by
$39.1 million,  or 8.6%, to $496.2 million at March 31, 2000 from $457.1 million
at June 30, 1999. Cash and interest-bearing  deposits increased by $3.0 million,
or 20.1%,  to $18.1  million at March 31,  2000 from  $15.1  million at June 30,
1999.  The  increase in cash was largely  due to the  addition of seven  banking
offices in central Iowa due to the MIFC acquisition. The balance of deferred tax
assets increased by $1.8 million,  or 152.3%,  to $3.0 million at March 31, 2000
from $1.2  million at June 30,  1999,  primarily  due to an  increase in the tax
benefit related to unrealized holding losses in the Company's available-for-sale
securities  portfolio in the generally higher rate  environment  brought on by a
series of Federal  Reserve  Board (FRB) rate hikes.  In addition,  the Company's
investment in Federal Home Loan Bank (FHLB) stock  increased by $835,000  during
the current  fiscal year  period.  The Company is required to maintain a certain
level of FHLB stock as collateral for FHLB advances.  Offsetting the increase in
cash and other  asset  balances  were  decreases  in the  balance of  investment
securities,   as  management   sought  to  increase  the  average   balances  of
higher-yielding  loans in response to demand in its market area.  The balance of

                                      -8-
<PAGE>

securities  available  for sale  decreased by $3.2  million,  or 2.6%, to $118.8
million at March 31, 2000 from $122.0 million at June 30, 1999. In addition, the
balance of securities held to maturity  decreased by $3.6 million,  or 11.3%, to
$28.4 million at March 31, 2000 from $32.0 million at June 30, 1999.

Deposits  increased by $19.3  million,  or 4.2%, to $483.5  million at March 31,
2000 from $464.2  million at June 30, 1999.  The increase in deposits was partly
due to  approximately  $10.0  million in  semi-annual  real estate tax  receipts
deposited at the end of the quarter by a local taxing  authority.  Advances from
the Federal  Home Loan Bank  increased  by $22.3  million,  or 16.1%,  to $160.9
million at March 31, 2000 from $138.6  million at June 30, 1999. The increase in
deposits and FHLB advances funded the increase in loans receivable.

Total  stockholders'  equity decreased by $1.4 million to $66.9 million at March
31, 2000 from $68.3 million at June 30, 1999.  Earnings totaled $3.6 million for
the first nine months of the fiscal year.  Largely  offsetting  the earnings for
the period was a decrease of $2.4 million in other  comprehensive  income.  This
decrease was primarily due to an increase in unrealized  losses in the Company's
available-for-sale  securities  portfolio  due  to  lower  valuations  for  such
securities in the generally higher interest rate  environment.  In December 1999
the  Company  commenced  a share  repurchase  program to  acquire  approximately
241,000 shares,  or 5%, of its outstanding  common stock.  Since the program was
announced,  the Company has repurchased 138,000 shares of its common stock at an
average  cost of $8.83 per share.  In  addition,  the Company  purchased  79,050
common  shares at $9.00 per share for the First  Federal  Bankshares,  Inc. 1999
Recognition and Retention Plan. Awards under the RRP totaled 73,000 shares.  The
remaining 6,050 RRP shares are held as treasury stock pending award.

LIQUIDITY

OTS regulations  require that thrift  institutions  such as the Bank maintain an
average daily balance of liquid assets (cash,  certain time  deposits,  banker's
acceptances  and specified  United States  government,  state or federal  agency
obligations)  in each calendar  quarter of not less than 4% of the average daily
balance  of its  liquidity  base (net  withdrawable  deposits  plus  short  term
borrowings) during the preceding  quarter.  For the quarter ended March 31, 2000
the Company's  average  liquidity  position was $147.5 million,  or 28.8% of its
liquidity base for the preceding quarter.

CAPITAL
The Company's total equity decreased by $1.4 million to $66.9 million at
March 31, 2000 from $68.3  million at June 30, 1999.  The OTS requires  that the
Company  meet  minimum   tangible,   leverage  (core)  and  risk-based   capital
requirements.  As of March  31,  2000 the  Company  was in  compliance  with all
regulatory  capital  requirements.  The  Company's  required,  actual and excess
capital levels as of March 31, 2000 were as follows:
                                                              Excess of
                                                              Actual Over
                       Required  % of       Actual    % of    Regulatory
                         Amount  Assets     Amount   Assets   Requirement
                         ------  ------     ------   ------   -----------
                                 (Dollars in thousands)
 Tangible Capital      $10,485   1.5%     $46,070     6.59%     $35,585
 Core Capital           27,960   4.0%      46,070     6.59%      18,110
 Risk-based Capital     31,795   8.0%      49,436    12.44%      17,641

                                      -9-
<PAGE>

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2000 and 1999

General.  Net earnings increased by $175,000,  or 17.7%, to $1.2 million for the
three  months  ended March 31, 2000 from $1.0 million for the three months ended
March 31, 1999. Diluted earnings per share totaled $.26 and $.21,  respectively,
for the three months ended March 31, 2000 and 1999. The  acquisition of Mid-Iowa
Financial  Corp.  (MIFC),  effective April 13, 1999, was accounted for using the
purchase  method of  accounting;  therefore,  the results of operations  for the
three months ended March 31, 1999 do not include MIFC results.

Interest Income.  Interest income increased by $2.6 million,  or 27.0%, to $12.2
million for the three  months  ended  March 31,  2000 from $9.6  million for the
three  months  ended March 31,  1999,  largely due to an increase in the average
balance of  interest-earning  assets.  The average  balance of  interest-earning
assets  increased by $142.2  million,  or 27.8%, to $653.7 million for the three
months ended March 31, 2000 from $511.5 million for the three months ended March
31,  1999.  The  increase  in average  balances of  interest-earning  assets was
largely due to the  acquisition of MIFC.  The average yield on  interest-earning
assets  decreased  to 7.45% for the three months ended March 31, 2000 from 7.50%
for the three  months  ended March 31,  1999,  primarily  due to lower yields on
loans  receivable  and  mortgage-backed  securities and to changes in the mix of
interest-earning assets. Investment securities, with generally lower yields than
yields on loans  receivable,  made up 19.9% of  interest-earning  assets for the
three  months  ended March 31,  2000 as  compared  to 14.3% of  interest-earning
assets  for the three  months  ended  March 31,  1999.  The change in the mix of
interest-earning  assets was primarily due to the  acquisition  of MIFC.  MIFC's
investment portfolio totaled $46.1 million, or 29.7%, of MIFC's interest-earning
assets on the effective date of the acquisition.

Interest  income on loans for the three months ended March 31, 2000 increased by
$1.6  million,  or 20.8%,  to $9.4  million for the three months ended March 31,
2000 from $7.8 million for the three  months ended March 31, 1999.  The increase
in interest  income on loans was primarily due to an increase of $89.0  million,
or 22.3%, in the average balance of loans receivable,  to $488.5 million for the
three months ended March 31, 2000 from $399.5 million for the three months ended
March 31, 1999. The increase in the average balance of loans  receivable was due
to originations of commercial real estate and commercial  operating loans during
the current  year  quarter and to growth  related to the MIFC  acquisition.  The
average  yield on loans  decreased to 7.73% for the three months ended March 31,
2000 from 7.83% for the three months  ended March 31,  1999.  The yield on loans
receivable  during the quarter ended March 31, 2000 was impacted by amortization
of the  purchase  premium  paid for MIFC  loans  that  totaled  $81,000  for the
quarter.

Interest income on  mortgage-backed  securities for the three months ended March
31, 2000 increased by $19,000,  or 3.8%, when compared to the three months ended
March 31, 1999. The increase was due to an increase of $1.6 million, or 5.3%, in
the average balance of mortgage-backed securities to $32.3 million for the three
months ended March 31, 2000 from $30.7  million for the three months ended March
31, 1999. The average yield on mortgage-backed securities decreased to 6.51% for
the three  months  ended  March 31, 2000 from 6.60% for the three  months  ended
March 31, 1999.

                                      -10-
<PAGE>

Interest income on investment securities increased by $999,000, or 85.1%, as the
average balance of investment  securities  increased by $56.9 million, or 77.9%,
to $129.9 million at March 31, 2000 from $73.0 million at March 31, 1999.
The increase in the average balance of investment  securities was largely due to
the acquisition of MIFC's investment portfolio.  The average yield on investment
securities  increased  by 27 basis  points to 6.69% for the three  months  ended
March 31, 2000 from 6.42% for the three months ended March 31, 1999.

Interest Expense.  Interest expense increased by $2.0 million, or 34.9%, to $7.7
million for the three  months  ended  March 31,  2000 from $5.7  million for the
three  months ended March 31,  1999.  The average rate paid on  interest-bearing
liabilities  increased  by 24 basis  points to 4.96% for the three  months ended
March 31, 2000 from 4.72% for the three months ended March 31, 1999.

Interest on deposits  increased by $1.1 million,  or 25.9%,  to $5.1 million for
the three  months  ended March 31, 2000 from $4.0  million for the three  months
ended March 31, 1999.  The increase in interest on deposits was primarily due to
an  increase  in the  average  balance  of  deposits  as a  result  of the  MIFC
acquisition.  The average  balance of deposits  increased by $75.7  million,  or
20.4%,  to $446.9  million at March 31,  2000 from  $371.2  million at March 31,
1999.  The increase in interest  paid on deposits was also due to an increase of
20 basis  points in the average  cost of deposits to 4.59% for the three  months
ended March 31, 2000 from 4.39% for the three months ended March 31, 1999. Rates
paid on deposit  accounts  were  increased  during the  current  year  period in
response to generally  higher market rates resulting from the series of FRB rate
increases starting in June 1999.

Interest on borrowings increased by $926,000,  or 57.8%, to $2.5 million for the
three  months  ended March 31, 2000 from $1.6 million for the three months ended
March 31, 1999.  The increase in interest on borrowings  was primarily due to an
increase in the average balance of advances.  Average advance balances increased
by $60.7  million,  or 55.3%,  to $170.5  million at March 31,  2000 from $109.8
million at March 31, 1999.  The increase in interest  expense was also due to an
increase of 9 basis  points in the average cost of  borrowings  to 5.93% for the
three  months  ended March 31, 2000 from 5.84% for the three  months ended March
31, 1999.

Net Interest  Income.  Net interest income  increased by $605,000,  or 15.4%, to
$4.5 million for the three months ended March 31, 2000 from $3.9 million for the
three  months  ended March 31,  1999.  This  increase  was  primarily  due to an
increase totaling $5.7 million in the average balance of interest-earning assets
net of  interest-bearing  liabilities  to $36.2  million at March 31,  2000 from
$30.5  million at March 31, 1999.  Partially  offsetting  the  increases  due to
average  balances was a decrease in the  Company's  interest  rate  spread.  The
Company's  interest  rate  spread  for the three  months  ended  March 31,  2000
decreased  by 29 basis  points,  or 10.4%,  to 2.50% for the three  months ended
March 31, 2000 from 2.79% for the quarter ended March 31, 1999.  The decrease in
the  interest  rate spread  resulted  from an increase of 24 basis points in the
cost of  interest-bearing  liabilities  and a decrease of 5 basis  points in the
Company's yield on interest-earning assets.

Provision for Loan Loss.  Provision for loan loss expense  totaled  $159,000 and
$105,000,  respectively,  for the three  months  ended  March 31, 2000 and 1999.
Provision  for loan loss expense was  increased  due to  increased  loan volume,
largely resulting from the MIFC  acquisition.  The allowance for losses on loans
is based on management's  periodic evaluation of the loan portfolio and reflects
an amount that,  in  management's  opinion,  is adequate to absorb losses in the
existing  portfolio.   In  evaluating  the  portfolio,   management  takes  into
consideration  numerous factors,  including current economic  conditions,  prior
loan loss  experience,  the composition of the loan portfolio,  and management's
estimate of anticipated credit losses.

                                      -11-
<PAGE>

Noninterest Income.  Noninterest income increased by $484,000, or 47.6%, to $1.5
million for the three  months  ended  March 31,  2000 from $1.0  million for the
three months ended March 31, 1999.  Service  charges and other fees increased by
$113,000,  or 20.3%,  to $668,000 for the three months ended March 31, 2000 from
$556,000  for the three  months  ended March 31,  1999.  The increase in service
charges and other fees was largely due to growth related to the MIFC acquisition
and to  increases in the number of  commercial  deposit  account  relationships.
Additionally,   fee  schedule  changes,   which  included  several  service  fee
increases,  went into effect in June 1999. Income from other real estate-related
activities  increased  by $136,000,  or 70.5%,  to $329,000 for the three months
ended March 31, 2000 from  $193,000  for the three  months ended March 31, 1999.
The increase in real estate-related  income was primarily due to income from the
real estate  brokerage  company  acquired  in the merger with MIFC.  Noninterest
income also  increased due to recognition of a $43,000 gain on sale of developed
lots and a $90,000  gain on the sale of  properties  previously  held for office
expansion  during the three months ended March 31, 2000.  Other income increased
by  $180,000,  or 101.6%,  to $357,000 for the three months ended March 31, 2000
from  $177,000 for the three months ended March 31, 1999 largely due to earnings
in the Company's non-bank subsidiaries.  During the three months ended March 31,
2000, gain on sale of loans held for sale decreased by $47,000,  or 78.9%,  when
compared to the same  quarter of 1999 due to a  continuing  slowdown in mortgage
activity related to rising mortgage interest rates.

Noninterest  expense.  Noninterest  expense increased by $780,000,  or 23.8%, to
$4.1 million for the three months ended March 31, 2000 from $3.3 million for the
three months ended March 31, 1999.  Compensation and benefits expense  increased
by $373,000, or 19.9%, to $2.2 million for the three months ended March 31, 2000
from $1.9 million for the three months ended March 31, 1999.  Staff increased by
23 full-time-equivalent  employees, or 11.9%, to 216 employees at March 31, 2000
from 193 employees at March 31, 1999. In addition,  compensation expense related
to the 1999 RRP approved in October 1999,  totaled  $81,000 for the three months
ended March 31, 2000.

Office property and equipment expense increased by $102,000,  or 22.0%, over the
prior  year,  partially  due to  the  completion  of a new  office  building  in
Grinnell, Iowa and to the addition of the seven MIFC offices.  Deposit insurance
premium  expense and advertising  expense  decreased by $35,000,  or 58.5%,  and
$39,000,  or 27.5%,  respectively,  for the three months ended March 31, 2000 as
compared to the three months ended March 31, 1999. The deposit insurance premium
annual rate  decreased to 2.1% per hundred for the quarter  ended March 31, 2000
from an annual rate of 6.1% per hundred  for the quarter  ended March 31,  1999.
Due to this rate decrease the Company's deposit insurance premium cost decreased
in  spite of the  increase  in  deposits  resulting  from the MIFC  acquisition.
Amortization  of  intangibles  increased  by $157,000 to $243,000  for the three
months  ended March 31, 2000 from  $86,000 for the three  months ended March 31,
1999 due to amortization of the goodwill  related to the MIFC  acquisition  that
closed in April 1999.  Other general and  administrative  expenses  increased by
$212,000, or 38.2%, for the three months ended March 31, 2000 as compared to the
three months ended March 31, 1999,  largely due to  noninterest  expenses of the
real estate brokerage company acquired from MIFC.

Net earnings and income tax expense.  Net earnings before income taxes increased
by  $256,000,  or 16.5%,  to $1.8  million for the three  months ended March 31,
2000,  from $1.6 million for the three  months ended March 31, 1999.  Income tax
expense  increased by $81,000,  or 14.4%, to $644,000 for the three months ended
March 31, 2000 from $563,000 for the three months ended March 31, 1999.

                                      -12-
<PAGE>

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED
MARCH 31, 2000 and 1999

General.  Net earnings totaled $3.6 million,  or $.79 per diluted share, for the
nine months  ended March 31, 2000 as  compared  to net  earnings  totaling  $3.5
million,  or $.73 per diluted  share,  for the nine months ended March 31, 1999.
The  acquisition  of MIFC  was  accounted  for  using  the  purchase  method  of
accounting; therefore, the results of operations for the nine months ended March
31, 1999 do not include MIFC results.

Interest Income.  Interest income increased by $5.8 million,  or 19.4%, to $35.5
million for the nine months ended March 31, 2000 from $29.7 million for the nine
months ended March 31, 1999,  largely due to an increase in the average  balance
of  interest-earning  assets.  The average  balance of  interest-earning  assets
increased by $119.5  million,  or 23.0%,  to $639.8  million for the nine months
ended  March 31, 2000 from  $520.3  million for the nine months  ended March 31,
1999. The increase in average balances of interest-earning  assets was primarily
due to the  acquisition  of MIFC. The average yield on  interest-earning  assets
decreased  to 7.40% for the nine months  ended March 31, 2000 from 7.62% for the
nine  months  ended  March  31,  1999,  primarily  due to lower  yields on loans
receivable  and  mortgage-backed  securities  and  to  changes  in  the  mix  of
interest-earning assets. Investment securities, with generally lower yields than
yields on loans  receivable,  made up 19.9% of  interest-earning  assets for the
nine months ended March 31, 2000 as compared to 15.0% of interest-earning assets
for  the  nine  months  ended  March  31,  1999.   The  change  in  the  mix  of
interest-earning assets was primarily due to the acquisition of MIFC.

Interest  income on loans for the nine months ended March 31, 2000  increased by
$3.3  million,  or 13.6%,  to $27.3  million for the nine months ended March 31,
2000 from $24.0  million for the nine months ended March 31, 1999.  The increase
in interest  income on loans was primarily due to an increase of $69.2  million,
or 17.1%, in the average balance of loans receivable,  to $473.4 million for the
nine months  ended March 31, 2000 from $404.2  million for the nine months ended
March 31,  1999.  The  average  yield on loans  decreased  to 7.69% for the nine
months ended March 31, 2000 from 7.93% for the nine months ended March 31, 1999.

Interest  income on  mortgage-backed  securities for the nine months ended March
31, 2000 increased by $55,000,  or 3.3%,  when compared to the nine months ended
March 31, 1999. The increase was due to an increase of $2.5 million, or 7.3%, in
the average balance of mortgage-backed  securities to $36.1 million for the nine
months  ended March 31, 2000 from $33.6  million for the nine months ended March
31, 1999. The average yield on mortgage-backed securities decreased to 6.44% for
the nine months  ended March 31, 2000 from 6.69% for the nine months ended March
31, 1999.

Interest income on investment securities increased by $2.5 million, or 64.1%, as
the average  balance of investment  securities  increased by $48.8  million,  or
62.4%, to $127.1 million at March 31, 2000 from $78.3 million at March 31, 1999.
The average yield on investment  securities increased by 7 basis points to 6.61%
for the nine months  ended  March 31, 2000 from 6.54% for the nine months  ended
March 31, 1999.

Interest Expense. Interest expense increased by $3.8 million, or 21.2%, to $21.9
million for the nine months ended March 31, 2000 from $18.1 million for the nine
months  ended  March  31,  1999.  The  average  rate  paid  on  interest-bearing
liabilities decreased by 7 basis points to 4.85% for the nine months ended March
31, 2000 from 4.92% for the nine months ended March 31, 1999.

                                      -13-
<PAGE>

Interest on deposits  increased by $2.1 million,  or 15.7%, to $15.1 million for
the nine  months  ended  March 31,  2000 from $13.0  million for the nine months
ended March 31, 1999.  The increase in interest on deposits was primarily due to
an  increase  in the  average  balance  of  deposits  as a  result  of the  MIFC
acquisition.  The average  balance of deposits  increased by $70.0  million,  or
18.5%,  to $447.3  million at March 31,  2000 from  $377.3  million at March 31,
1999.  The  increase  in  interest  paid on deposits  due to  increased  average
balances was partly offset by an 11 basis point  decrease in the average cost of
deposits  to 4.50% for the nine  months  ended March 31, 2000 from 4.61% for the
nine months ended March 31, 1999.

Interest on borrowings  increased by $1.8 million, or 35.4%, to $6.8 million for
the nine months ended March 31, 2000 from $5.0 million for the nine months ended
March 31, 1999.  The increase in interest on borrowings  was primarily due to an
increase in the average balance of advances.  Average advance balances increased
by $41.5  million,  or 36.9%,  to $154.2  million at March 31,  2000 from $112.7
million at March 31,  1999.  The  increase in interest  expense due to increased
advance  balances  was  partly  offset by a  decrease  of 6 basis  points in the
average  cost of  borrowings  to 5.89% for the nine months  ended March 31, 2000
from 5.95% for the nine months ended March 31, 1999.

Net Interest Income. Net interest income increased by $1.9 million, or 16.6%, to
$13.6  million for the nine months  ended March 31, 2000 from $11.7  million for
the nine months ended March 31, 1999. The Company's interest rate spread for the
nine months ended March 31, 2000 decreased by 16 basis points, or 5.9%, to 2.54%
from 2.70% for the nine months ended March 31, 1999.

Provision for Loan Loss.  Provision for loan loss expense  totaled  $399,000 and
$255,000, respectively, for the nine months ended March 31, 2000 and 1999.

Noninterest Income.  Noninterest income increased by $822,000, or 20.3%, to $4.9
million for the nine months  ended March 31, 2000 from $4.1 million for the nine
months  ended  March 31,  1999.  Service  charges  and other fees  increased  by
$614,000,  or 40.5%,  to $2.1  million for the nine months  ended March 31, 2000
from $1.5  million for the nine months  ended March 31,  1999.  The  increase in
service  charges and other fees was  largely  due to growth  related to the MIFC
acquisition.  Gains on the sale of real  estate  owned and held for  development
totaled $404,000 and $41,000,  respectively, for the nine months ended March 31,
2000 and 1999. In addition, a gain on sale of fixed assets totaling $107,000 for
the nine months ended March 31, 2000  compared to a loss on sale of fixed assets
totaling  $10,000 for the nine months  ended March 31,  1999.  Income from other
real estate-related  activities increased by $512,000, or 93.3%, to $1.1 million
for the nine months ended March 31, 2000 from $549,000 for the nine months ended
March 31, 1999. The increase in real estate-related  income was primarily due to
earnings  from the real  estate  brokerage  company  acquired in the merger with
MIFC. Other income increased by $458,000, or 74.4%, to $1.1 million for the nine
months  ended March 31, 2000 from  $616,000  for the nine months ended March 31,
1999 largely due to earnings in the Company's non-bank subsidiaries.  During the
nine months ended March 31, 2000,  gain on sale of loans held for sale decreased
by $95,000,  or 40.9%, when compared to the same period of 1999,  reflecting the
slowdown  in  mortgage  activity  due to higher  mortgage  interest  rates.  The
increases  in  noninterest  income  during the nine months ended March 31, 2000,
when compared to the nine months ended March 31, 1999, more than offset the $1.1
million gain on sale of branch deposits that was recorded during the nine months
ended March 31, 1999.

                                      -14-
<PAGE>

Noninterest expense. Noninterest expense increased by $2.5 million, or 24.7%, to
$12.5  million for the nine months  ended March 31, 2000 from $10.0  million for
the nine  months  ended  March  31,  1999.  Compensation  and  benefits  expense
increased by $1.2 million,  or 21.7%,  to $6.7 million for the nine months ended
March 31, 2000 from $5.5 million for the nine months ended March 31, 1999.

Office property and equipment expense increased by $377,000,  or 28.1%, over the
prior year. Deposit insurance premium expense and advertising  expense decreased
by $13,000 and $67,000,  respectively,  for the nine months ended March 31, 2000
as compared to the nine months ended March 31, 1999. Amortization of intangibles
increased  by $480,000 to $738,000 for the nine months ended March 31, 2000 from
$258,000  for the nine months  ended March 31, 1999 due to  amortization  of the
goodwill  related to the MIFC  acquisition  that  commenced in April 1999.  Data
processing  expense  increased  by $37,000,  or 12.4%,  to $333,000 for the nine
months  ended March 31, 2000 from  $296,000  for the nine months ended March 31,
1999. Other general and administrative expenses increased by $452,000, or 23.0%,
for the nine months  ended  March 31, 2000 as compared to the nine months  ended
March 31,  1999.  The increase in other  noninterest  expense was largely due to
noninterest expenses of the MIFC real estate brokerage firm.

Net earnings and income tax expense.  Net earnings  before  income taxes totaled
$5.6  million  for the nine  months  ended  March 31,  2000 as  compared to $5.4
million for the nine months  ended March 31,  1999.  Income tax expense  totaled
$2.0 million for each of the  nine-month  periods ended March 31, 2000 and 1999.
The Company's  effective  tax rate  decreased to 35.1% for the nine months ended
March 31, 2000 from 36.4% for the nine months ended March 31, 1999 partially due
to increased balances in the Company's  tax-exempt  investment  portfolio during
the nine months ended March 31, 2000 as compared to the same period in 1999.



RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments and Hedging Activities",  which is scheduled to be effective for the
Company for the year beginning July 1, 2000. This statement requires recognition
of all  derivative  instruments as either assets or liabilities in the statement
of financial  position  measured at fair value.  This  statement  requires  that
changes in the  derivative's  fair value be  recognized  currently  in  earnings
unless  specific  hedge  accounting  criteria are met.  Special  accounting  for
qualifying  hedges allows gains and losses from  derivatives  to offset  related
results on the hedged  item in the income  statement  and  requires a company to
formally  document,  designate and assess the  effectiveness of transactions for
which hedge accounting is applied.  The impact the adoption of SFAS No. 133 will
have on the Company's financial statements has not been determined.  The Company
expects to adopt SFAS NO. 133 when required.

                                      -15-
<PAGE>



PART II. OTHER INFORMATION

Legal Proceedings.

   There are various claims and lawsuits in which the Registrant is periodically
involved incidental to the Registrant's  business. In the opinion of management,
no   material   loss  is   expected   from  any  of  such   pending   claims  or
lawsuits.Submission of Matters to a Vote of Security Holders.
   No matters  were  submitted to a vote of security  holders  during the period
covered by this report.


Exhibits and Reports on Form 8-K.

(a)   Exhibits

      none


(b)   Reports on Form 8-K

      On  January  5, 2000 the  Registrant  filed a  current  report on Form 8-K
      relating  to the  Company's  announcement  that it is  commencing  a share
      repurchase  program calling for the repurchase of up to 241,239 shares, or
      approximately 5% of the shares outstanding, in open market purchases.

                                      -16-

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this  report to be signed by the  undersigned
thereunto duly authorized.


                                             FIRST FEDERAL BANKSHARES, INC.



         DATE:  May 10, 2000                 BY: /s/ Barry E. Backhaus
                                                 ---------------------
                                                 Barry E. Backhaus
                                                 President and
                                                 Chief Executive Officer



         DATE:  May 10, 2000                 BY: /s/ Katherine Bousquet
                                                 ----------------------
                                                 Katherine Bousquet
                                                 Chief Financial Officer


                                      -17-