UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

     |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                  For the Quarterly Period Ended March 31, 2001

                         Commission File Number: 0-29598




                           MIDWEST BANC HOLDINGS, INC.
             (Exact name of Registrant as specified in its charter.)

            DELAWARE                                    36-3252484
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

            501 W. NORTH AVE.
          MELROSE PARK, ILLINOIS                           60160
(Address of principal executive offices)                 (Zip code)


--------------------------------------------------------------------------------

                                 (708) 865-1053
              (Registrant's telephone number, including area code)

     Indicate by checkmark 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 1, 2001
--------------------------------------------------------------------------------

    Common, par value $.01                                   10,740,392
================================================================================

<PAGE>

                           MIDWEST BANC HOLDINGS, INC.

                                    FORM 10-Q

                                TABLE OF CONTENTS



                                                                     Page Number
                                                                     -----------
                                     PART I


Item 1.  Financial Statements..................................................3

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations................................................10

Item 3.  Quantitative and Qualitative Disclosures About Market Risk...........20

                                     PART II

Item 1.  Legal Proceedings....................................................22

Item 2.  Changes in Securities and Use of Proceeds............................22

Item 3.  Defaults upon Senior Securities......................................22

Item 4.  Submission of Matters to a Vote of Security Holders..................22

Item 5.  Other Information....................................................22

Item 6.  Exhibits and Reports on Form 8-K.....................................22

Form 10-Q  Signature Page.....................................................24

                                       2

<PAGE>

                           MIDWEST BANC HOLDINGS, INC.
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                             MARCH 31,        DECEMBER 31,
                                                                               2001               2000
                                                                          --------------     --------------
<S>                                                                       <C>                <C>

ASSETS
Cash and cash equivalents                                                 $       56,391     $       46,556
Securities available-for-sale                                                    512,731            513,512
Securities held-to-maturity                                                       24,759             25,174
Loans                                                                            874,944            824,632
Allowance for loan losses                                                         (9,040)            (8,593)
                                                                          --------------     --------------
   Net loans                                                                     865,904            816,039
Cash value of life insurance                                                      18,851             18,617
Premises and equipment, net                                                       20,687             21,185
Other real estate                                                                    154              1,153
Goodwill                                                                           3,779              3,893
Other assets                                                                      18,541             21,641
                                                                          --------------     --------------

      Total assets                                                        $    1,521,797     $    1,467,770
                                                                          ==============     ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
   Non-interest-bearing                                                   $      122,130     $      128,749
   Interest-bearing                                                            1,002,458            957,037
                                                                          --------------     --------------
       Total deposits                                                          1,124,588          1,085,786
Securities sold under agreements to repurchase and federal funds
  purchased                                                                       27,767             24,293
Advances from the Federal Home Loan Bank                                         244,500            239,500
Notes payable and other borrowings                                                 5,000              5,300
Junior subordinated debt                                                          20,000             20,000
Other liabilities                                                                 11,891             10,315
                                                                          --------------     --------------

      Total liabilities                                                        1,433,746          1,385,194

STOCKHOLDERS' EQUITY
Preferred stock                                                                        -                  -
Common stock                                                                         114                114
Surplus                                                                           29,654             29,654
Retained earnings                                                                 68,065             65,814
Accumulated other comprehensive loss                                                (637)            (3,861)
Treasury stock, at cost                                                           (9,145)            (9,145)
                                                                          --------------     --------------
      Total stockholders' equity                                                  88,051             82,576
                                                                          --------------     --------------

          Total liabilities and stockholders' equity                      $    1,521,797     $    1,467,770
                                                                          ==============     ==============
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.

                                       3

<PAGE>

                           MIDWEST BANC HOLDINGS, INC.
                  CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>


                                                                                            2001           2000
                                                                                            ----           ----
<S>                                                                                       <C>           <C>

INTEREST INCOME
Loans                                                                                     $   19,620    $   15,325
Securities:
   Taxable                                                                                     8,552         8,955
   Exempt from federal income taxes                                                              403           449
Trading account securities                                                                         -             3
Federal funds sold and other short term investments                                               72            92
                                                                                          ----------    ----------

      Total interest income                                                                   28,647        24,824

INTEREST EXPENSE
Deposits                                                                                      12,967        10,338
Advances from the Federal Home Loan Bank                                                       3,323         2,607
Notes payable and other borrowings                                                               535           670
Junior subordinated debt                                                                         500             -
                                                                                          ----------    ----------

      Total interest expense                                                                  17,325        13,615
                                                                                          ----------    ----------

Net interest income                                                                           11,322        11,209

    Provision for loan losses                                                                    509           355
                                                                                          ----------    ----------

Net interest income after provision for loan losses                                           10,813        10,854

OTHER INCOME
Service charges on deposits                                                                      956           797
Net gains on securities transactions                                                             270            52
Net trading account profits                                                                      161           135
Mortgage loan origination fees                                                                    87            51
Trust income                                                                                     213           165
Insurance and brokerage commissions                                                              135           191
Other income                                                                                     401           186
                                                                                          ----------    ----------

      Total other income                                                                       2,223         1,577

OTHER EXPENSES
Salaries and employee benefits                                                                 4,474         4,087
Occupancy and equipment                                                                        1,233         1,186
Professional services                                                                            410           443
Marketing                                                                                        191           248
Other expenses                                                                                 1,085         1,246
                                                                                          ----------    ----------

      Total other expenses                                                                     7,393         7,210
                                                                                          ----------    ----------


Income before income taxes                                                                     5,643         5,221

Provision for income taxes                                                                     1,781         1,818
                                                                                          ----------    ----------
NET INCOME                                                                                $    3,862    $    3,403
                                                                                          ==========    ==========

Basic earnings per share                                                                  $     0.36    $     0.31
                                                                                          ==========    ==========

Diluted earnings per share                                                                 $    0.36    $     0.31
                                                                                          ==========    ==========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       4

<PAGE>

                           MIDWEST BANC HOLDINGS, INC.
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                               2001          2000
                                                                               ----          ----
<S>                                                                          <C>          <C>

Net Income                                                                   $   3,862    $   3,403

Net increase in fair value of securities classified as
  available-for-sale, net of income taxes and reclassification
  adjustments                                                                    3,224          528
                                                                             ---------    ---------

Comprehensive Income                                                         $   7,086    $   3,931
                                                                             =========    =========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       5

<PAGE>

                           MIDWEST BANC HOLDINGS, INC.
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                           ACCUMULATED
                                                                              OTHER                       TOTAL
                                      COMMON                 RETAINED     COMPREHENSIVE   TREASURY    STOCKHOLDERS'
                                       STOCK      SURPLUS    EARNINGS         LOSS          STOCK        EQUITY
                                     --------    --------   ---------      ------------   --------    -------------
<S>                                  <C>         <C>        <C>            <C>            <C>          <C>

Balance, January 1, 2000             $    114    $ 29,704   $  56,848      $   (11,942)   $ (7,030)    $    67,694
Cash dividends declared ($0.125
   per share)                               -           -      (1,350)               -           -          (1,350)

Purchase of 117,654 shares of
   treasury stock                           -           -           -                -      (1,728)         (1,728)
Comprehensive income
Net income                                  -           -       3,403                -           -           3,403

Net increase in fair value of
   securities classified as
   available-for-sale, net of
   income taxes and
   reclassification adjustments             -           -           -              528           -             528
                                                                                                       -----------

       Total comprehensive income                                                                            3,931
                                     --------    --------   ---------      -----------    --------     -----------
Balance, March 31, 2000              $    114    $ 29,704   $  58,901      $   (11,414)   $ (8,758)    $    68,547
                                     ========    ========   =========      ===========    ========     ===========



Balance, January 1, 2001             $    114    $ 29,654   $  65,814      $    (3,861)   $ (9,145)    $    82,576
Cash dividends declared ($0.15
   per share)                               -           -      (1,611)               -           -          (1,611)
Comprehensive income
Net income                                  -           -       3,862                -           -           3,862

Net increase in fair value of
   securities classified as
   available-for-sale, net of
   income taxes and
   reclassification adjustments             -           -           -            3,224           -           3,224
                                                                                                       -----------
       Total comprehensive income                                                                            7,086
                                     --------    --------   ---------      -----------    --------     -----------

Balance, March 31, 2001              $    114    $ 29,654   $  68,065      $      (637)   $ (9,145)    $    88,051
                                     ========    ========   =========      ===========    ========     ===========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       6

<PAGE>

                           MIDWEST BANC HOLDINGS, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                      2001              2000
                                                                                 --------------    --------------
<S>                                                                              <C>               <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                    $        3,862    $        3,403
   Adjustments to reconcile net income to net cash provided by
     operating activities
      Depreciation                                                                          665               650
      Provision for loan losses                                                             509               355
      Proceeds from sales of trading account securities, net                                161               135
      Net gain on sale of securities                                                       (270)              (52)
      Net trading account profits                                                          (161)             (135)
      Net proceeds from sales of real estate loans originated for sale                   (1,429)             (182)
      Loss on sale of other real estate                                                       4                 -
      (Increase) decrease in other assets                                                   919              (952)
      Increase in other liabilities                                                       1,576             1,123
                                                                                 --------------    --------------
        Net cash from operating activities                                                5,836             4,345

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sales and maturities of securities available-for-sale                   58,331            13,538
   Principal payments on securities available-for-sale                                   33,029            12,421
   Purchase of securities available-for-sale                                            (85,024)          (68,545)
   Purchase of securities held-to-maturity                                                    -              (870)
   Maturities of securities held-to-maturity                                                415               770
   Net increase in loans                                                                (48,945)          (45,060)
   Proceeds from sale of other real estate                                                  995                 -
   Property and equipment expenditures, net                                                (167)           (1,581)
                                                                                 ---------------   --------------
      Net cash from investing activities                                                (41,366)          (89,327)

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits                                                              38,802            14,959
   Borrowings                                                                             5,000            45,250
   Repayment of borrowings                                                                 (300)                -
   Dividends paid                                                                        (1,611)           (1,360)

   Securities sold under agreements to repurchase and federal funds
     purchased                                                                            3,474            27,682
   Treasury stock activity, net                                                               -            (1,728)
                                                                                 --------------    --------------

      Net cash from financing activities                                                 45,365            84,803
                                                                                 --------------    --------------

   Increase (decrease) in cash and cash equivalents                                       9,835              (179)

   Cash and cash equivalents at beginning of period                                      46,556            36,151
                                                                                 --------------    --------------

   Cash and cash equivalents at end of period                                    $       56,391    $       35,972
                                                                                 ==============    ==============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       7

<PAGE>

NOTE 1 - BASIS OF PRESENTATION

     The consolidated financial information of Midwest Banc Holdings, Inc. ("the
Company") included herein is unaudited; however, such information reflects all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation for the interim
periods. The financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.

     The annualized results of operations for the three months ended March 31,
2001 are not necessarily indicative of the results expected for the full year
ending December 31, 2001.


NOTE 2 - EARNINGS PER SHARE

     For purposes of per share calculations, the Company had 10,740,392 shares
of common stock outstanding at March 31, 2001 and December 31, 2000, and
10,767,392 shares of common stock outstanding at March 31, 2000. Basic earnings
per share for the three months ended March 31, 2001 and 2000 were computed by
dividing net income by the weighted average number of shares outstanding.
Diluted earnings per share for the three months ended March 31, 2001 and 2000
were computed by dividing net income by the weighted average number of shares
outstanding, adjusted for the dilutive effect of the outstanding stock options.
Computations for basic and diluted earnings per share are provided below.

<TABLE>
<CAPTION>

                                                          FOR THE THREE MONTHS ENDED
                                                                 MARCH 31,
                                                           2001             2000
                                                           ----             ----
                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                      <C>                <C>

   BASIC
 Net income                                              $ 3,862            $ 3,403
                                                         =======            =======

 Weighted average common shares                           10,740             10,839
    outstanding                                          =======            =======

 Basic earnings per common share                         $  0.36            $  0.31
                                                         =======            =======

   DILUTED
 Net income                                              $ 3,862            $ 3,403
                                                         =======            =======

 Weighted average common shares                           10,740             10,839
    outstanding

 Diluted effect of stock options                              85                 36
                                                         -------            -------

 Dilutive average common shares                           10,825             10,875
                                                         =======            =======

 Diluted earnings per common share                       $  0.36            $  0.31
                                                         =======            =======
</TABLE>


     Options to purchase 136,500 shares at a price of $17.88, were outstanding
at March 31, 2001. These options were not included in the computation of diluted
earnings per share because the options' exercise price was greater than the
average market price of the common stock and were, therefore, antidilutive.

                                       8

<PAGE>

NOTE 3 - STOCK OPTIONS

     During the first quarter of 2001, 141,000 stock options were granted at an
exercise price of $15.31. There were no options exercised. The total stock
options outstanding were 695,558 at March 31, 2001 with exercise prices ranging
between $8.13 and $17.88 and expiration dates between 2006 and 2011.


NOTE 4 - ISSUANCE OF TRUST PREFERRED SECURITIES

     In May 2000, the Company formed MBHI Capital Trust I ("the Trust"). The
Trust is a statutory business trust formed under the laws of the State of
Delaware and is wholly-owned by the Company. In June 2000, the Trust issued 10%
preferred securities with an aggregate liquidation amount of $20,000,000 ($25
per preferred security) to third-party investors. The Company then issued 10%
junior subordinated debentures aggregating $20,000,000 to the Trust. The junior
subordinated debentures are the sole assets of the Trust. The junior
subordinated debentures and the preferred securities pay distributions and
dividends, respectively, on a quarterly basis, which are included in interest
expense. The junior subordinated debentures will mature on June 7, 2030, at
which time the preferred securities must be redeemed. The junior subordinated
debentures and preferred securities can be redeemed contemporaneously, in whole
or in part, beginning June 7, 2005 at a redemption price of $25 per preferred
security. The Company has provided a full, irrevocable and unconditional
guarantee on a subordinated basis of the obligations of the Trust under the
preferred securities in the event of the occurrence of an event of default, as
defined in such guarantee. Debt issuance costs totaling $270,000 and
underwriting fees of $700,000 were capitalized related to the offering and are
being amortized over the estimated life of the junior subordinated debentures.


NOTE 5 - RECENT REGULATORY DEVELOPMENTS

     On November 12, 1999, the Gramm-Leach-Bliley Act (the "GLB Act") was
enacted. The GLB Act amended or repealed certain provisions of the
Glass-Steagall Act and other legislation that restricted the ability of bank
holding companies, securities firms, and insurance companies to affiliate with
one another. The GLB Act establishes a comprehensive framework to permit
affiliations among commercial banks, insurance companies and securities firms.
Further, the GLB Act expanded the range of activities in which bank holding
companies may engage by allowing certain well managed and well capitalized bank
holding companies to be designated as "financial holding companies." In
addition, the GLB Act contains provisions intended to safeguard consumer
financial information in the hands of financial service providers by, among
other things, requiring such entities to disclose their privacy policies to
their customers and allowing customers to "opt out" of having their financial
service providers disclose their confidential financial information to
non-affiliated third parties, subject to certain exceptions. Final regulations
implementing the new financial privacy regulations become effective during 2001.
Similar to most other consumer-oriented laws, the regulations contain some
specific prohibitions and require timely disclosures of certain information. The
Company has devoted what it believes are sufficient resources to comply with
these new requirements. It is not anticipated that the GLB Act will have a
material adverse effect on the operations or prospects of the Company and its
subsidiaries. However, to the extent the GLB Act permits banks, securities firms
and insurance companies to affiliate, the financial services industry may
experience further consolidation. This consolidation could result in a growing
number of larger financial institutions that offer a wider variety of financial
services than the Company currently offers and that can aggressively compete in
the markets the Company currently serves.

                                       9

<PAGE>


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


                   RESULTS OF OPERATIONS - THREE MONTHS ENDED
                             MARCH 31, 2001 AND 2000

     Consolidated net income for the first quarter of 2001 was $3.9 million, or
$0.36 per share, a 13.5% increase compared to $3.4 million, or $0.31 per share,
for the first quarter of 2000. Earnings per share for the three months ended
March 31, 2001 were 16.1% higher than for the comparable period in 2000.

     Net interest income increased 1.0% to $11.3 million in the first quarter of
2001 compared to $11.2 million in the first quarter of 2000. Excluding gains on
securities and trading account profits, other income increased 28.9% to $1.8
million in the first quarter of 2001 compared to $1.4 million in the first
quarter of 2000. Other expenses increased 2.5% to $7.4 million in the first
quarter of 2001 compared to $7.2 million in the first quarter of 2000.

Net Interest Income
-------------------

     Net interest income was $11.3 million and $11.2 million during the three
months ended March 31, 2001 and 2000, respectively, an increase of 1.0%. The
Company's net interest margin (tax equivalent net interest income as a
percentage of earning assets) was 3.41% for the three months ended March 31,
2001 compared to 3.80% for the comparable period in 2000. Net interest income
increased due to the growth in average earning assets from $1.2 billion during
the first quarter of 2000 to $1.4 billion for the three months ended March 31,
2001. This increase was offset in part by an increase in interest-bearing
liabilities of $169.2 million.

     The average loan yield was 9.26% during the first quarter of 2001, an
increase of 0.7% from 9.20% during the comparable period in 2000. The Federal
Reserve reduced the Federal Funds and Discount Rates by one and one-half percent
since the beginning of 2001 through March 28, 2001. The Company's net income is
dependent in part on stable interest rates. Falling rates may have some adverse
implications for the Company and its customers. Interest rate reductions would
likely have the effect of compressing the Company's net interest margin assuming
that interest rates continue to fall. The Company expects its average loan yield
to be reduced in subsequent quarters.

     Yields on securities were 7.00%, a decrease of 2.5% from 7.18% during the
comparable period in 2000. A decrease in mortgage rates has sparked an increase
in mortgage refinancing which has accelerated the prepayment speeds of the
Company's mortgage-backed securities and increased amortization expense for
these bonds.

                                       10

<PAGE>

     Yields on earning assets increased 1.0% to 8.36% during the first quarter
of 2001 compared to 8.28% for the first quarter of 2000. The increase in yields
on earning assets was offset by an increase of 9.7% in average rates paid on
deposits and borrowings. Average rates on deposits increased 10.8% to 5.32% for
the three months ended March 31, 2001 from 4.80% for the comparable period in
2000. Average rates on borrowings were 5.91% for the first quarter of 2001
compared to 5.47% in the comparable period in 2000. Based on current economic
conditions and interest rate trends, it is anticipated that yields on
interest-earning assets and interest-bearing liabilities may decrease during the
second quarter of 2001.

     The net interest margin calculation for the three months ended March 31,
2001 and 2000 is shown below (interest income and average rate on non-taxable
securities and loans are reflected on a tax equivalent basis, assuming a 35% tax
rate for 2001 and 2000):

<TABLE>
<CAPTION>

                                                        2001                                   2000
                                       -------------------------------------  ------------------------------------
                                         AVERAGE                   AVERAGE      AVERAGE                   AVERAGE
                                         BALANCE      INTEREST       RATE       BALANCE     INTEREST        RATE
                                       -----------   ----------    --------   -----------   --------      --------
<S>                                    <C>           <C>           <C>        <C>           <C>           <C>
                                                                 (DOLLARS IN THOUSANDS)

INTEREST-EARNING ASSETS

Federal funds sold                     $     5,339   $       72        5.39%  $     6,437   $     92         5.72%
Securities taxable                         507,380        8,871        6.99       497,519      8,958         7.20
Securities tax-exempt                       35,315          620        7.02        39,735        690         6.95
Commercial loans(1)                        207,359        4,786        9.23       188,897      4,356         9.22
Commercial real estate loans(1)            470,541       11,134        9.46       321,642      7,599         9.45
Agricultural loans(1)                       48,343        1,033        8.55        42,118        899         8.54
Consumer real estate loans(1)              110,690        2,417        8.73        96,424      2,128         8.83
Consumer installment loans(1)               14,318          335        9.36        20,182        411         8.15
                                       -----------   ----------        ----   -----------   --------         ----
                                       $ 1,399,285   $   29,268        8.36%  $ 1,212,954   $ 25,133         8.28%
                                       ===========   ==========        ====   ===========   ========         ====

INTEREST-BEARING LIABILITIES

Interest-bearing demand deposits       $   124,262   $    1,017        3.27%  $   108,234   $    882         3.26%
Money-market demand deposits
   and savings deposits                    266,289        2,738        4.11       245,048      2,564         4.19
Time deposits less than $100,000           454,658        7,145        6.29       385,381      5,206         5.40
Time deposits greater than $100,000         75,979        1,190        6.26        67,998        938         5.52
Public funds                                54,343          877        6.46        55,181        748         5.42
Federal funds purchased
   and repurchase agreements                28,509          428        6.01        33,353        460         5.52
FHLB advances                              241,278        3,323        5.51       195,022      2,607         5.35
Notes payable and other borrowings          25,117          607        9.67        11,064        210         7.59
                                       -----------   ----------        ----   -----------   --------         ----
                                       $ 1,270,435   $   17,325        5.44%  $ 1,101,281   $ 13,615         4.96%
                                       ===========   ==========        ====   ===========   ========         ====

Net Interest Income                                  $   11,943        2.92%                $ 11,518         3.32%
                                                     ==========        ====                 ========         ====
Net Interest Margin                                                    3.41%                                 3.80%
                                                                       ====                                  ====
</TABLE>


     (1)  Nonaccrual loans are included in the average balances, however these
          loans are not earning any interest.

                                       11

<PAGE>

Provision for Loan Losses
-------------------------

     The Company's provision for loan losses was $509,000 for the first quarter
of 2001 compared to $355,000 for the similar period in 2000.

     The allowance for loan losses as a percentage of total loans was 1.03% at
March 31, 2001 and 1.04% at December 31, 2000.

Other Income
------------

     Other income, excluding securities gains, was $1.8 million for the three
months ended March 31, 2001, an increase of $402,000, or 28.9%, over the
comparable period in 2000.

     Service charges and fees increased 20.0%, or $159,000, to $956,000 in the
first quarter of 2001 from $797,000 in the first quarter of 2000. Service
charges and fees include service charges on deposit accounts which are expected
to increase with future deposit growth.

     Insurance and investment brokerage commissions decreased $56,000 from
$191,000 for the first quarter of 2000 to $135,000 for the first quarter of
2001. Investment brokerage activities are expected to be expanded to many of the
Company's banking center locations in the near future. No guaranty can be made
on whether the anticipated commission growth will be realized under this
expansion strategy.

     Mortgage loan origination fees increased 70.6% to $87,000 during the first
quarter of 2001 from the comparable period in 2000. The increase is due in large
part to the decline in mortgage rates and increased refinancing activity. The
Company places most mortgages originated into the secondary market.

     Trust income increased 29.1% or $48,000 to $213,000 for the first quarter
of 2001 compared to $165,000 for the comparable period in 2000. Estate trust
income increased $55,000 for the first quarter of 2001 from the comparable
period in 2000. Trust income is in part derived from the market value of trust
assets under management. There can be no assurance that in subsequent quarters
that the level of trust income will increase due to existing market conditions
at that time.

     Sales of securities available-for-sale resulted in net gains of $270,000 in
the first quarter of 2001 compared to $52,000 for the comparable period in 2000.
Securities available-for-sale are held in a manner which allows for their sale
in response to changes in interest rates, liquidity needs, or significant
prepayment risk. Net trading account profits were $161,000 and $135,000 during
the first quarters of 2001 and 2000, respectively.

     During 2000, the Company purchased bank-owned life insurance of
approximately $18.3 million. For the first quarter of 2001, the increase in the
cash surrender value of this insurance was $256,000.

Other Expenses
--------------

     Total other expenses increased 2.5%, or $183,000, to $7.4 million during
the first quarter of 2001 compared to $7.2 million for the comparable period in
2000.

         Salary and benefit expenses increased 9.5%, or $387,000, to $4.5
million for the first

                                       12

<PAGE>

quarter of 2001 compared to $4.1 million for the similar period in 2000. The
number of full-time equivalent employees was 350 at March 31, 2001 compared to
337 as of March 31, 2000. The increase in the number of full-time equivalent
employees, as well as salaries and benefits, was primarily due to the full
impact in 2001 of initial staffing and related compensation costs attributable
to new banking centers in Roselle, Illinois in February 2000 and Monmouth,
Illinois in January 2001.

     Occupancy expenses increased $47,000, or 4.0%, to $1.2 million during the
first quarter of 2000 compared to $1.2 million for the comparable period in
2000. Midwest Bank of Western Illinois opened a new banking center in January
2001 in Monmouth, Illinois. Midwest Bank of Western Illinois also constructed a
new headquarters, which opened in January 2000. In February 2000, Midwest Bank
of Hinsdale opened the Roselle, Illinois banking center.

     Expenses, other than salary and employee benefits and occupancy, decreased
$251,000, or 13.0%, to $1.7 million in the first quarter of 2001 from $1.9
million for the similar period in 2000. The decrease in expenses was due
primarily to reduced legal expenses for problem loans, marketing expenses and
other real estate expenses. During the first quarter of 2000, Midwest Bank of
Western Illinois donated its former headquarters to the City of Monmouth. The
donation expense was $110,000, a non-reoccurring expense.

Income Taxes
------------

     The Company recorded income tax expense of $1.8 million for both quarters
ended March 31, 2001 and 2000, respectively.

FINANCIAL CONDITION

Loans
-----

     Total loans increased $50.3 million, or 6.1%, to $874.9 million at March
31, 2001 from $824.6 million at December 31, 2000. Loan demand has been strong
during the first three months of 2001, but there is no guarantee that loan
demand will continue to be robust in future periods. Commercial loans increased
$5.7 million, or 2.8%, to $211.4 million at March 31, 2001 compared to $205.7
million at December 31, 2000. Commercial real estate loans increased 9.3%, or
$41.8 million, to $490.8 million at March 31, 2001 from $449.0 million at
December 31, 2000. Agricultural loans increased 2.0%, or $936,000, to $48.7
million at March 31, 2001 from $47.8 million at December 31, 2000.

     Consumer real estate loans increased $1.5 million, or 1.4%, to $110.3
million at March 31, 2001 from $108.8 million at December 31, 2000. Consumer
loans increased 2.2% to $14.9 million at March 31, 2001 compared to $14.5
million at December 31, 2000.

     Most residential mortgage loans the Company originates are sold in the
secondary market. At any point in time, loans will be at various stages of the
mortgage banking process. Included as part of consumer real estate loans are
loans held for sale, which were $616,000 at December 31, 2000 and $2,045,000 at
March 31, 2001. The carrying value of these loans approximated their market
value at that time.

     Based upon the Company's business strategy to increase loans, it is
anticipated that commercial and commercial real estate loans will continue to
represent an increasing percentage of earning assets during the rest of 2001.

                                       13

<PAGE>

Allowance for Loan Losses
-------------------------

     An allowance for loan losses has been established to provide for those
loans that may not be repaid in their entirety for a variety of reasons. The
allowance is maintained at a level considered by management to be adequate to
provide for potential loan losses. The allowance is increased by provisions
charged to earnings and is reduced by chargeoffs, net of recoveries. The
provision for loan losses is based upon past loan loss experience and
management's evaluation of the loan portfolio under current economic conditions.
Loans are charged to the allowance for loan losses when, and to the extent, they
are deemed by management to be uncollectible. The allowance for loan losses is
composed of allocations for specific loans and a historical portion for all
other loans.

     Following is a summary of changes in the allowance for loan losses for the
three months ended March 31:

<TABLE>
<CAPTION>

                                                                2001              2000
                                                                ----              ----
                                                               (DOLLARS IN THOUSANDS)
<S>                                                         <C>                <C>

  Balance, January 1                                        $    8,593         $   7,567
  Provision charged to operations                                  509               355
  Loans charged-off                                               (106)             (505)
  Recoveries                                                        44                27
                                                            ----------         ---------

 Balance, March 31                                          $    9,040         $   7,444
                                                            ==========         =========
</TABLE>

     The Company recognizes that credit losses will be experienced and the risk
of loss will vary with, among other things, general economic conditions; the
type of loan being made; the creditworthiness of the borrower over the term of
the loan and in the case of a collateralized loan, the quality of the collateral
for such loan. The allowance for possible loan losses represents the Company's
estimate of the allowance necessary to provide for probable losses in the
portfolio. In making this determination, the Company analyzes the ultimate
collectibility of the loans in its portfolio by incorporating feedback provided
by internal loan staff, an independent loan review function, and information
provided by examinations performed by regulatory agencies. The Company makes an
ongoing evaluation as to the adequacy of the allowance for loan losses.

     On a quarterly basis, management of the Banks meets to review the adequacy
of the allowance for possible loan losses. Each loan officer grades these
individual commercial credits, and the Company's independent loan review
function validates the officers' grades. In the event that loan review
downgrades a loan, it is included in the allowance analysis at the lower grade.
The grading system is in compliance with the regulatory classifications, and the
allowance is allocated to the loans based on the regulatory grading, except in
instances where there are known differences (e.g. collateral value is nominal).

     The analysis of the allowance for loan losses is comprised of three
components: specific credit allocation; general portfolio allocation; and
subjectively by determined allocation. The specific credit allocation includes a
detailed review of the credit in accordance with SFAS Nos. 114 and 118, and an
allocation is made based on this analysis. The general portfolio allocation
consists of an assigned reserve percentage based on the credit rating of the
loan. The subjective portion is determined based on loan history and the
Company's evaluation of various factors including future economic and industry
outlooks. In addition, the subjective portion of the

                                       14

<PAGE>

allowance is influenced by current economic conditions and trends in the
portfolio including delinquencies and impairments, as well as changes in the
composition of the portfolio.

     The allowance for loan losses is based on estimates, and ultimate losses
will vary from current estimates. These estimates are reviewed quarterly, and as
adjustments, either positive or negative, become necessary, a corresponding
increase or decrease is made in the provision for loan losses. The methodology
used to determine the adequacy of the allowance for possible loan losses is
consistent with prior periods.

     The allowance for loan losses as a percentage of total loans was 1.03% as
of March 31, 2001 and 1.04% at December 31, 2000. In management's judgment, an
adequate allowance for loan losses has been established.

Nonaccrual and Nonperforming Loans
----------------------------------

     Nonaccrual loans are those loans on which the accrual of interest income
has been stopped due typically to a problem situation. Nonaccrual loans
increased to $1.4 million at March 31, 2001 from $1.2 million at December 31,
2000. Most of the nonaccrual loans are related to several commercial loans which
are being addressed by specific workout plans at this time.

     Nonperforming loans include nonaccrual loans and accruing loans which are
90 days or more delinquent. Typically, these loans have adequate collateral
protection or personal guaranties to provide a source of repayment to the bank.
Nonperforming loans were $2.0 million at March 31, 2001 compared to $2.3 million
at December 31, 2000 and $2.1 million at March 31, 2000. Nonperforming loans
were 0.23%, 0.26% and 0.31% of total loans at March 31, 2001, December 31, 2000
and March 31, 2000, respectively. Nonperforming loans were 0.13%, 0.15% and
0.16% of total assets at March 31, 2001, December 31, 2000 and March 31, 2000,
respectively.

     Other real estate owned was $154,000, $1.2 million and $3.0 million at
March 31, 2001, December 31, 2000 and March 31, 2000, respectively. During the
first quarter of 2001, the Company sold one piece of other real estate owned
which had an approximate carrying value of $1.0 million.

Securities
----------

     The Company manages its securities portfolio to provide a source of both
liquidity and earnings. Each Bank has its own asset/liability committee, which
develops current investment policies based upon its operating needs and market
circumstances. The investment policy is reviewed by senior financial management
of the Company in terms of its objectives, investment guidelines and consistency
with overall Company performance and risk management goals. Each Bank's
investment policy is formally reviewed and approved annually by its board of
directors. The asset/liability committee of each Bank is responsible for
reporting and monitoring compliance with the investment policy. Reports are
provided to each Bank's board of directors and the Board of Directors of the
Company on a regular basis.

     Securities available-for-sale are carried at fair value, with related
unrealized net gains or losses, net of deferred income taxes, recorded as an
adjustment to equity capital. At March 31, 2001, unrealized losses, net of taxes
on securities available-for-sale, were $637,000 compared to $3.9 million at
December 31, 2000. The decrease in net unrealized losses on securities
available-

                                       15

<PAGE>

for-sale resulted in a $3,224,000 increase in book equity.

     Securities available-for-sale decreased to $512.7 million at March 31, 2001
from $513.5 million at December 31, 2000. U.S. government agency mortgage-backed
securities and collateralized mortgage obligations decreased 4.1%, or $17.3
million, from $424.1 million at December 31, 2000 to $406.8 million at March 31,
2001. Equity securities increased $16.1 million from $59.7 million at December
31, 2000 to $75.8 million at March 31, 2001. Equity securities included capital
securities of United States Agencies, bond-rated or credit equivalent community
banks, and the Federal Home Loan Bank as well as Federal Reserve Bank stock at
March 31, 2001.

     All fixed and adjustable rate mortgage pools and collateralized mortgage
obligations contain a certain amount of risk related to the uncertainty of
prepayments of the underlying mortgages. Interest rate changes have a direct
impact upon prepayment rates. The Company uses computer simulation models to
test the average life and yield volatility of adjustable rate mortgage pools and
collateralized mortgage obligations under various interest rate assumptions to
monitor volatility. Stress tests are performed quarterly.

     Securities held-to-maturity decreased $415,000, or 1.6%, from $25.2 million
at December 31, 2000 to $24.8 million at March 31, 2001.

     There were no trading account securities held at March 31, 2001 or December
31, 2000. The Company holds trading account securities on a short-term basis
based on market and liquidity conditions.

Other Assets
------------

     The Company's investment in Bank-Owned Life Insurance (BOLI) increased by
$256,000 as the cash surrender value of the insurance increased. The BOLI is
intended to provide funding for future employee benefit expense.

Deposits and Borrowed Funds
---------------------------

     Total deposits of $1.125 billion at March 31, 2001 represented an increase
of $38.8 million, or 3.6%, from $1.086 billion at December 31, 2000.
Non-interest-bearing deposits were $122.1 million at March 31, 2001,
approximately $6.6 million lower than the $128.7 million level at December 31,
2000. Over the same period, interest-bearing deposits increased 4.7%, or $45.4
million. Certificates of deposit under $100,000 increased $34.7 million from
December 31, 2000 to March 31, 2001.

     The Company's membership in the Federal Home Loan Bank System gives it the
ability to borrow funds from the Federal Home Loan Bank of Chicago for short- or
long-term purposes under a variety of programs. The advances were used to fund
growth and permit the Company's bank subsidiaries to extend term maturities,
reduce funding costs and manage interest rate risk exposures more effectively.

     Federal Home Loan Bank advances were $244.5 million at March 31, 2001 and
$239.5 million at December 31, 2000. The weighted average rate for Federal Home
Loan Bank advances was 5.51% during the three months ended March 31, 2001 with a
range of maturities on such advances between one and ten years. This rate
compares favorably to the average year-to-date 2001 rate of 6.29% paid on the
Company's certificates of deposit under $100,000.

                                       16

<PAGE>

     Borrowed funds at March 31, 2001 and December 31, 2000 are listed below:

<TABLE>
<CAPTION>

                                                      2001              2000
                                                      ----              ----
                                                      (DOLLARS IN THOUSANDS)
<S>                                                   <C>             <C>

Federal Home Loan Bank (FHLB) advances to             $244,500        $239,500
 bank subsidiaries
Revolving line of credit  ($25,000,000                   5,000           5,300
 available)                                           --------        --------

 Total notes payable                                  $249,500        $244,800
                                                      ========        ========
</TABLE>

     The Company entered into a credit agreement with a correspondent bank on
January 30,1998 (the "Credit Agreement"), which provides the Company with a
revolving line of credit with a maximum availability of $25.0 million. The
original maturity of the revolving line of credit was January 30, 2000. On
January 17, 2000, this revolving line of credit was extended until January 31,
2002 by an amendment to the existing agreement.

     Amounts outstanding under the Company's revolving line of credit represent
borrowings incurred to provide capital contributions to the Banks to support
their growth. The Company makes interest payments, at its option, at the 30-,
60-, 90-, or 180-day London Inter-Bank Offered Rate ("LIBOR") plus 95 basis
points or the prime rate less 25 basis points.

     The Company also utilizes securities sold under repurchase agreements as a
source of funds. Most local municipalities and some other organizations must
have funds insured or collateralized as a matter of their own policies.
Repurchase agreements provide a source of funds and do not increase the
Company's reserve requirement. Although the balance of repurchase agreements is
subject to variation, particularly seasonal variation, the account relationships
represented by these balances are principally local and have been maintained for
relatively long periods of time. The Company had $21.0 million in securities
sold under repurchase agreements at March 31, 2001. The Company had $6.8 million
in federal funds purchased at March 31, 2001 compared to $3.8 million at
December 31, 2000.

     In addition, in June 2000, the Company issued 10% junior subordinated
debentures aggregating $20,000,000 to MBHI Capital Trust I, a wholly-owned
subsidiary of the Company. The junior subordinated debentures pay interest on a
quarterly basis and will mature on June 7, 2030. The junior subordinated
debentures can be redeemed in whole or in part, beginning June 7, 2005.

Capital Resources
-----------------

     Stockholders' equity increased $5.5 million, or 6.6%, from $82.6 million at
December 31, 2000 to $88.1 million at March 31, 2001. The increase was due to
2001 cumulative earnings exceeding dividends declared and as well as a $3.2
million decrease in accumulated other comprehensive loss.

     The Company and its four subsidiary banks ("the Banks") are subject to
regulatory

                                       17

<PAGE>

capital requirements administered by federal banking agencies. Capital adequacy
guidelines and prompt corrective action regulations involve quantitative
measures of assets, liabilities and certain off-balance-sheet items calculated
under regulatory accounting practices. Capital amounts and classifications are
also subject to qualitative judgments by regulators about components, risk
weightings and other factors, and the regulators can lower classifications in
certain areas. Failure to meet various capital requirements can initiate
regulatory action that could have a direct material effect on the Company's
financial statements.

     The prompt corrective action regulations provide five classifications,
including well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized, however these
terms are not used to represent overall financial condition. If adequately
capitalized, regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and plans for capital restoration are required.

     The Company and each of the Banks were categorized as well capitalized as
of March 31, 2001. Management is not aware of any conditions or events since the
most recent regulatory notification that would change the Company's or the
Banks' categories.

     Capital levels and minimum required levels (dollars in thousands):

<TABLE>
<CAPTION>

                                                                        AT MARCH 31, 2001
                                                ------------------------------------------------------------------
                                                                        MINIMUM REQUIRED       MINIMUM REQUIRED
                                                       ACTUAL           FOR CAPITAL ADEQUACY   TO BE WELL CAPITALIZED
                                                --------------------    --------------------   ----------------------
                                                  AMOUNT       RATIO      AMOUNT      RATIO     AMOUNT       RATIO
                                                ----------     -----    ---------     -----    --------      -----
                                                                         (IN THOUSANDS)
<S>                                             <C>            <C>      <C>           <C>      <C>           <C>
 Total capital to risk-weighted assets
 Company                                        $  114,207     11.8%    $  77,207     8.0%     $ 96,509      10.0%
 Midwest Bank and Trust Company                     50,775     12.3        33,144     8.0        41,429      10.0
 Midwest Bank of Hinsdale                           25,582     11.5        17,743     8.0        22,179      10.0
 Midwest Bank of McHenry County                     23,884     12.1        15,819     8.0        19,774      10.0
 Midwest Bank of Western Illinois                   14,178     11.0        10,299     8.0        12,874      10.0

 Tier I capital to risk-weighted assets
 Company                                           104,904     10.9        38,603     4.0        57,905       6.0
 Midwest Bank and Trust Company                     46,545     11.2        16,572     4.0        24,858       6.0
 Midwest Bank of Hinsdale                           23,489     10.6         8,872     4.0        13,307       6.0
 Midwest Bank of McHenry County                     22,015     11.1         7,910     4.0        11,865       6.0
 Midwest Bank of Western Illinois                   12,924     10.0         5,150     4.0         7,724       6.0

 Tier I capital to average assets
 Company                                           104,904      7.1        59,312     4.0        74,140       5.0
 Midwest Bank and Trust Company                     46,545      7.4        25,153     4.0        31,442       5.0
 Midwest Bank of Hinsdale                           23,489      7.2        13,023     4.0        16,278       5.0
 Midwest Bank of McHenry County                     22,015      7.2        12,233     4.0        15,291       5.0
 Midwest Bank of Western Illinois                   12,924      6.0         8,678     4.0        10,847       5.0
</TABLE>

                                       18

<PAGE>

<TABLE>
<CAPTION>

                                                                        AT DECEMBER 31, 2000
                                                ------------------------------------------------------------------
                                                                        MINIMUM REQUIRED       MINIMUM REQUIRED
                                                       ACTUAL           FOR CAPITAL ADEQUACY   TO BE WELL CAPITALIZED
                                                --------------------    --------------------   ----------------------
                                                  AMOUNT       RATIO      AMOUNT      RATIO     AMOUNT       RATIO
                                                ----------     -----    ---------     -----    --------      -----
                                                                         (IN THOUSANDS)
<S>                                             <C>            <C>      <C>           <C>      <C>           <C>

 Total capital to risk-weighted assets
 Company                                        $  111,125     11.9%    $  74,428     8.0%     $ 93,035      10.0%
 Midwest Bank and Trust Company                     49,470     12.3        32,067     8.0        40,084      10.0
 Midwest Bank of Hinsdale                           24,731     11.4        17,423     8.0        21,779      10.0
 Midwest Bank of McHenry County                     23,100     12.9        14,347     8.0        17,933      10.0
 Midwest Bank of Western Illinois                   13,956     10.7        10,390     8.0        12,987      10.0

 Tier I capital to risk-weighted assets
 Company                                           102,532     11.0        37,214     4.0        55,821       6.0
 Midwest Bank and Trust Company                     45,574     11.4        16,033     4.0        24,050       6.0
 Midwest Bank of Hinsdale                           22,841     10.5         8,712     4.0        13,067       6.0
 Midwest Bank of McHenry County                     21,404     11.9         7,173     4.0        10,760       6.0
 Midwest Bank of Western Illinois                   12,845      9.9         5,195     4.0         7,792       6.0

 Tier I capital to average assets
 Company                                           102,532      7.2        57,338     4.0        71,673       5.0
 Midwest Bank and Trust Company                     45,574      7.4        24,708     4.0        30,885       5.0
 Midwest Bank of Hinsdale                           22,841      7.3        12,455     4.0        15,568       5.0
 Midwest Bank of McHenry County                     21,404      7.3        11,721     4.0        14,651       5.0
 Midwest Bank of Western Illinois                   12,845      6.3         8,219     4.0        10,274       5.0
</TABLE>

Liquidity
---------

     Liquidity measures the ability of the Company to meet maturing obligations
and its existing commitments, to withstand fluctuations in deposit levels, to
fund its operations, and to provide for customers' credit needs. The liquidity
of the Company principally depends on cash flows from operating activities,
investment in and maturity of assets, changes in balances of deposits and
borrowings, and its ability to borrow funds in the money or capital markets.

     Net cash inflows provided by operations were $5.8 million for the three
months ended March 31, 2001 compared to inflows of $4.3 million a year earlier.
Net cash outflows from investing activities were $41.4 million in the first
three months of 2001 compared to a net cash outflow of $89.3 million a year
earlier. Cash inflows from financing activities for the three months ended March
31, 2001 were $45.4 million compared to a net inflow of $84.8 million in the
comparable period during 2000.

     In the event of short-term liquidity needs, the Banks may purchase federal
funds from correspondent banks. In addition, the Company has established
repurchase agreements and brokered certificates of deposit arrangements with
various financial sources. The Company's membership in the Federal Home Loan
Bank System gives it the ability to borrow funds from the Federal Home Loan Bank
of Chicago for short- or long-term purposes under a variety of programs.

     Interest received net of interest paid was a principal source of operating
cash inflows for the three months ended March 31, 2001 and March 31, 2000,
respectively. Management of investing and financing activities and market
conditions determines the level and the stability of net interest cash flows.
Management's policy is to mitigate the impact of changes in market interest
rates to the extent possible so that balance sheet growth is the principal
determinant of growth in net interest cash flows.

                                       19

<PAGE>


                ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK

Interest Rate Sensitivity Analysis
----------------------------------

     The Company's overall interest rate sensitivity is demonstrated by net
interest income analysis. Net interest income analysis measures the change in
net interest income in the event of hypothetical changes in interest rates. This
analysis assesses the risk of change in net interest income in the event of
sudden and sustained 1.0% to 2.0% increases and decreases in market interest
rates. The table below presents the Company's projected changes in net interest
income for the various rate shock levels at March 31, 2001.


                    NET INTEREST INCOME
          -------------------------------------
           AMOUNT     $ CHANGE         % CHANGE
          --------    --------         --------
                (DOLLARS IN THOUSANDS)

-200 bp   $ 46,896    $   (858)         (1.80)%
-100 bp     47,687         (67)         (0.14)
 Base       47,754          --             --
+100 bp     47,660         (94)         (0.20)
+200 bp     46,606      (1,148)         (2.40)

     As shown above, at March 31, 2001, the effect of an immediate 200 basis
point increase in interest rates would decrease the Company's net interest
income by 2.40%, or $1.1 million. The effect of an immediate 200 basis point
reduction in rates would decrease the Company's net interest income by 1.80%, or
$858,000.

     The projected changes in the Company's net interest income for the various
rate shock levels at March 31, 2000 were the following:


                    NET INTEREST INCOME
          -------------------------------------
           AMOUNT     $ CHANGE         % CHANGE
          --------    --------         --------
                (DOLLARS IN THOUSANDS)

-200 bp   $ 43,696    $    1,575         3.74%
-100 bp     43,262         1,144         2.72
Base        42,118            --           --
+100 bp     40,819        (1,299)       (3.08)
+200 bp     39,366        (2,752)       (6.53)

     Changes in the mix of earning assets and interest-bearing liabilities
increased the Company's liability sensitivity during the past twelve months.

     Computations of the prospective effects of hypothetical interest rate
changes are based on numerous assumptions, including relative levels of market
interest rates, loan prepayments, and deposit decay rates, and should not be
relied upon as indicative of actual results. Actual values may differ from those
projections set forth above, should market conditions vary from assumptions used
in preparing the analyses. Further, the computations do not contemplate any
actions the Company may undertake in response to changes in interest rates.

                                       20

<PAGE>

               SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
                          LITIGATION REFORM ACT OF 1995

     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 Litigation Reform
Act of 1995 and is including this statement for 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. Important factors which could cause actual events to
differ from the Company's expectations include, but are not limited to,
fluctuations in interest rates and loan and deposit pricing, which could reduce
the Company's net interest margins, asset valuations and expense expectations; a
deterioration in the economy or business conditions, either nationally or in the
Company's market areas, that could increase credit-related losses and expenses;
increases in defaults by borrowers and other loan delinquencies resulting in
increases in the Company's provision for loan losses and related expenses;
higher than anticipated costs related to the Company's new banking centers or
slower than expected earning assets growth which could extend anticipated
breakeven periods at these locations; significant increases in competition;
legislative or regulatory changes applicable to bank holding companies or the
Company's banking or other subsidiaries; and possible changes in tax rates, tax
laws, or tax law interpretation.

                                       21

<PAGE>

                                     PART II


ITEM 1.  LEGAL PROCEEDINGS

     There are no material pending legal proceedings to which the Company or its
subsidiaries are a party other than ordinary routine litigation incidental to
their respective businesses.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None

ITEM 5.  OTHER INFORMATION

         The Company has established the following financial objectives for the
         year ending December 31, 2001:

         (a)    Total assets of $1.6 billion.
         (b)    Net income of $16.2 million.
         (c)    Diluted earnings per share of $1.50 to $1.52.
         (d)    Return on average equity of 17.00-18.00%.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  The following exhibits are either filed as part of this report
or are incorporated herein by reference:

          3.1  Restated Certificate of Incorporation, as amended (incorporated
               by reference to Registrant's Registration Statement on Form S-1,
               Registration No. 333-42827).
          3.2  Restated By-laws, as amended (incorporated by reference to
               Registrant's Quarterly Report on Form 10-Q for the quarter ended
               June 30, 1998, File No. 0-29652).
          3.3  Amendment of Restated By-laws (incorporated by reference to
               Registrant's Quarterly Report on Form 10-Q for the quarter ended
               June 30, 2000, File No. 0-29598).
          4.1  Specimen Common Stock Certificate (incorporated by reference to
               Registrant's Registration Statement on Form S-1, Registration No.
               333-42827).
          4.2  Certain instruments defining the rights of the holders of
               long-term debt of the Company and certain of its subsidiaries,
               none of which authorize a total amount of indebtedness in excess
               of 10% of the total assets of the Company and its subsidiaries on
               a consolidated basis, have not been filed as Exhibits. The
               Company hereby agrees to furnish a copy of any of these
               agreements to the SEC upon request.

                                       22

<PAGE>

        (b)      Reports on Form 8-K

                 None

                                       23

<PAGE>

                                   SIGNATURES

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

Date:    May 1, 2001

                                MIDWEST BANC HOLDINGS, INC.
                                (Registrant)

                                  By: /s/ Brad A. Luecke
                                     -------------------------------------------
                                     Brad A. Luecke,
                                     President and Chief Executive
                                     Officer

                                  By: /s/ Daniel R. Kadolph
                                     -------------------------------------------
                                     Daniel R. Kadolph,
                                     Senior Vice President and
                                     Chief Financial Officer

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