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, 2002

  [   ]    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 10, 2002
  ------------------------------              ----------------------------
  (Common Stock, $.01 par value)                       4,244,504



<PAGE>

                         FIRST FEDERAL BANKSHARES, INC.


                                      INDEX




                                                                     Page

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

            Condensed Consolidated Balance Sheets
            at March 31, 2002 and June 30, 2001                        1

            Condensed Consolidated Statements of Operations
            for the three- and nine-month periods ended
            March 31, 2002 and 2001                                    2

            Condensed Consolidated Statements of Changes in
            Stockholders' Equity for the nine-month periods
            ended March 31, 2002 and 2001                              3

            Condensed Consolidated Statements of Comprehensive
            Income for the three- and nine-month periods ended
            March 31, 2002 and 2001                                    4

            Condensed Consolidated Statements of Cash Flows
            for the nine-month periods ended
            March 31, 2002 and 2001                                    5

            Notes to Condensed Consolidated Financial Statements       6

   Item 2.  Management's Discussion and Analysis of
            Financial Condition and Results of Operations              9

Part II. Other Information                                            18



<PAGE>


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

FIRST FEDERAL BANKSHARES, INC and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                  March 31,            June 30,
                                                                    2002                 2001
                                                              ------------------   ------------------
                                                                  (Unaudited)
<S>                                                               <C>                    <C>
Assets
Cash and due from banks                                             $37,397,433          $20,241,215
Interest-bearing deposits in other financial institutions            11,596,856           57,708,338
                                                              ------------------   ------------------
       Cash and cash equivalents                                     48,994,289           77,949,553
                                                              ------------------   ------------------
Securities available-for-sale, at fair value (amortized
    cost of $73,650,848 and $88,147,083, respectively)               74,153,354           87,598,252
Securities held-to-maturity, at amortized cost
   (fair value of $60,484,298 and $22,882,470, respectively)         60,408,350           22,725,200
Loans receivable, net                                               419,691,143          417,897,877
Office property and equipment, net                                   13,969,640           14,686,405
Federal Home Loan Bank stock, at cost                                 5,013,300            9,468,700
Accrued interest receivable                                           3,262,283            3,793,058
Refundable income taxes                                                  87,741              112,365
Deferred tax asset                                                      106,000              500,000
Goodwill                                                             18,522,607           18,522,607
Other assets                                                         13,628,686            6,870,333
                                                              ------------------   ------------------
Total assets                                                       $657,837,393         $660,124,350
                                                              ==================   ==================

Liabilities
Deposits                                                           $482,411,762         $488,708,229
Advances from Federal Home Loan Bank                                 96,077,525           89,117,564
Advance payments by borrowers for
    taxes and insurance                                                 641,545            1,910,376
Accrued interest payable                                              4,466,611            5,676,823
Accrued expenses and other liabilities                                2,398,730            2,123,911
                                                              ------------------   ------------------
Total liabilities                                                   585,996,173          587,536,903
                                                              ------------------   ------------------

Stockholders' equity
Common stock, $.01 par value, 12,000,000 shares authorized;
    4,866,068 and 4,849,536 shares issued at
    March 31, 2002 and June 30, 2001, respectively                       48,661               48,495
Additional paid-in capital                                           36,205,145           36,053,892
Retained earnings, substantially restricted                          43,307,435           41,357,535
Treasury stock, at cost, 586,764 and 298,375 shares at
     March 31, 2002 and June 30, 2001, respectively                  (6,477,546)          (2,803,832)
Accumulated other comprehensive income (loss)                           313,506             (343,831)
Unearned ESOP                                                        (1,366,910)          (1,473,470)
Unearned RRP                                                           (189,071)            (251,342)
                                                              ------------------   ------------------
Total stockholders' equity                                           71,841,220           72,587,447
                                                              ------------------   ------------------
Total liabilities and stockholders' equity                         $657,837,393         $660,124,350
                                                              ==================   ==================
</TABLE>


See notes to condensed consolidated financial statements.


                                       -1-



<PAGE>

FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                  Three months                 Nine months
                                                                 ended March 31,               ended March 31,
                                                                2002          2001          2002           2001
                                                         -----------------------------------------------------------
<S>                                                          <C>          <C>            <C>            <C>
                                                                                (Unaudited)
Interest income:

    Loans receivable                                         $7,881,878   $10,001,569    $24,989,780    $30,967,899
    Mortgage-backed securities                                  870,600       850,026      1,647,021      1,699,179
    Investment securities                                       823,796     2,004,159      3,131,767      6,274,146
    Other interest-earning assets                                23,874        31,404        666,145        105,111
                                                         -----------------------------------------------------------
         Total interest income                                9,600,148    12,887,158     30,434,713     39,046,335
                                                         -----------------------------------------------------------

Interest expense:
    Deposits                                                  4,085,077     5,905,336     14,212,165     17,420,038
    Advances from FHLB and other borrowings                   1,272,290     2,191,063      3,722,053      7,812,760
                                                         -----------------------------------------------------------
         Total interest expense                               5,357,367     8,096,399     17,934,218     25,232,798
                                                         -----------------------------------------------------------
    Net interest income                                       4,242,781     4,790,759     12,500,495     13,813,537
    Provision for losses on loans                             1,035,000       150,000      2,315,000        445,000
                                                         -----------------------------------------------------------
    Net interest income after provision for losses on loans   3,207,781     4,640,759     10,185,495     13,368,537
                                                         -----------------------------------------------------------

Noninterest income:
    Fees and service charges                                  1,192,216       827,395      3,721,515      2,500,691
    Gain on sale of loans held for sale                         133,109        51,270        469,574        195,986
    Gain on sale of branch deposits                                  --            --        164,730             --
    Gain on sale of real estate owned and held for development   81,392        48,185        156,483        226,399
    Net gain (loss) on sale of securities                            --       228,256        (23,457)       234,328
    (Loss) gain on sale of office property and equipment           (826)          100        250,404         (2,136)
    Real estate-related activities                              333,825       278,346      1,091,226        859,738
    Other income                                                385,781       364,317      1,035,382      1,014,100
                                                         -----------------------------------------------------------
         Total noninterest income                             2,125,497     1,797,869      6,865,857      5,029,106
                                                         -----------------------------------------------------------

Noninterest expense:
    Compensation and benefits                                 2,300,514     2,229,982      6,836,354      6,594,105
    Office property and equipment                               655,168       639,830      1,869,747      1,839,712
    Deposit insurance premiums                                   22,037        23,336         67,575         72,367
    Data processing expense                                      89,879       122,442        259,033        364,393
    Advertising                                                 119,427        62,632        293,499        276,694
    Amortization of goodwill                                         --       210,920             --        632,870
    Other expense                                             1,075,907     1,079,192      3,275,850      3,038,843
                                                         -----------------------------------------------------------
         Total noninterest expense                            4,262,932     4,368,334     12,602,058     12,818,984
                                                         -----------------------------------------------------------

    Earnings before taxes on income                           1,070,346     2,070,294      4,449,294      5,578,659
    Taxes on income                                             325,000       797,000      1,502,000      2,018,000
                                                         -----------------------------------------------------------
    Net earnings                                               $745,346    $1,273,294     $2,947,294     $3,560,659
                                                         ===========================================================

Earnings per share:
    Basic earnings per share                                      $0.18         $0.29          $0.71          $0.81
                                                         ===========================================================
    Diluted earnings per share                                    $0.18         $0.29          $0.70          $0.80
                                                         ===========================================================

    Dividends declared per share                                  $0.08         $0.08          $0.24          $0.24
                                                         ===========================================================
</TABLE>


See notes to condensed consolidated financial statements.

                                      -2-

<PAGE>

FIRST FEDERAL BANKSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                  Nine months ended March 31,
                                                                     2002           2001
                                                                ------------------------------
                                                                          (Unaudited)
<S>                                                                 <C>            <C>
Capital Stock
   Beginning of year balance                                           $48,495        $48,336
   Stock options exercised                                                 166             41
----------------------------------------------------------------------------------------------
End of period balance                                                   48,661         48,377
----------------------------------------------------------------------------------------------

Additional paid-in capital
   Beginning of year balance                                        36,053,892     36,002,723
   RRP awarded                                                          17,500             --
   RRP forfeited                                                        (1,800)            --
   Stock options exercised                                             111,757         12,480
   Stock appreciation (depreciation) of allocated ESOP shares           23,796        (10,422)
----------------------------------------------------------------------------------------------
End of period balance                                               36,205,145     36,004,781
----------------------------------------------------------------------------------------------

Retained earnings, substantially restricted
   Beginning of year balance                                        41,357,535     39,782,321
   Net earnings                                                      2,947,294      3,560,659
   Dividends paid on common stock                                     (997,394)    (1,077,579)
----------------------------------------------------------------------------------------------
End of period balance                                               43,307,435     42,265,401
----------------------------------------------------------------------------------------------

Treasury stock, at cost
   Beginning of year balance                                        (2,803,832)    (1,273,138)
   RRP awarded                                                          63,000             --
   RRP forfeited                                                       (64,800)            --
   Treasury stock purchased                                         (3,671,914)      (941,169)
----------------------------------------------------------------------------------------------
End of period balance                                               (6,477,546)    (2,214,307)
----------------------------------------------------------------------------------------------

Accumulated other comprehensive income (loss)
   Beginning of year balance                                          (343,831)    (4,343,049)
   Net change in unrealized gains on securities available-for-sale     642,629      5,710,410
   Less: reclassification adjustment for net realized (losses) gains
         included in net income (net of tax expense)                   (14,708)       146,924
----------------------------------------------------------------------------------------------
End of period balance                                                  313,506      1,220,437
----------------------------------------------------------------------------------------------

Unearned ESOP shares
   Beginning of year balance                                        (1,473,470)    (1,634,600)
   ESOP shares allocated                                               106,560        121,990
----------------------------------------------------------------------------------------------
End of period balance                                               (1,366,910)    (1,512,610)
----------------------------------------------------------------------------------------------

Unearned recognition and retention plan shares
   Beginning of year balance                                          (251,342)      (469,674)
   RRP awarded                                                         (80,500)            --
   RRP forfeited                                                        66,600             --
   Amortization of RRP expense                                          76,171        175,003
----------------------------------------------------------------------------------------------
End of period balance                                                 (189,071)      (294,671)
----------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------
Total stockholders' equity                                         $71,841,220    $75,517,408
==============================================================================================
</TABLE>


See notes to condensed consolidated financial statements.

                                       -3-



<PAGE>

FIRST FEDERAL BANKSHARES, INC.  and SUBSIDIARIES
Condensed Consolidated  Statements  of  Comprehensive Income

<TABLE>
<CAPTION>


                                                                          Three Months Ended               Nine months ended
                                                                                March 31,                       March 31,
                                                                        --------------------------     --------------------------
                                                                             2002           2001          2002             2001
                                                                             ----           ----          ----             ----
                                                                                                (Unaudited)
<S>                                                                     <C>             <C>            <C>              <C>
Net earnings                                                            $   745,346     $ 1,273,294    $ 2,947,294      $ 3,560,659
Other comprehensive income:
    Unrealized holding (losses) gains arising during the period
      net tax                                                              (150,384)      2,332,244        642,629        5,710,410
    Less: reclassification adjustment for net realized (losses) gains
         included in net income, net of tax expense                              --         143,117        (14,708)         146,924
                                                                        -----------     -----------    -----------      -----------
Other comprehensive (loss) income, net of tax                              (150,384)      2,189,127        657,337        5,563,486
                                                                        -----------     -----------    -----------      -----------

Comprehensive income                                                    $   594,962     $ 3,462,421    $ 3,604,631      $ 9,124,145
                                                                        ===========     ===========    ===========      ===========
</TABLE>

See notes to condensed consolidated financial statements

                                       -3-

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

<TABLE>
<CAPTION>
                                                                                           Nine months ended March 31,
                                                                                             2002               2001
                                                                                       ----------------------------------
Cash flows from operating activities:                                                              (Unaudited)
<S>                                                                                      <C>                 <C>
Net earnings                                                                             $   2,947,294       $   3,560,659
Adjustments to reconcile net earnings to net cash provided by operating activities:
   Loans originated for sale to investors                                                  (54,266,000)        (26,728,680)
   Proceeds from sale of loans originated for sale                                          55,018,306          24,182,705
   Provision for loan losses                                                                 2,315,000             445,000
   Depreciation and amortization                                                             1,518,315           1,534,133
   Net loss (gain) on sale of securities available-for-sale                                     23,457            (234,328)
   Net (gain) loss on sale of office property and equipment                                   (250,404)              2,136
   Net gain on sale of real estate owned and held for development                             (156,483)           (226,399)
   Net loan fees deferred                                                                      181,225             (22,418)
   Amortization of premiums and discounts on loans and securities                              482,679             527,758
   (Increase) decrease in other assets                                                          91,658            (611,741)
   (Decrease) increase in accrued expenses and other liabilities                              (910,769)          1,441,935
                                                                                         -------------       -------------
Net cash (used in) provided by operating activities                                          6,994,278           3,870,760
                                                                                         -------------       -------------

Cash flows from investing activities:
   Purchase of securities held-to-maturity                                                 (46,971,082)                 --
   Proceeds from maturities of securities held-to-maturity                                   6,267,231           1,731,198
   Proceeds from sale of securities available-for-sale                                       4,162,043          61,597,124
   Purchase of securities available-for-sale                                               (51,701,888)         (3,000,000)
   Proceeds from maturities of securities available-for-sale                                65,008,653          17,195,621
   Purchase of bank owned life insurance                                                    (6,984,000)                 --
   Redemption (purchase) of Federal Home Loan Bank Stock                                     4,455,400            (539,800)
   Loans purchased                                                                         (15,681,000)         (9,785,000)
   Decrease (increase) in loans receivable                                                  10,072,658          (7,641,228)
   Proceeds from sale of office property and equipment                                         520,950                 200
   Purchase of office property and equipment                                                  (444,887)           (506,158)
   Proceeds from sale of real estate owned and held for development                            610,397             998,947
   Net expenditures on real estate owned and held for development                               (5,444)           (531,172)
                                                                                         -------------       -------------
Net cash used in investing activities                                                      (30,690,969)         59,519,732
                                                                                         -------------       -------------

Cash flows from financing activities:
   (Decrease) increase in deposits                                                          (6,296,467)         13,629,567
   Proceeds from advances from FHLB                                                         22,000,000          36,500,000
   Repayment of advances from FHLB                                                         (15,135,891)       (110,686,990)
   Net decrease in advances from borrowers for taxes and insurance                          (1,268,831)         (1,888,247)
   Issuance of common stock, net                                                               111,924              12,521
   Repurchase of common stock                                                               (3,671,914)           (941,169)
   Cash dividends paid                                                                        (997,394)         (1,077,579)
                                                                                         -------------       -------------
Net cash used in financing activities                                                       (5,258,573)        (64,451,897)
                                                                                         -------------       -------------
Net decrease in cash and cash equivalents                                                  (28,955,264)         (1,061,405)
Cash and cash equivalents at beginning of period                                            77,949,553          20,166,706
                                                                                         -------------       -------------
Cash and cash equivalents at end of period                                               $  48,994,289       $  19,105,301
                                                                                         =============       =============

Supplemental disclosures:
  Cash paid for interest                                                                 $  19,144,430       $  23,644,560
  Cash paid for income taxes                                                                 1,477,371           2,455,838
  Noncash activities - loans converted to securities                                                --         111,495,480
                                                                                         =============       =============
</TABLE>

See notes to condensed consolidated financial statements.

                                       -5-

<PAGE>


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 FIRST FEDERAL BANKSHARES, INC. and SUBSIDIARIES


1. Basis of presentation
   ---------------------

The  condensed  consolidated  balance  sheet  information  for June 30, 2001 was
derived  from  the  audited   Consolidated   Balance  Sheets  of  First  Federal
Bankshares,  Inc. (the  "Company") at June 30, 2001. The condensed  consolidated
financial statements at and for the three months and nine months ended March 31,
2002 and 2001 are unaudited.

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 condensed consolidated 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.

The Company's critical  accounting policy relates to the allowance for losses on
loans.  It is based on  management's  opinion of an amount  that is  adequate to
absorb  losses in the existing  portfolio.  The allowance for losses on loans is
established through a provision for loan losses based on management's evaluation
of the risk inherent in the loan  portfolio,  the  composition of the portfolio,
specific impaired loans and current economic conditions. Such evaluation,  which
includes  a  review  of all  loans  on  which  full  collectability  may  not be
reasonably assured,  considers among other matters, the estimated net realizable
value  or the fair  value of the  underlying  collateral,  economic  conditions,
historical loan loss experience, management's estimate of probable credit losses
and other  factors that warrant  recognition  in providing  for an adequate loan
loss allowance.

A summary of  significant  accounting  policies  followed  by the Company is set
forth in Note 1 of the  Company's  2001  Annual  Report to  Stockholders  and is
incorporated herein by reference.

2. Organization
   ------------

The Company is the holding  company for First  Federal  Bank (the  "Bank").  The
Company owns 100% of the Bank's common stock. Currently,  the Company engages in
no other significant activities beyond its ownership of the Bank's common stock.

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.

<TABLE>
<CAPTION>

                                                Three months ended            Nine months ended
                                                    March 31,                      March 31,
                                               2002           2001            2002            2001
                                           ---------------------------    ----------------------------
Basic earnings per share computation:
-------------------------------------
<S>                                        <C>             <C>             <C>             <C>
   Net earnings                            $  745,346      $1,273,294      $2,947,294      $3,560,659
   Weighted average common shares
         outstanding                        4,091,098       4,378,154       4,129,757       4,422,966
                                           ----------      ----------      ----------      ----------
      Basic earnings per share             $     0.18      $     0.29      $     0.71      $     0.81
                                           ==========      ==========      ==========      ==========
</TABLE>

                                       6

<PAGE>

<TABLE>
<CAPTION>
                                                       Three months ended             Nine months ended
                                                            March 31,                      March 31,
                                                       2002           2001            2002           2001
                                                   --------------------------      --------------------------
         Diluted earnings per share computation:
<S>                                                <C>             <C>             <C>             <C>
         Net earnings                              $  745,346      $1,273,294      $2,947,294      $3,560,659
         Weighted average common
            shares outstanding - basic              4,091,098       4,378,154       4,129,757       4,422,966
         Incremental option shares using
            treasury stock method                      84,570          63,611          87,043          46,644
                                                   ----------       ---------       ---------       ---------
         Weighted average diluted
            shares outstanding                      4,175,668       4,441,765       4,216,800       4,469,610
                                                   ----------       ---------       ---------       ---------
            Diluted earnings per share             $     0.18      $     0.29      $     0.70      $     0.80
                                                   ==========      ==========      ==========      ==========
</TABLE>

4. Goodwill and other intangible assets
   ------------------------------------

In July 2001,  the FASB  issued  SFAS No.  142,  Goodwill  and Other  Intangible
Assets.  SFAS  No.  142  requires  that  goodwill  and  intangible  assets  with
indefinite  useful  lives  no  longer  be  amortized,  but  instead  tested  for
impairment at least annually in accordance  with the provisions of SFAS No. 142.
SFAS No. 142 also requires that intangible  assets with definite useful lives be
amortized  over  their  respective  estimated  useful  lives to their  estimated
residual values, and reviewed for impairment. The Company adopted the provisions
of SFAS No.  142  effective  July 1, 2001.  In  connection  with SFAS No.  142's
transitional goodwill impairment evaluation, the Company performed an assessment
and determined that goodwill was not impaired as of the adoption date. As of the
adoption  date,  the  Company  had   unamortized   goodwill  in  the  amount  of
$18,522,607.

Effective July 1, 2001, the amortization of goodwill was discontinued. The table
below  reconciles  reported  earnings for the three months and nine months ended
March 31, 2001 to "adjusted" earnings, which exclude goodwill amortization.

<TABLE>
<CAPTION>

                    Three months ended
                      March 31, 2002       Three months ended March 31, 2001
                      --------------       ---------------------------------
                           Reported      Reported      Goodwill    "Adjusted"
                           earnings      earnings   Amortization    earnings
                           --------      --------   ------------    --------
<S>                        <C>           <C>            <C>        <C>
Net income                 $745,346      $1,273,294     $210,920   $1,484,214
Earnings per share:
  Basic EPS                   $0.18           $0.29        $0.05        $0.34
  Diluted EPS                 $0.18           $0.29        $0.04        $0.33
</TABLE>

<TABLE>
<CAPTION>
                   Nine months ended
                      March 31, 2002        Nine months ended March 31, 2001
                      --------------        --------------------------------
                           Reported      Reported      Goodwill    "Adjusted"
                           earnings      earnings   Amortization    earnings
                           --------      --------   ------------    --------
<S>                      <C>             <C>            <C>        <C>
Net income               $2,947,294      $3,560,659     $632,870   $4,193,529
Earnings per share:
  Basic EPS                   $0.71           $0.81        $0.14        $0.95
  Diluted EPS                 $0.70           $0.80        $0.14        $0.94
</TABLE>


                                       7
<PAGE>


The gross carrying amount of intangible  assets subject to amortization  and the
associated accumulated amortization at March 31, 2002, is presented in the table
below.  Amortization  expense for  intangible  assets was  $108,618 and $23,745,
respectively,  for the three months ended March 31, 2002 and 2001;  and $318,608
and  $84,477,  respectively,  for the nine months ended March 31, 2002 and 2001.


                                                   March 31, 2002
                                            --------------------------
                                                 Gross
                                               carrying    accumulated
                                                amount    amortization
                                                ------    ------------
    Intangible assets:
      Core deposit premium                   $   690,140   $ 338,532
      Mortgage servicing rights                  700,250     278,000
                                             -----------   ---------
    Total                                    $ 1,390,390   $ 616,532
                                             ===========   =========
    Unamortized intangible assets                          $ 773,858
                                                           =========

Projections of amortization expense are based on existing asset balances and the
existing  interest  rate  environment  as of March 31,  2002.  What the  Company
actually  experiences may be significantly  different  depending upon changes in
mortgage  interest rates and market  conditions.  The following  table shows the
estimated future amortization expense for amortizing intangible assets:

                       Core deposit      Mortgage servicing
                       premium           rights                   Total
                       ------------      ------------------       -----
Three months ended
  June 30, 2002        $ 18,618            $ 90,000            $ 108,618

Year ended June 30,
       2003              66,516             276,000              342,516
       2004              52,374              56,250              108,624
       2005              45,396                  --               45,396
       2006              44,604                  --               44,604
       2007              44,604                  --               44,604


5. Dividends

On January 17, 2002 the Company  declared a cash  dividend on its common  stock,
payable on February 28, 2002 to  stockholders of record as of February 14, 2002,
equal to $.08 per share. Dividends totaling $330,872 were paid to stockholders.

On April 18, 2002 the  Company  declared a cash  dividend  on its common  stock,
payable on May 31,  2002 to  stockholders  of record as of May 17, 2002 equal to
$.08 per share.  Approximately  $331,000 will be paid to stockholders on May 31,
2002.


<PAGE>


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

Forward-looking statements
--------------------------

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.

Financial condition
-------------------

Total assets decreased by $2.3 million,  or 0.4%, to $657.8 million at March 31,
2002 from $660.1 million at June 30, 2001. Cash and cash  equivalents  decreased
by $29.0  million,  or 37.2%,  to $49.0  million  at March 31,  2002 from  $78.0
million  at June  30,  2001 as the  Company  used  funds  from  interest-bearing
deposits in other financial institutions to purchase relatively  higher-yielding
investment  securities and other assets. The Company purchased $47.0 million and
$51.7  million,  respectively,  of securities  held-to-maturity  and  securities
available-for-sale  during the nine  months  ended  March 31,  2002.  Securities
held-to-maturity  increased by $37.7  million,  or 165.8%,  to $60.4  million at
March   31,   2002   from   $22.7   million   at  June  30,   2001.   Securities
available-for-sale  decreased by $13.4  million,  or 15.4%,  to $74.2 million at
March 31, 2002 from $87.6 million at June 30, 2001 as proceeds from sales, calls
and maturities more than offset purchases during the nine months ended March 31,
2002. The Company purchased bank owned life insurance  ("BOLI") in the amount of
$7.0 million in November and December  2001.  Largely due to the BOLI  purchase,
other assets increased by $6.8 million,  or 98.4%, to $13.6 million at March 31,
2002 from $6.9  million at June 30,  2001.  Federal  Home Loan Bank (the "FHLB")
Stock  decreased by $4.5  million,  or 47.1%,  to $5.0 million at March 31, 2002
from $9.5 million at June 30, 2001 after the FHLB  redeemed  excess member stock
during the current fiscal year.

Deposits decreased by $6.3 million, or 1.3%, to $482.4 million at March 31, 2002
from $488.7 million at June 30, 2001 and accrued interest  payable  decreased by
$1.2 million,  or 21.3%,  to $4.5 million at March 31, 2002 from $5.7 million at
June 30, 2001.  Partially offsetting the decrease in the balance of deposits was
an increase in FHLB advances as the Company obtained fixed-rate  advances in the
generally lower market interest rate environment after the Federal Reserve Board
decreased the federal  funds rate by 200 basis points  between June 30, 2001 and
March 31, 2002.  FHLB  advances  increased by $7.0  million,  or 7.8%,  to $96.1
million at March 31, 2002 from $89.1 million at June 30, 2001.

                                       9

<PAGE>


Total stockholders'  equity decreased by $746,000,  or 1.0%, to $71.8 million at
March  31,  2002  from  $72.6  million  at  June  30,  2001.   The  decrease  in
stockholders'  equity was  primarily  due to the  Company's  purchase of 288,000
shares of its common stock,  between June 30, 2001 and March 31, 2002, at a cost
of $3.7 million under a buyback program  commenced in December 2000.  Under this
buyback program the Company  purchased  340,500 shares of its common stock prior
to March 31, 2002 and is expected to acquire up to 119,500  additional shares in
order to complete the program, subject to market conditions and other factors.

Earnings  totaled $2.9 million for the first nine months of the fiscal year.  In
addition,  accumulated other  comprehensive  income increased by $657,000 due to
higher valuations for the Company's available-for-sale securities portfolio as a
result of Federal  Reserve  interest rate cuts since June 30, 2001.  The Company
reported a net unrealized loss on securities  available-for-sale  of $344,000 at
June 30, 2001 and a net unrealized gain of $313,000 at March 31, 2002. Excluding
dividends  on  unallocated   Employee  Stock  Ownership  Plan  ("ESOP")  shares,
dividends declared during the nine months ended March 31, 2002 totaled $997,000.

Capital
-------

The Office of Thrift Supervision (the "OTS") requires that the Bank meet minimum
tangible,  leverage (core) and risk-based capital requirements.  As of March 31,
2002 the Bank was in compliance with all regulatory  capital  requirements.  The
Bank's  required,  actual and excess  capital levels as of March 31, 2002 are as
follows:

                                                            Excess of
                                                            Actual Over
                      Required  % of      Actual    % of    Regulatory
                       Amount  Assets     Amount   Assets   Requirement
                       ------  ------     ------   ------   -----------
                                  (Dollars in thousands)
 Tangible Capital     $ 9,515   1.5%     $47,715     7.52%     $38,200
 Core Capital          19,029   3.0%      47,715     7.52%      28,686
 Risk-based Capital    33,676   8.0%      52,315    12.43%      18,639

Liquidity
---------

The Company is required by OTS  regulation to maintain  sufficient  liquidity to
assure its safe and sound  operation.  Liquid assets include cash,  certain time
deposits, banker's acceptances and specified United States government,  state or
federal agency  obligations.  For the quarter ended March 31, 2002 the Company's
average  liquidity  position was $148.0 million,  or 29.8% of its liquidity base
for the preceding quarter.  The Company adjusts its liquidity levels in order to
meet  funding  needs for deposit  outflows,  payment of real  estate  taxes from
escrowed funds, when applicable, and loan commitments.  The Company also adjusts
liquidity as appropriate to meet its asset/liability objectives.

Market risk management
----------------------

Market risk is the risk of loss arising from  adverse  changes in market  prices
and interest rates. The Company's market risk is primarily comprised of interest
rate risk  resulting  from its core  banking  activities  of lending and deposit
taking.  Interest  rate risk is the risk that changes in market  interest  rates
might  adversely  affect the Company's net interest income or the economic value
of  its  portfolio  of  assets,  liabilities  and  off-balance-sheet  contracts.
Management  continually  develops and applies  strategies to mitigate this risk.
The Company has not experienced any material changes in its market risk position
from that disclosed in the Company's 2001 Form 10-K Annual Report as of June 30,
2001. The Company's  primary market risk exposures and how those  exposures were
managed at December 31, 2001 did not change  significantly  when compared to the
preceding  measurements  at June 30, 2001 and September 30, 2001, and management
does not believe that the Company's  primary market risk exposures and how those
exposures were managed as of March 31, 2002 changed  significantly when compared
to the December 31, 2001  measurement.  The Company  primarily relies on the OTS
Net  Portfolio  Value  Model (the  "Model")  to measure  its  susceptibility  to

                                       10
<PAGE>

interest  rate  changes.  For  various  assumed  hypothetical  changes in market
interest rates,  the Model estimates the current  economic value of each type of
asset,  liability and off-balance-sheet  contract. The present value of expected
net cash flows from existing assets minus the present value of expected net cash
flows from existing  liabilities plus or minus the present value of expected net
cash flows from existing off-balance-sheet  contracts results in a net portfolio
value  ("NPV")  estimate.  An  analysis  of the  changes  in NPV in the event of
hypothetical  changes in interest  rates was presented in the Form 10-K filed by
the Company for the fiscal year ended June 30, 2001.

Effect of new accounting standard
---------------------------------

In August 2001,  the FASB issued SFAS No. 144,  Accounting for the Impairment or
Disposal  of  Long-Lived  Assets,   which  addresses  financial  accounting  and
reporting for the impairment or disposal of long-lived  assets.  While Statement
No. 144  supersedes  FASB  Statement No. 121,  Accounting  for the Impairment of
Long-Lived  Assets and for Long-Lived  Assets to Be Disposed Of, it retains many
of the fundamental provisions of that Statement.

SFAS No. 144 also  supersedes  the  accounting  and reporting  provisions of 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,  for the disposal of a segment of a business.
However,  it retains  the  requirement  in Opinion  No. 30 to report  separately
discontinued  operations  and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment,  or in a distribution to
owners) or is classified as held for sale. By  broadening  the  presentation  of
discontinued  operations  to include more  disposal  transactions,  the FASB has
enhanced  managements'  ability to  provide  information  that  helps  financial
statement  users to assess the effects of a disposal  transaction on the ongoing
operations of an entity.

The effective date for SFAS No. 144 is for fiscal years beginning after December
15, 2001.  The Company will adopt this  statement as of July 1, 2002. The effect
of this  statement on the Company's  financial  statements is not expected to be
material.

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
------------------------------------------------------------------
March 31, 2002 and 2001
-----------------------

General.  Net  earnings  for the  three  months  ended  March 31,  2002  totaled
$745,000,  or $0.18 per diluted  share,  compared to $1.3 million,  or $0.29 per
diluted share for the three months ended March 31, 2001.

Interest Income.  Interest income  decreased by $3.3 million,  or 25.5%, to $9.6
million for the three  months  ended  March 31, 2002 from $12.9  million for the
three  months  ended  March 31,  2001,  largely due to a decrease in the average
balance of  interest-earning  assets.  The average  balance of  interest-earning
assets  decreased by $87.5  million,  or 13.3%,  to $571.8 million for the three
months ended March 31, 2002 from $659.3 million for the three months ended March


                                       11

<PAGE>

31, 2001. In addition, the average yield on interest-earning assets decreased by
110 basis  points to 6.72% for the three  months ended March 31, 2002 from 7.82%
for the  three  months  ended  March  31,  2001,  due to  changes  in the mix of
interest-earning  assets and lower yields on all categories of  interest-earning
assets in the generally lower interest rate environment after eleven consecutive
Federal Reserve rate cuts since January 2001.

Interest income on loans receivable decreased by $2.1 million, or 21.2%, to $7.9
million for the three  months  ended  March 31, 2002 from $10.0  million for the
three months ended March 31, 2001. The decrease in interest  income on loans was
primarily due to a decrease of $59.4 million,  or 12.3%,  in the average balance
of loans receivable, to $424.4 million for the three months ended March 31, 2002
from $483.8  million for the three months ended March 31, 2001.  The decrease in
the  average  balance  of  loans  receivable  was  primarily  the  result  of  a
transaction that took place in March 2001 in which the Company securitized,  and
subsequently  sold,  approximately  $112.7  million of fixed-rate  single-family
mortgage loans. The average yield on loans receivable decreased to 7.43% for the
three  months  ended March 31, 2002 from 8.27% for the three  months ended March
31,  2001.  The  decrease in the average  yield on loans was due to  refinancing
activity  and to  interest  rate  reductions  for  adjustable-rate  loans in the
generally lower market interest rate environment during the current year period.

Interest income on  mortgage-backed  securities for the three months ended March
31, 2002 increased by $21,000,  or 2.4%, when compared to the three months ended
March 31, 2001. The average balance of mortgage-backed  securities  increased by
$13.3 million,  or 26.2%,  to $63.8 million for the three months ended March 31,
2002 from $50.5  million for the three months ended March 31, 2001.  The average
yield on  mortgage-backed  securities  decreased  to 5.46% for the three  months
ended March 31, 2002 from 6.73% for the three months  ended March 31, 2001.  The
decrease in the average yield on mortgage-backed securities was primarily due to
purchases yielding relatively lower rates during the current fiscal year period.
In addition,  adjustable-rate mortgage-backed securities repriced at lower rates
in the generally lower market interest rate environment.

Interest income on investment securities decreased by $1.2 million, or 58.9%, to
$824,000  for the three  months  ended March 31, 2002 from $2.0  million for the
three months ended March 31, 2001. The average balance of investment  securities
decreased  by $45.5  million,  or 37.2%,  to $77.0  million for the three months
ended March 31, 2002 from $122.5  million for the three  months  ended March 31,
2001, as a total of $79.3 million of agency securities owned by the Company were
called during the twelve  months ended March 31, 2002. In addition,  the average
yield on  investment  securities  decreased by 227 basis points to 4.28% for the
three  months  ended March 31, 2002 from 6.55% for the three  months ended March
31, 2001.

Interest Expense.  Interest expense decreased by $2.7 million, or 33.8%, to $5.4
million for the three  months  ended  March 31,  2002 from $8.1  million for the
three  months  ended March 31,  2001.  Interest on  deposits  decreased  by $1.8
million,  or 30.8%,  to $4.1  million for the three  months ended March 31, 2002
from $5.9 million for the three  months  ended March 31,  2001.  The decrease in
interest  on deposits  was  primarily  due to a 147 basis point  decrease in the
average cost of deposits to 3.61% for the three months ended March 31, 2002 from
5.08% for the three  months  ended March 31, 2001.  The  generally  lower market
interest rate  environment  during the current fiscal year  influenced the rates
paid on deposits.  In  addition,  the average  balance of deposits  decreased by

                                       12
<PAGE>

$12.4  million,  or 2.7%, to $453.0 million for the three months ended March 31,
2002 from $465.4 million for the three months ended March 31, 2001.

Interest on FHLB advances  decreased by $919,000,  or 41.9%, to $1.3 million for
the three  months  ended March 31, 2002 from $2.2  million for the three  months
ended March 31, 2001. The Company  repaid  short-term  borrowings  from the FHLB
with proceeds  from the  securitized  loan sales in March 2001.  The decrease in
interest on borrowings was primarily due to a decrease in the average balance of
advances.  The average balance of advances decreased by $55.0 million, or 36.9%,
to $94.3  million for the three months ended March 31, 2002 from $149.3  million
for the three  months ended March 31,  2001.  In  addition,  the average cost of
borrowings  decreased  by 47 basis  points to 5.40% for the three  months  ended
March 31, 2002 from 5.87% for the three months ended March 31, 2001.

Net Interest  Income.  The decrease in interest  expense was more than offset by
the decrease in interest income.  Net interest income decreased by $548,000,  or
11.4%,  to $4.2  million  for the three  months  ended  March 31, 2002 from $4.8
million  for the three  months  ended  March 31,  2001.  Partly  offsetting  the
decrease in net interest income due to lower average balances, were increases in
the interest rate spread and in the net yield on  interest-earning  assets.  The
Company's  interest  rate  spread  for the three  months  ended  March 31,  2002
increased to 2.80% from 2.55% for the three  months  ended March 31,  2001.  The
Company's   net  yield  on   interest-earning   assets   was  2.97%  and  2.91%,
respectively, for the three months ended March 31, 2002 and 2001.

Provision  for  Losses on Loans.  Provision  for  losses on loans  increased  by
$885,000 to $1.0 million for the three months ended March 31, 2002 from $150,000
for the three  months ended March 31, 2001.  Non-performing  loans  increased to
$8.2 million,  or 2.0% of total loans,  at March 31, 2002 from $7.3 million,  or
1.7% of total  loans,  at December 31,  2001.  At March 31, 2001  non-performing
loans  totaled  $1.8  million,   or  .43%  of  total  loans.   The  increase  in
non-performing  loans  was  partly  due to  generally  less  favorable  economic
conditions in the Company's  market area that adversely  affected several of its
commercial  and  industrial  borrowers.  During the three months ended March 31,
2002 the Company recorded a partial charge-off totaling $1.0 million on loans to
a local industrial  metals'  recycler that had experienced  declining prices for
its product.  At March 31, 2002 the  remaining  balance of various loans to this
borrower  totaled  $1.6  million.  Management  is  currently  in the  process of
determining  the fair value of the  collateral  underlying  these  loans,  which
consists of commercial  real estate and  equipment,  and  implementing a plan of
disposal and recovery.  Four other commercial borrowers with total loan balances
of $1.2 million experienced  debt-repayment problems and workout plans have been
put in place with the  expectation  that the loans  will be  brought  current as
local economic conditions improve.  The increase in non-performing loans is also
due to a commercial real estate loan with a balance of $2.9 million at March 31,
2002.  The loan is secured by an assisted  living  facility  located in Madison,
Wisconsin.  The facility experienced cash flow problems due to lower-than-normal
occupancy rates as compared to similar facilities in the Madison market area. As
of March 31,  2002,  the  Company was not  accruing  interest on a total of $6.8
million in non-performing loan balances.

The Company has taken steps to identify and address any  additional  weakness in
its  commercial  loan portfolio and expects to complete this process by June 30,
2002. An  independent  credit review  department  has been  established  and has
completed  reviews on a significant  portion of the commercial  loan  portfolio.
Workout  plans  have  been  put  in  place  for  several  commercial   borrowers
experiencing debt service shortfalls.  In addition, the Company recently adopted

                                       13
<PAGE>

a more  comprehensive  commercial loan credit policy and procedural  changes are
being implemented in accordance with the credit policy guidelines.

Management is committed to assuring asset quality and believes that the level of
non-performing  loans and the loan charge-offs  experienced over the last twelve
months will be significantly  reduced going forward as local economic conditions
improve and the steps outlined above take effect.

Noninterest Income.  Noninterest income increased by $328,000, or 18.2%, to $2.1
million for the three  months  ended  March 31,  2002 from $1.8  million for the
three  months  ended March 31,  2001.  The  increase in  noninterest  income was
primarily  due to an increase  of  $365,000,  or 44.1%,  in income from fees and
service  charges to $1.2  million for the three months ended March 31, 2002 from
$827,000 for the three  months  ended March 31,  2001.  The increase in fees and
service charges  resulted from increased loan  origination fees and service fees
on deposit accounts.  Increases in mortgage  originations and refinancing in the
generally lower market interest rate environment during the current-year quarter
also contributed to an increase of $82,000,  or 159.6%, in gain on sale of loans
held for sale to $133,000 for the three months ended March 31, 2002 from $51,000
for the three months ended March 31, 2001.  In addition,  income from other real
estate-related  activities  increased by $55,000,  or 19.9%, to $334,000 for the
three months ended March 31, 2002 from $278,000 for the three months ended March
31, 2001, primarily due to an increase in sales revenue in the Company's service
corporations  in a generally  stronger real estate market.  Gain on sale of real
estate owned and held for investment  increased by $33,000, or 68.9%, to $81,000
for the three  months  ended  March 31, 2002 from  $48,000 for the three  months
ended March 31,  2001.  During the three months ended March 31, 2001 the Company
recorded  a net gain on sale of  securities  totaling  $228,000.  This  gain was
primarily due to gains realized on the sale of $49.0 million of  mortgage-backed
securities  securitized in March 2001. No securities  were sold during the three
months ended March 31, 2002.

Noninterest expense.  Noninterest expense totaled $4.3 million and $4.4 million,
respectively,  for the three months ended March 31, 2002 and 2001.  Compensation
and  benefits  expense  increased by $71,000,  or 3.2%,  to $2.3 million for the
three  months  ended March 31, 2002 from $2.2 million for the three months ended
March 31, 2001 due  primarily  to annual  salary  increases  and to increases in
health insurance benefit expenses.  Advertising expense increased by $57,000, or
90.7% to $119,000 for the three months ended March 31, 2002 from $62,000 for the
three months ended March 31, 2001.

The increases in compensation  and benefits  expense and  advertising  were more
than  offset by  decreases  in  amortization  of  goodwill  and data  processing
expense.  No amortization of goodwill  expense was recorded for the three months
ended  March 31,  2002 due to the  Company's  early  adoption  of SFAS NO.  142,
Goodwill and Other Intangible  Assets.  In comparison,  amortization of goodwill
expense  totaled  $211,000  for the three  months  ended  March 31,  2001.  Data
processing  expense  decreased  by  $33,000,  or 26.6% to $90,000  for the three
months  ended March 31, 2002 from  $122,000 for the three months ended March 31,
2001 as  capitalized  software  expense from the 1996  conversion to an in-house
computer system was fully amortized.

Net earnings and income tax expense.  Net earnings before income taxes decreased
by $1.0 million,  or 48.3%, to $1.1 million for the three months ended March 31,
2002 from $2.1 million for the three  months  ended March 31,  2001.  Income tax
expense decreased by $472,000,  or 59.2%, to $325,000 for the three months ended
March 31, 2002 from  $797,000 for the three  months  ended March 31,  2001.  The
Company's  effective tax rate was 30.4% and 38.5%,  respectively,  for the three
months ended March 31, 2002 and 2001. The lower effective tax rate for the three


                                       14
<PAGE>

months ended March 31, 2002 resulted from an increase in tax-exempt  investments
such  as  municipal   bonds  and  bank  owned  life   insurance.   In  addition,
non-deductible goodwill amortization expense during the three months ended March
31, 2001  resulted  in a higher  effective  tax rate when  compared to the three
months  ended  March 31,  2002 in which no  goodwill  amortization  expense  was
recorded.


COMPARISON OF THE RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED
-----------------------------------------------------------------
March 31, 2002 and 2001
-----------------------

General.  Net  earnings  for the nine months  ended March 31, 2002  totaled $2.9
million,  or $0.70 per diluted  share,  compared to $3.6  million,  or $0.80 per
diluted share for the nine months ended March 31, 2001.

Interest Income.  Interest income decreased by $8.6 million,  or 22.1%, to $30.4
million for the nine months ended March 31, 2002 from $39.0 million for the nine
months ended March 31, 2001, largely due to a decrease in the average balance of
interest-earning   assets.  The  average  balance  of  interest-earning   assets
decreased  by $91.1  million,  or 13.6%,  to $578.1  million for the nine months
ended  March 31, 2002 from  $669.2  million for the nine months  ended March 31,
2001. In addition, the average yield on interest-earning  assets decreased by 76
basis  points to 7.02% for the nine  months  ended March 31, 2002 from 7.78% for
the nine months  ended March 31, 2001,  due to lower yields on  interest-earning
assets in the generally  lower interest rate  environment  and to changes in the
mix of interest-earning assets.

Interest  income on loans  receivable  decreased by $6.0 million,  or 19.3%,  to
$25.0  million for the nine months  ended March 31, 2002 from $31.0  million for
the nine months ended March 31, 2001.  The decrease in interest  income on loans
was  primarily  due to a decrease  of $83.8  million,  or 16.5%,  in the average
balance of loans  receivable,  to $423.6 million for the nine months ended March
31, 2002 from  $507.4  million for the nine  months  ended March 31,  2001.  The
average  yield on loans was 7.87% and 8.14%,  respectively,  for the nine months
ended March 31, 2002 and 2001.

Interest  income on  mortgage-backed  securities for the nine months ended March
31, 2002 decreased by $52,000,  or 3.1%,  when compared to the nine months ended
March  31,  2001  due to a  decrease  in  the  average  yield  earned  on  those
securities.  The average yield on  mortgage-backed  securities  decreased by 109
basis  points to 5.68% for the nine  months  ended March 31, 2002 from 6.77% for
the nine  months  ended March 31,  2001.  The  decrease in the average  yield on
mortgage-backed  securities was primarily due to purchases  yielding  relatively
lower  rates  during  the  nine  months  ended  March  31,  2002.  In  addition,
adjustable-rate securities repriced at lower rates in the generally lower market
interest  rate   environment.   Partly  offsetting  the  decrease  in  yield  on
mortgage-backed  securities  was an  increase  in the  average  balance of those
securities.  The average balance of mortgage-backed securities increased by $5.2
million,  or 15.6%,  to $38.7  million for the nine months  ended March 31, 2002
from $33.5 million for the nine months ended March 31, 2001.

Interest income on investment securities decreased by $3.1 million, or 50.1%, as
the average  balance of investment  securities  decreased by $43.5  million,  or
34.5%,  to $82.5  million for the nine  months  ended March 31, 2002 from $126.0
million  for the  nine  months  ended  March  31,  2001.  The  average  yield on
investment securities decreased by 158 basis points to 5.06% for the nine months
ended  March 31,  2002 from  6.64% for the nine  months  ended  March 31,  2001.


                                       15
<PAGE>

Interest  income on short-term  investments  and other  interest-earning  assets
increased  by $561,000 to $666,000 for the nine months ended March 31, 2002 from
$105,000 for the nine months ended March 31, 2001  primarily  due to an increase
in the average balance of those  investments.  The average balance of short-term
investments and other interest-earning assets increased to $33.3 million for the
nine months  ended March 31,  2002 from $2.3  million for the nine months  ended
March 31, 2001 as a result of increased liquidity.

Interest Expense. Interest expense decreased by $7.3 million, or 28.9%, to $17.9
million for the nine months ended March 31, 2002 from $25.2 million for the nine
months ended March 31, 2001.  Interest on deposits decreased by $3.2 million, or
18.4%,  to $14.2  million  for the nine  months  ended March 31, 2002 from $17.4
million for the nine months  ended March 31,  2001.  The decrease in interest on
deposits was primarily  due to a 92 basis point  decrease in the average cost of
deposits  to 4.15% for the nine  months  ended March 31, 2002 from 5.07% for the
nine months ended March 31, 2001. The average balance of deposits totaled $456.6
million and $458.3  million,  respectively,  for the nine months ended March 31,
2002 and 2001.

Interest on FHLB advances  decreased by $4.1 million,  or 52.4%, to $3.7 million
for the nine months  ended March 31, 2002 from $7.8  million for the nine months
ended March 31, 2001. The Company repaid $50.5 million in short-term  borrowings
from the FHLB with  proceeds  from the  securitized  loan  sales in March  2001.
Additional  higher-rate fixed-term advances matured between March 2001 and March
2002,  and the  Company  replaced  a portion  of this  funding  with  lower-rate
fixed-term FHLB advances in the generally lower market interest rate environment
during the  period.  The  decrease  in  interest  expense on FHLB  advances  was
primarily  due to a decrease in the  average  balance of  advances.  The average
balance of advances  decreased by $80.7 million,  or 48.2%, to $86.9 million for
the nine months  ended  March 31,  2002 from $167.7  million for the nine months
ended March 31, 2001. In addition, the average cost of FHLB borrowings decreased
by 50 basis  points to 5.71% for the nine months ended March 31, 2002 from 6.21%
for the nine months ended March 31, 2001.

Net Interest  Income.  The decrease in interest  expense was more than offset by
the decrease in interest income.  Net interest income decreased by $1.3 million,
or 9.5%,  to $12.5  million for the nine months  ended March 31, 2002 from $13.8
million  for the nine  months  ended  March  31,  2001.  Partly  offsetting  the
decreases in net interest income due to lower average  balances,  were increases
in the interest rate spread and in the net yield on interest-earning assets. The
Company's  interest  rate  spread  for the nine  months  ended  March  31,  2002
increased  to 2.62% from 2.41% for the nine  months  ended March 31,  2001.  The
Company's   net  yield  on   interest-earning   assets   was  2.88%  and  2.75%,
respectively, for the nine months ended March 31, 2002 and 2001.

Provision for Losses on Loans.  Provision for losses on loans  increased by $1.9
million,  to $2.3 million for the nine months ended March 31, 2002 from $445,000
for the nine  months  ended  March  31,  2001.  Provision  for  losses  on loans
increased primarily due to an increase in the level of non-performing  loans and
loan charge-offs.  In addition,  provision for losses on loans was increased due
to increases  in the balance of  commercial  real estate and business  loans and
consumer loans that generally  involve a greater degree of risk than one-to-four
family residential mortgage loans.

Noninterest  Income.  Noninterest income increased by $1.9 million, or 36.5%, to
$6.9  million for the nine months ended March 31, 2002 from $5.0 million for the
nine months ended March 31, 2001. The increase in noninterest  income was partly
due to a pretax gain of $456,000 on the sale of a northwest  Iowa branch  office


                                       16
<PAGE>

to another financial institution. The purchaser assumed deposits of $8.9 million
and  acquired  loans  totaling  $2.8  million in addition  to the branch  office
building and fixtures.  Gains on sale of the branch deposits, loans and building
and fixtures totaled $165,000, $44,000 and $247,000,  respectively. The increase
in noninterest income was also due to an increase of $1.2 million,  or 48.8%, in
income from fees and service  charges to $3.7  million for the nine months ended
March 31, 2002 from $2.5 million for the nine months  ended March 31, 2001.  The
increase  in  fees  and  service  charges  resulted  from  an  increase  in loan
origination activity in the generally lower market interest rate environment and
from increases in service fees on deposit  accounts.  Gain on sale of loans held
for sale, including the sale of branch office loans mentioned earlier, increased
by  $274,000,  or 139.6%,  to $470,000  for the nine months ended March 31, 2002
from  $196,000  for the nine  months  ended March 31, 2001 and income from other
real estate-related  activities increased by $231,000, or 26.9%, to $1.1 million
for the nine months ended March 31, 2002 from $860,000 for the nine months ended
March  31,  2001.  Gain on sale of real  estate  owned  and held for  investment
decreased by $70,000,  or 30.9%, to $156,000 for the nine months ended March 31,
2002  from  $226,000  for the  nine  months  ended  March  31,  2001,  partially
offsetting  increases in the majority of other categories of noninterest income.
For the nine months ended March 31, 2001 the Company recorded a net gain on sale
of securities  totaling  $234,000,  primarily due to the sale of mortgage-backed
securities.  A loss on the sale of investment  securities  totaling  $23,000 was
recorded for the nine months ended March 31, 2002.

Noninterest  expense.  Noninterest  expense  decreased by $217,000,  or 1.7%, to
$12.6  million for the nine months  ended March 31, 2002 from $12.8  million for
the nine months ended March 31, 2001.  The decrease in  noninterest  expense was
primarily due to a decrease of $633,000 in  amortization  of goodwill due to the
Company's early adoption of SFAS No. 142, Goodwill and Other Intangible  Assets.
Data processing expense decreased by $105,000, or 28.9% to $259,000 for the nine
months  ended March 31, 2002 from  $364,000  for the nine months ended March 31,
2001  due to  lower  software  amortization  expense.  Partly  offsetting  these
decreases  in  noninterest  expense  was an increase of  $242,000,  or 3.7%,  in
compensation  and  benefits  expense to $6.8  million for the nine months  ended
March 31,  2002 from $6.6  million  for the nine  months  ended  March 31,  2001
primarily due to annual salary  increases and to increases in the cost of health
insurance premiums.  In addition,  other expense increased by $237,000, or 7.8%,
to $3.3  million for the nine months  ended March 31, 2002 from $3.0 million for
the nine months ended March 31, 2001.  The increase in other  expense was partly
due to expenses  related to handling the higher loan  origination  volume during
the nine months ended March 31, 2002 and to losses  associated with  transaction
accounts.

Net earnings and income tax expense.  Net earnings before income taxes decreased
by $1.1 million,  or 20.2%,  to $4.5 million for the nine months ended March 31,
2002 from $5.6  million for the nine months  ended  March 31,  2001.  Income tax
expense decreased by $516,000,  or 25.6%, to $1.5 million, an effective tax rate
of 33.8%,  for the nine  months  ended  March 31,  2002  from $2.0  million,  an
effective tax rate of 36.2%, for the nine months ended March 31, 2001. The lower
effective  tax rate for the nine months  ended March 31, 2002  resulted  from an
increase in tax-exempt  investments  such as municipal bonds and bank owned life
insurance. In addition,  non-deductible goodwill amortization expense during the
nine months ended March 31, 2001  resulted in a higher  effective  tax rate when
compared  to the  nine  months  ended  March  31,  2002  in  which  no  goodwill
amortization expense was recorded.


                                       17
<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

     No reports on Form 8-K were filed during the period covered by this report.





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<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 13, 2002             BY: /s/ Barry E. Backhaus
                                             -----------------------------
                                             Barry E. Backhaus
                                             President and
                                             Chief Executive Officer



         DATE:  May 13, 2002             BY: /s/ Katherine Bousquet
                                             -----------------------------
                                             Katherine Bousquet
                                             Vice President and Treasurer
                                            (Principal Financial and
                                             Accounting Officer






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