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: December 31, 1996


                         Commission File Number: 0-8673


                  Financial Services Corporation of the Midwest
             (Exact name of registrant as specified in its charter)




          Delaware                                                36-2301786
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                              Identification No.)


224 - 18th Street, Suite 202, Rock Island, Illinois               61201-8737
    (Address of principal executive offices)                      (zip code)


                                 (309) 794-1120
                         (Registrant's telephone number)


Indicated  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: Common Stock, $.50 Par Value,
176,611 Shares
<PAGE>



                  FINANCIAL SERVICES CORPORATION OF THE MIDWEST


                                      INDEX



Part I -- Financial Information


                                                                        Page No.

        Item 1   Unaudited Financial Statements:


                    Consolidated  Balance  Sheets -- December 31, 1996 and March
                    31, 1996

                    Consolidated  Statements  of Income -- Nine and Three Months
                    Ended December 31, 1996 and 1995

                    Consolidated  Statements  of  Stockholders'  Equity  -- Nine
                    Months Ended December 31, 1996 and 1995

                    Consolidated  Statements  of Cash Flows -- Nine Months Ended
                    December 31, 1996 and 1995

                    Notes to Consolidated Financial Statements

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


Part II -- Other Information and Signatures
<PAGE>



FINANCIAL SERVICES CORPORATION OF THE MIDWEST                               
                                                                        
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
                                                                                                               (Unaudited)
                                                                                                       ----------------------------
                                                                                                       December  31,      March 31,
                                                                                                           1996             1996
                                                                                                       -------------      ---------
<S>                                                                                                    <C>                <C>
ASSETS
Cash and due from banks ..........................................................................       $  23,727        $  14,423
Interest-bearing deposits with other financial institutions ......................................           4,977            4,861
Investment securities:
    Held-to-maturity (approximate market value December 31, 1996-$33,684 and
        March 31, 1996-$29,072) ..................................................................          33,632           29,115
    Available-for-sale (amortized cost December 31, 1996-$64,635 and
            March 31, 1996-$61,948) ..............................................................          64,245           61,308
Federal funds sold ...............................................................................           6,200           11,900

Loans and direct financing leases ................................................................         284,317          255,965
    Less:  Allowance for possible loan and lease losses ..........................................          (5,508)          (4,463)
                                                                                                         ---------        ---------
        Total loans and leases, net ..............................................................         278,809          251,502

Premises, furniture and equipment, net ...........................................................           5,467            5,953
Accrued interest receivable ......................................................................           3,178            2,653
Other real estate, net ...........................................................................             193              457
Other assets .....................................................................................           5,753            4,795
                                                                                                         ---------        ---------
        Total ....................................................................................       $ 426,181        $ 386,967
                                                                                                         =========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
    Noninterest-bearing demand ...................................................................       $  42,576        $  36,286
    Interest-bearing:
        N.O.W. accounts ..........................................................................          24,011           24,420
        Savings ..................................................................................          37,432           41,814
        Insured money market .....................................................................          37,089            8,638
        Other time ...............................................................................         200,362          190,660
                                                                                                         ---------        ---------
        Total deposits ...........................................................................         341,470          301,818

Accounts payable and accrued liabilities .........................................................           6,057            4,766
Securities sold under agreements to repurchase ...................................................          39,508           48,846
Other short-term borrowings ......................................................................           1,224            1,500
Notes payable ....................................................................................          10,000            4,500
Mandatory convertible debentures .................................................................           1,250            1,250
                                                                                                         ---------        ---------
        Total liabilities ........................................................................         399,509          362,680
                                                                                                         ---------        ---------

Stockholders' equity:
Capital stock:
    Preferred, no par value; authorized, 100,000 shares:
        Class A Preferred Stock, stated value $100 per share; authorized, 50,000 shares;
           issued and outstanding:  50,000 shares ................................................           5,000            5,000
        Class B Preferred Stock, stated value $500 per share; authorized, 1,000 shares;
           issued and outstanding:  1,000 shares .................................................             500              500
        Class C Preferred Stock, stated value $425 per share; authorized, 2,400
           shares; issued and outstanding:  2,400 shares .........................................           1,020            1,020
    Common, par value $.50 per share; authorized, 600,000 shares;
        issued:  340,662 shares; outstanding:  176,611 shares ....................................             170              170
Capital surplus ..................................................................................           2,574            2,574
Net unrealized loss on available-for-sale securities, net of taxes ...............................            (257)            (422)
Retained earnings ................................................................................          22,914           20,694
Treasury stock ...................................................................................          (5,249)          (5,249)
                                                                                                         ---------        ---------
                  Total stockholders' equity .....................................................          26,672           24,287
                                                                                                         ---------        ---------
                  Total ..........................................................................       $ 426,181        $ 386,967
                                                                                                         =========        =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>

FINANCIAL SERVICES CORPORATION OF THE MIDWEST

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
                                                                                 (Unaudited)                       (Unaudited)
                                                                             ------------------------      ------------------------
                                                                                Nine Months Ended              Three Months Ended
                                                                                   December 31,                    December 31,
                                                                             ------------------------      ------------------------
                                                                               1996           1995           1996           1995
                                                                             ---------      ---------      ---------      ---------
<S>                                                                          <C>            <C>            <C>            <C>
Interest income:
    Interest and fees on loans and leases .............................      $  20,616      $  17,772      $   7,231      $   6,361
    Interest on investment securities .................................          4,369          3,520          1,466          1,305
    Interest on federal funds sold ....................................            382            941            200            212
    Interest on interest-bearing deposits with other financial
            institutions ..............................................            197              6             68              2
                                                                             ---------      ---------      ---------      ---------
        Total interest income .........................................         25,564         22,239          8,965          7,880
                                                                             ---------      ---------      ---------      ---------
Interest expense:
    Interest on deposits ..............................................         10,711          9,464          3,814          3,247
    Interest on securities sold under agreements to repurchase ........          1,817          1,719            549            684
    Interest on other short-term borrowings ...........................             69             58             20             27
    Interest on notes payable .........................................            343            315            152            102
    Interest on mandatory convertible debentures ......................             73             78             24             26
                                                                             ---------      ---------      ---------      ---------
        Total interest expense ........................................         13,013         11,634          4,559          4,086
                                                                             ---------      ---------      ---------      ---------
        Net interest income ...........................................         12,551         10,605          4,406          3,794
Provision for possible loan and lease losses ..........................          2,000          1,380            950            650
                                                                             ---------      ---------      ---------      ---------
        Net interest income after provision for possible loan
                   and lease losses ...................................         10,551          9,225          3,456          3,144
                                                                             ---------      ---------      ---------      ---------
Other income:
    Trust fees ........................................................            333            222            133             (2)
    Investment securities gains .......................................             --             11             --             11
    Loan servicing fees ...............................................            552            503            188            170
    Gain on sales of loans and leases .................................            287            265            107             93
    Service charges on deposit accounts ...............................            849            795            296            259
    Insurance commissions .............................................            157            221              8             84
    Other .............................................................            554            417            193            159
                                                                             ---------      ---------      ---------      ---------
        Total other income ............................................          2,732          2,434            925            774
                                                                             ---------      ---------      ---------      ---------
                                                                                                                              
Other expenses:
    Salaries and employee benefits ....................................          4,706          4,326          1,542          1,533
    Occupancy, net ....................................................            633            571            209            262
    Insurance .........................................................             86            254             31             60
    Equipment .........................................................            741            692            257            353
    Data processing ...................................................            503            400            175            137
    Advertising .......................................................            295            290             65             58
    Other operating ...................................................          1,663          1,189            619            226
                                                                             ---------      ---------      ---------      ---------
        Total other expenses ..........................................          8,626          7,722          2,898          2,629
                                                                             ---------      ---------      ---------      ---------
        Income before income taxes ....................................          4,657          3,937          1,483          1,289
Income taxes ..........................................................          1,725          1,294            592            417
                                                                             ---------      ---------      ---------      ---------
Net income ............................................................      $   2,932      $   2,643      $     891      $     872
                                                                             =========      =========      =========      =========
Net income available for Common Stock .................................      $   2,485      $   2,194      $     743      $     722
                                                                             =========      =========      =========      =========
Earnings per common share:
Primary ...............................................................      $   14.07      $   12.53      $    4.21      $    4.12
                                                                             =========      =========      =========      =========
Fully diluted .........................................................      $    9.06      $    8.03      $    2.77      $    2.67
                                                                             =========      =========      =========      =========

Weighted average common shares outstanding ............................        176,611        175,111        176,611        175,111
                                                                             =========      =========      =========      =========
Weighted average common and contingently issuable
 common shares outstanding ............................................        328,838        335,421        326,961        332,744
                                                                             =========      =========      =========      =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>




FINANCIAL SERVICES CORPORATION OF THE MIDWEST

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands, Except Per Share Amounts)

<TABLE>


                                                                                                     Net
                                                                                                 Unrealized
                                                                                                   Loss on
                                                         Preferred Stock                         Available-
Nine Months Ended                                   -------------------------   Common   Capital   For-Sale  Retained   Treasury
December 31, 1996 (Unaudited)                       Class A  Class B  Class C    Stock   Surplus Securities1 Earnings     Stock
-------------------------------------------------   -------  -------  -------  -------   ------- ----------- --------   --------
<S>                                                 <C>      <C>      <C>      <C>       <C>     <C>         <C>        <C>
Balance at March 31, 1996........................   $5,000   $  500    $1,020  $   170    $2,574 $    (422)  $20,694    $(5,249)
Net income.......................................      ---      ---       ---      ---       ---       ---     2,932        ---
Change in net unrealized loss on
   available-for-sale securities1 ...............      ---      ---       ---      ---       ---       165       ---        ---
Cash dividends declared:
   Class A Preferred, $6.94 per share............      ---      ---       ---      ---       ---       ---     (347)        ---
   Class B Preferred, $34.85 per share...........      ---      ---       ---      ---       ---       ---      (35)        ---
   Class C Preferred, $27.09 per share...........      ---      ---       ---      ---       ---       ---      (65)        ---
   Common, $1.50 per share ......................      ---      ---       ---      ---       ---       ---     (265)        ---
                                                    ------   ------    ------   ------    ------    ------   -------    -------
Balance at December 31, 1996.....................   $5,000   $  500    $1,020   $  170    $2,574    $ (257)  $22,914    $(5,249)
                                                    ======   ======    ======   ======    ======    ======   =======    =======

                                                                           
Nine Months Ended 
December 31, 1995 (Unaudited)
-------------------------------------------------

Balance at March 31, 1995........................   $5,000   $  500    $1,020  $   170    $2,521  $    ---   $18,047    $(5,297)
Net income.......................................      ---      ---       ---      ---       ---       ---     2,643        ---
Change in net unrealized gain on
   available-for-sale securities1 ...............      ---      ---       ---      ---       ---       174       ---        ---
Cash dividends declared:
   Class A Preferred, $6.94 per share............      ---      ---       ---      ---       ---       ---     (347)        ---
   Class B Preferred, $37.02 per share...........      ---      ---       ---      ---       ---       ---      (37)        ---
   Class C Preferred, $27.09 per share...........      ---      ---       ---      ---       ---       ---      (65)        ---
   Common, $1.26 per share ......................      ---      ---       ---      ---       ---       ---     (221)        ---
                                                    ------   ------    ------   ------   -------   -------   -------    -------
Balance at December 31, 1995.....................   $5,000   $  500    $1,020   $  170   $ 2,521   $   174   $20,020    $(5,297)
                                                    ======   ======    ======   ======   =======   =======   =======    =======
<FN>
1 Net of taxes
</FN>
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>


FINANCIAL SERVICES CORPORATION OF THE MIDWEST

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
                                                                                                                  (Unaudited)
                                                                                                           ------------------------
                                                                                                               Nine Months Ended
                                                                                                                 December 31,
                                                                                                           ------------------------
                                                                                                             1996            1995
                                                                                                           --------        --------
<S>                                                                                                        <C>             <C>
Cash Flows From Operating Activities:
Net income .........................................................................................       $  2,932        $  2,643
Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization ..................................................................            937             670
    Provision for possible loan and lease losses ...................................................          2,000           1,380
    Gain on sale of investment securities available-for-sale .......................................             --             (11)
    Investment amortization ........................................................................            183             113
    Loans and leases originated for sale ...........................................................        (25,928)        (49,694)
    Proceeds from sales of loans and leases ........................................................         35,057          49,034
    Gain on sales of loans and leases ..............................................................           (287)           (265)
    Increase in interest receivable ................................................................           (525)         (1,265)
    Increase in interest payable ...................................................................            667           1,021
    (Increase) decrease in other assets ............................................................         (1,068)            283
    Increase in other liabilities ..................................................................            624             629
                                                                                                           --------        --------
Net cash provided by operating activities ..........................................................         14,592           4,538
                                                                                                           --------        --------

Cash Flows From Investing Activities:
Net decrease in federal funds sold .................................................................          5,700          14,900
Net (increase) decrease in interest-bearing deposits with other financial institutions .............           (116)            181
Purchase of investment securities held-to-maturity .................................................        (14,542)        (16,076)
Proceeds from maturity or call of investment securities held-to-maturity ...........................         10,000          19,000
Purchase of investment securities available-for-sale ...............................................        (12,629)        (34,790)
Proceeds from maturity or call of investment securities available-for-sale .........................          9,784              --
Proceeds from sales of investment securities available-for-sale ....................................           --             7,152
Net increase in loans and leases ...................................................................        (38,149)        (31,964)
Net increase in other investing activities .........................................................           (162)         (3,404)
                                                                                                           --------        --------
Net cash used in investing activities ..............................................................        (40,114)        (45,001)
                                                                                                           --------        --------

Cash Flows From Financing Activities:
Net increase in deposits ...........................................................................         39,652          20,986
Net increase (decrease) in short-term borrowings ...................................................         (2,668)         13,696
Proceeds from other borrowings .....................................................................         36,642          27,259
Payments on other borrowings .......................................................................        (43,588)        (19,809)
Proceeds from bank note advance ....................................................................          1,210              --
Payments on bank note advance ......................................................................         (1,210)             --

Issuance of notes payable ..........................................................................         10,000              --
Redemption of notes payable ........................................................................         (4,500)           (500)
Cash dividends paid on Preferred Stock .............................................................           (447)           (449)
Cash dividends paid on Common Stock ................................................................           (265)           (221)
                                                                                                           --------        --------
Net cash provided by financing activities ..........................................................         34,826          40,962
                                                                                                           --------        --------

Net increase in cash and due from banks ............................................................          9,304             499
Cash and due from banks at the beginning of the year ...............................................         14,423          13,955
                                                                                                           --------        --------
Cash and due from banks at the end of the period ...................................................       $ 23,727        $ 14,454
                                                                                                           ========        ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>




                  FINANCIAL SERVICES CORPORATION OF THE MIDWEST
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   Interim  Financial  Statements - The  accompanying  unaudited  consolidated
     financial  statements  have been prepared in accordance  with the rules and
     regulations of the Securities and Exchange Commission.  Certain information
     and footnote disclosures normally included in financial statements prepared
     in accordance  with  generally  accepted  accounting  principles  have been
     condensed  or  omitted  pursuant  to  such  rules  and  regulations.  These
     consolidated  financial  statements  should be read in conjunction with the
     consolidated  financial statements and notes thereto contained in Financial
     Services  Corporation  of the  Midwest's  ("FSCM") Form 10-K for the fiscal
     year  ended  March  31,  1996,  filed  with  the  Securities  and  Exchange
     Commission.  

     In  the  opinion  of  management  of  FSCM,  the   accompanying   unaudited
     consolidated  financial  statements contain all adjustments  (consisting of
     only normal recurring  accruals)  necessary to present fairly the financial
     position  of FSCM,  its  results of  operations  and its cash flows for the
     interim periods presented.  Interim results are not necessarily  indicative
     of the results to be expected for the full year.

2.   Supplemental Disclosures of Cash Flow Information - Cash paid for:

                                                           
       (Dollars in Thousands)                                  December  31,
                                                          ---------------------
                                                            1996          1995
                                                          -------       -------

     Interest ...............................             $12,346       $10,612
     Income taxes ...........................               1,895         1,180

3.   Earnings Per Common Share Data - The following  information was used in the
     computation  of  earnings  per  common  share on both a  primary  and fully
     diluted basis for the respective nine and three month periods.
<TABLE>

                                                                         Nine Months Ended         Three Months Ended
        (Dollars in Thousands)                                              December 31,               December 31,
         ---------------------                                         ----------------------    ----------------------
                                                                         1996          1995         1996         1995
                                                                       ---------    ---------    ---------    ---------
       <S>                                                             <C>          <C>          <C>          <C>
       Net income ..................................................   $   2,932    $   2,643    $     891    $     872
       Accrued preferred dividends .................................        (447)        (449)        (149)        (150)
                                                                       ---------    ---------    ---------    ---------

       Primary earnings ............................................       2,486        2,194          742          722
       Accrued convertible preferred dividends .....................         447          449          149          150
       Mandatory convertible debentures interest expense, net of tax          48           52           16           18
                                                                       ---------    ---------    ---------    ---------
       Fully diluted earnings ......................................   $   2,980    $   2,695    $     907    $     890
                                                                       =========    =========    =========    =========

       Weighted average common shares outstanding ..................     176,611      175,111      176,611      175,111

       Weighted average common shares issuable upon conversion of:
       Class A Preferred Stock1 ....................................      67,116       75,199       65,239       72,522
       Class B Preferred Stock2 ....................................      11,111       11,111       11,111       11,111
       Class C Preferred Stock2 ....................................      24,000       24,000       24,000       24,000
       Mandatory convertible debentures2 ...........................      50,000       50,000       50,000       50,000
                                                                       ---------    ---------    ---------    ---------
           Weighted average common and contingently issuable
                common shares outstanding ..........................     328,838      335,421      326,961      332,744
                                                                       =========    =========    =========    =========

<FN>
1    The Class A Cumulative Convertible Preferred Stock cannot be converted into
     Common Stock until on or after December 1, 2002.

2    The Class B and C Preferred Stock and the mandatory convertible  debentures
     are  convertible  at the option of the holders.  The holders of the Class B
     and C Preferred  Stock and  certain  holders of the  mandatory  convertible
     debentures have consented to provide FSCM with a ninety day notice prior to
     the  conversion  of their  securities  and allow for the  obtainment of any
     necessary regulatory approval or legal opinion.
</FN>
</TABLE>

No mandatory convertible  debentures or Preferred Stock were converted to common
shares during the periods presented.
<PAGE>




                  FINANCIAL SERVICES CORPORATION OF THE MIDWEST
                      MANAGEMENT'S DISCUSSION AND ANALYSIS


Business Development

On November 8, 1996, FSCM went effective with a $10 million,  unsecured,  twelve
year, 8.0% fixed rate public notes offering ("1996 Notes").  Funding occurred on
November  13, 1996 and the  proceeds  were used to (i) redeem the $4.5  million,
8.50%  Notes due  December 1, 1999 ("1992  Notes")  and accrued  interest,  (ii)
provide for a $4 million capital investment into THE Rock Island Bank,  National
Association  ("TRIB"),  FSCM's wholly owned  commercial bank  subsidiary,  (iii)
allow for the repayment of a $550 thousand correspondent bank loan, (iv) pay the
underwriting fees and other offering related costs which approximated  $525,000,
and (v) supplement  working capital.  The 1996 Notes are dated as of November 1,
1996 and will mature on November 1, 2008.  Semiannual  interest payments are due
on the first of May and November beginning May 1, 1997. Mandatory redemptions of
$750  thousand  commence  November  1,  2000 and are due  yearly  thereafter  on
November 1 in each of the years 2001 through 2007. FSCM may redeem any or all of
the 1996 Notes at any time upon not less than 15 days  notice to the holders for
the  principal  amount  plus  accrued  interest to the date of  redemption.  Any
redemptions  occurring  prior to  November 1, 1999 will be priced at 103% of the
principal amount.

Income Statement

Overview

Net income of $891  thousand was earned  during the three months ended  December
31, 1996, resulting in the nine month fiscal net income totaling $2.9 million as
compared  to fiscal  1995's net income for the  comparable  three and nine month
periods of $872  thousand  and $2.6  million,  respectively.  Earnings per fully
diluted  common share equaled $9.06 and $8.03 for the nine months ended December
31, 1996, and 1995,  respectively,  and $2.77 and $2.67 for the respective three
month  periods.  Changes in net income  between the nine and three month periods
ended December 31, 1996, and 1995 were as follows:

                                                              Change in Income
                                                           --------------------
                                                             Nine        Three
        (Dollars in Thousands)                              Months       Months
        ----------------------                             -------      -------

Interest income ......................................     $ 3,325      $ 1,085
Interest expense .....................................      (1,379)        (473)
                                                           -------      -------
Net interest income ..................................       1,946          612
Provision for possible loan and lease losses .........        (620)        (300)
Other income .........................................         298          151
Other expenses .......................................        (904)        (269)
Income taxes .........................................        (431)        (175)
                                                           -------      -------
Net increase (decrease) in net income ................     $   289      $    19
                                                           =======      =======

The   efficiency  and  overhead   ratios  are  two  commonly  used   performance
measurements.  Both measure the  coverage of  operating  expense by net interest
income.  In the efficiency  ratio,  other income is added to net interest income
and in the overhead  ratio other  income is netted  against  operating  expense.
Lower ratios generally  reflect better  performance and therefore are considered
more  favorable.  FSCM's  ratios as of December 31, 1996 and 1995 and Peer Group
comparisons  are presented  below.  FSCM's Peer Group is defined as bank holding
companies with  consolidated  assets between $300 million and $500 million.  The
Peer Group numbers  presented here and throughout the report are as of September
30, 1996--the most recent data available.  The improvement in the ratios between
nine  month  comparative  periods  was  primarily  the result of  increased  net
interest income.

                                                      FSCM
                                          ----------------------------
                                           December 31,   December 31,   Peer
                                               1996          1995        Group
                                          --------------  ------------ ---------

Efficiency Ratio ..................            56.44%         59.22%     63.98%
Overhead Ratio ....................            46.96          49.86       N/A

<PAGE>



Net Interest Income

As reflected in the table below,  increases in both outstanding  balances of and
yields on  interest-earning  assets  resulted in interest  income totaling $25.6
million for the nine months ended December 31, 1996 as compared to $22.2 million
for the 1995 nine month period.  Correspondingly,  the  outstanding  balances of
interest-bearing   liabilities  also  increased  but  the  cost  of  such  funds
decreased.  As a result,  interest  expense  totaled  $13.0 million for the nine
months ended  December 31, 1996 as compared to $11.6 million for the  comparable
1995 period.  The resulting net interest  income equaled $12.6 million and $10.6
million for the nine months ended December 31, 1996 and 1995,  respectively,  an
increase of $1.9 million,  or 18.35%.  Further details of changes which resulted
in these  improvements are shown in the variance table on the next page. The net
interest margin, net interest income divided by average interest-earning assets,
improved 22 basis points to equal 4.52% as compared to 4.30% for the nine months
ended December 31, 1996 and 1995, respectively. FSCM's Peer Group's net interest
margin equaled 4.71%.  Strong funding demands and intense local  competition for
funds has  contributed to the  unfavorable  comparisons to Peer Group ratios for
both the cost of funds and the net interest margin.

                   AVERAGE BALANCE AND INTEREST RATE ANALYSIS
<TABLE>

                                                                                      Nine Months Ended
                                                        ----------------------------------------------------------------------------
                                                                   December 31, 1996                     December 31, 1995
    (Dollars in Thousands)                              ----------------------------------------  ----------------------------------
                                                                                       Average                             Average
                                                         Average                        Annual     Average                  Annual
            ASSETS                                       Balance       Interest          Rate      Balance      Interest     Rate
--------------------------------------------------      --------       --------        ---------  --------      --------   ---------
<S>                                                     <C>            <C>             <C>        <C>           <C>        <C>
Interest-bearing deposits with other
    financial institutions .......................      $  4,923       $    197           5.34%   $    124      $      6      6.45%
Investment securities ............................        95,698          4,369           6.09      81,627         3,520      5.75
Federal funds sold ...............................         9,572            382           5.32      21,149           941      5.93
Loans and leases, net1 ...........................       260,449         20,616          10.55     225,789        17,772     10.49
                                                        --------       --------                   --------      --------      
    Total interest-earning assets ................      $370,642         25,564           9.20    $328,689        22,239      9.02
                                                        ========       --------                   ========      --------

                     LIABILITIES
Savings deposits .................................      $ 86,693          1,900           2.92    $ 74,323         1,381      2.48
Time deposits ....................................       193,692          8,811           6.07     171,473         8,083      6.29
Federal funds purchased ..........................           135              6           5.93         116             5      5.75
Securities sold under agreements to
    repurchase ...................................        46,469          1,817           5.21      40,927         1,719      5.60
Other short-term borrowings ......................         1,392             63           6.03       1,216            53      5.81
Notes payable ....................................         5,480            343           8.35       4,944           315      8.50
Mandatory convertible debentures .................         1,250             73           7.79       1,250            78      8.32
                                                        --------       -------                    --------      --------

    Total interest-bearing liabilities ...........      $335,111         13,013           5.18    $294,249        11,634      5.27
                                                        ========       --------                   ========      --------

Net interest income ..............................                     $ 12,551                                 $ 10,605
                                                                       ========                                 ========
Net interest margin (net interest income
    divided by average total interest-
    earning assets) ..............................                                        4.52%                              4.30%
                                                                                       ========                           ========
<FN>
1  Nonaccruing loans and leases are included in the average balance.
</FN>
</TABLE>
<PAGE>



                           INTEREST VARIANCE ANALYSIS
<TABLE>

                                                                                       Nine Months Ended
                                                                            December 31, 1996 vs. December 31, 1995
                                                                            ---------------------------------------
                                                                                     Increase (Decrease)
                                                                                     Due to Change in1
                                                                               -----------------------------
                                                                               Average    Average    Total
    (Dollars in Thousands)                                                     Balance     Rate      Change
                                                                               --------   -------    -------
<S>                                                                            <C>        <C>        <C>
Interest income:
    Interest-bearing deposits with other financial institutions ............   $   232    $   (41)   $   191
    Investment securities ..................................................       607        242        849
    Federal funds sold .....................................................      (515)       (44)      (559)
    Loans and leases .......................................................     2,728        116      2,844
                                                                               -------    -------    -------
       Total interest income ...............................................     3,052        273      3,325
                                                                               -------    -------    -------

Interest expense:
    Savings deposits .......................................................       230        289        519
    Time deposits ..........................................................     1,047       (319)       728
    Federal funds purchased ................................................         1         --          1
    Securities sold under agreements to repurchase .........................       233       (135)        98
    Short-term borrowings ..................................................         8          2         10
    Notes payable ..........................................................        34         (6)        28
    Mandatory convertible debentures .......................................        --         (5)        (5)
                                                                               -------    -------    -------
       Total interest expense ..............................................    1 ,553       (174)     1,379
                                                                               -------    -------    -------

Change in net interest income ..............................................   $ 1,499    $   447    $ 1,946
                                                                               =======    =======    =======

<FN>
1    The change in interest due to the volume and rate has been allocated to the
     change in average  rate.  Nonaccruing  loans and leases are included in the
     average  balance.  Loan and lease  fees of $1,268  and  $1,072 for the nine
     months ended December 31, 1996 and 1995, respectively,  are included in the
     interest income on loans and leases.
</FN>
</TABLE>

Provision for Possible Loan and Lease Losses

The provision  for possible loan and lease losses  totaled $2.0 million and $1.4
million for the nine months ended December 31, 1996 and 1995, respectively,  and
$950  thousand and $650 thousand for the  respective  three month  periods.  The
amount of the provisions were based on  management's  assessment of the adequacy
of the  allowance  for  possible  loan and  lease  losses  in  relation  to both
nonperforming  loans  (those  past-due 90 days or more and loans in a nonaccrual
status)  and total  loans and  leases  outstanding.  For the nine  months  ended
December  31, 1996 and 1995,  net  charge-offs  totaled  $955  thousand and $1.2
million,  respectively.  Net charge-offs for the three months ended December 31,
1996 totaled $133  thousand as compared to 1995's  three months  charge-offs  of
$563  thousand.  Nonperforming  loans and  leases  totaled  $3.4  million  as of
December 31, 1996 and $1.3 million on December 31, 1995. The  allowance,  stated
as a percentage of nonperforming  loans and leases,  equaled 162.29% and 305.87%
as of December 31, 1996 and 1995,  respectively.  FSCM's  comparative Peer Group
ratio  equaled  282.30%.  A  significant  portion,  $2.7  million,  of the  1996
nonperforming  loan and lease  balances was  comprised of loans  secured by real
estate.  Of such loans,  $112 thousand  related to  construction  lending,  $2.0
million related to 1-4 family residential  mortgages,  and $577 thousand related
to commercial  real estate credits.  Further,  of the $2.0 million in 1-4 family
residential  mortgages,  $779  thousand was one credit of a California  property
appraised at over $1.0 million.  Management has taken a conservative  posture in
respect to the underlying  fair market value of the  collateral and  anticipates
significant  reductions in the  nonperforming  balances once the properties have
been foreclosed and liquidated.
<PAGE>



Other Income

Total other income  equaled $2.7 million for the nine months ended  December 31,
1996, a $298 thousand, or 12.24%, increase from 1995's nine month income of $2.4
million. Increases in other income was primarily generated from increases in fee
income  generated  from trust  services and in  syndication  fees  received from
structuring  financing  arrangements.  Other income for the three month  periods
ended  December  31, 1996 and 1995  equaled  $925  thousand  and $774  thousand,
respectively.  Loan servicing fees and service charges on deposit  accounts were
also higher in 1996 than in 1995 for both the nine and three month periods.

Other Expenses

Total other  expenses  equaled $8.6 million and $7.7 million for the nine months
ended  December 31, 1996 and 1995,  respectively,  a $904  thousand,  or 11.71%,
increase  between  periods.  For the three month  period,  total  other  expense
equaled $2.9 million and $2.6 million, respectively, a $269 thousand, or 10.23%,
increase between periods.

Salaries  and  employee  benefits  comprise  approximately  55% of  total  other
expenses  and equaled  $4.7  million and $4.3  million for the nine months ended
December 31, 1996 and 1995, respectively,  and $1.5 million for both three month
comparative  periods.  The number of full-time  equivalent employees totaled 184
and 174 at  December  31,  1996 and  1995,  respectively.  Annualized  personnel
expense,  stated as a percentage of average  assets  equaled 1.58% and 1.64% for
the nine  months  ended  December  31,  1996 and 1995 as compared to FSCM's Peer
Group ratio which equaled 1.74%.

The occupancy expense and equipment  expense increased $62 thousand,  or 10.86%,
and $49 thousand, or 7.08%,  respectively,  between the 1996 and 1995 nine month
comparative  periods due primarily to expansion of the 18th Avenue, Rock Island,
Illinois  ("Hilltop")  office and the opening of the Bettendorf,  Iowa office in
November 1995.

The decrease in insurance  expense  between both nine and three month periods in
1996 versus 1995 primarily resulted from the premium reduction received from the
Federal Deposit Insurance Corporation ("FDIC").

Other operating expense totaled $1.7 million and $1.2 million for the respective
nine month periods and $619 thousand and $226 thousand for the respective  three
month periods  ended  December 31, 1996 and 1995.  Changes in items  included in
other operating expense were as follows.

o    The  amortization of deferred note offering costs totaled $150 thousand for
     the nine months  ended  December 31,  1996--primarily  because of the early
     redemption of the notes issued in 1992--as compared to $39 thousand for the
     nine months ended December 31, 1995. 

o    Loan and lease related bank expenses  including  recording and filing fees,
     dealer fees paid for the generation of indirect  consumer loan  financings,
     and problem loan costs incurred to preserve TRIB's position.  Such expenses
     netted $202 thousand and $109 thousand for the nine and three month periods
     ended December 31, 1996,  respectively,  as compared to $5 thousand for the
     nine month period and a recovery of $54 thousand for the three month period
     ended  December  31,  1995,   respectively.   The  recovery  resulted  from
     collections of previous  expensed amounts upon resolution of the underlying
     credit.  The indirect  lending  function was introduced by TRIB in 1995 and
     the difference in the amounts between periods primarily reflected the lower
     volume due to  start-up  in 1995.  These are not  sub-prime  loans.  

o    TRIB regulatory  examination fees totaled $71 thousand and $33 thousand for
     the 1996 and 1995 nine month  periods,  respectively,  and $22 thousand and
     $12 thousand for the respective three month periods.  The increase in costs
     resulted from TRIB's  November  1995 change in operating  charters from one
     issued by the State of Illinois to a National  Association under the Office
     of the Comptroller of the Currency ("OCC"). 

o    Advisory  services  totaled $19  thousand and $98 thousand for the 1996 and
     1995 nine month  periods,  respectively.  Included in the 1995 amounts were
     costs  associated  with the  employment  of a national  consulting  firm to
     perform a bank-wide "best practices" review.
<PAGE>



Income Taxes

Income taxes increased $431 thousand,  or 33.31%,  to total $1.7 million for the
nine months  ended  December  31, 1996 from $1.3 million for the 1995 nine month
comparative period, and $175 thousand, or 41.97%, to total $592 thousand for the
three months ended December 31, 1996 from $417 thousand for the 1995 three month
period.  The effective tax rates equaled 37.04% and 32.87% for the 1996 and 1995
nine month periods, respectively, and 39.92% and 32.35% for the respective three
month periods.  The increase in income tax effective  rates was primarily due to
the state tax obligations generated by TRIB's Iowa presence.

Risk Management

FSCM's  internal  credit  administration  department  performs  continuous  loan
reviews; monitors loan documentation;  ensures compliance with internal policies
and  governmental  regulations;  and maintains the internal loan and lease watch
list. FSCM also employs an internal  audit/compliance  staff to provide on-going
operational audits and reviews of regulatory compliance. In addition, management
continues to cautiously  assess the risks  associated with the potential  future
impact of adverse  changes in the overall  economic  climate and more  stringent
regulatory standards and requirements. An asset/liability committee monitors the
liquidity position of FSCM in order to provide for future liquidity requirements
as well as maintain an acceptable return on assets. Further, computer simulation
modeling is used to assess the  interest  rate  sensitivity  characteristics  of
assets and liabilities and predict possible impacts of new marketing and product
development strategies.

As depicted in FSCM's  Consolidated  Statement of Cash Flows,  the operating and
financing  activities  are  generally  net sources of  liquidity,  and investing
activities  are net uses of  liquidity.  For the nine months ended  December 31,
1996,  the primary  sources of cash  provided by operating  activities  included
proceeds from the sale of loans and leases  coupled with net income;  these same
two components provided positive net cash flow from operating activities for the
nine months ended December 31, 1995. For both nine month periods,  cash was used
in investing  activities  primarily to fund the net increase in loans and leases
and  the  increase  in  investments.  Cash  was  provided,  in  the  nine  month
comparative  periods, by financing  activities from the net increase in deposits
for the 1996 period and from net increase in deposits and short-term  borrowings
for the 1995  period.  The  resulting  net  change  in cash  and due from  banks
reflected  an increase of $9.3  million for the nine months  ended  December 31,
1996 and $499 thousand for the corresponding  1995 nine month period.  The large
1996  increase  in cash and due  from  banks  primarily  resulted  from  weather
hindering  the  clearing  of cash  letters on  December  30 which also caused an
unusually high balance in noninterest-bearing demand deposits.

Balance Sheet

Overview

Assets  totaled  $426.2  million at  December  31,  1996,  an  increase of $39.2
million,  or  10.13%,  from March 31,  1996's  balance  of $387.0  million.  The
increase was  primarily  distributed  to net loans and leases,  which  increased
$27.3 million,  or 10.86%,  and  investments,  which increased $7.5 million,  or
8.24%.  Loans and leases,  net, comprised 65.42% of total assets at December 31,
1996--FSCM's  Peer  Group  comparative  ratio was  60.67%.  The ratio of average
interest-earning assets to total average assets as of December 31, 1996 for FSCM
and  for  FSCM's   Peer  Group   equaled   93.42%  and   92.14%,   respectively.
Correspondingly,  the  increase in assets was funded by  increased  deposits and
notes payable.  Targeted  marketing  campaigns have been successful in gathering
additional funds in the insured money market and time deposit  products.  FSCM's
December 31, 1996 ratio of average interest-bearing liabilities to total average
assets  equaled  84.47% as  compared  to that of its Peer  Group  which  equaled
76.46%.  The  unfavorable  variance  primarily  resulted from FSCM's funding and
capital  structure  in which the average  balances  in both  noninterest-bearing
deposits and stockholders' equity were lower than that of its Peer Group.
<PAGE>



Investments

Investments  totaled  $97.9  million at December  31,  1996,  or 22.97% of total
assets.   Investments  are  categorized  at  the  time  of  purchase  as  either
held-to-maturity    or    available-for-sale.    Securities    categorized    as
held-to-maturity  are  carried at  amortized  cost.  Securities  categorized  as
available-for-sale  are  carried  at  fair  market  value  with  the  net of tax
difference  between the  amortized  cost and the fair market value carried as an
unrealized  adjustment  to  stockholders'   equity.   Securities  classified  as
held-to-maturity  and  available-for-sale  at December  31, 1996  equaled  $33.6
million and $64.2 million,  respectively, or 34.36% and 65.64%, respectively, of
total  securities.  FSCM's  Peer Group  comparative  ratios  equaled  29.62% and
70.38%,  respectively.  At December 31 and March 31, 1996, the amortized cost of
the  available-for-sale  securities  exceeded  the  fair  market  value  by $390
thousand  and $640  thousand,  respectively.  The  decrease in  unrealized  loss
between periods was primarily due to a decrease in the interest rates from March
to December 1996. As a result,  the adjustment to stockholders'  equity,  net of
income taxes,  related to the net  unrealized  loss also decreased to equal $257
thousand and $422 thousand at December 31 and March 31, 1996, respectively.

Loans and Direct Financing Leases

The  following   table   presents  the  December  and  March  1996   comparative
distribution of loans and leases.

                           LOAN AND LEASE DISTRIBUTION

                                                          December 31, March 31,
        (Dollars in Thousands)                                1996       1996
        ----------------------                             ---------   ---------

Commercial, financial and agricultural ...............     $ 90,640     $ 85,578
Direct financing leases ..............................        5,449        5,719
Real  estate:
   Residential mortgage1 .............................       63,598       64,248
   Construction ......................................       27,414       21,823
   Commercial mortgage ...............................       69,710       62,746
Consumer, not secured by a real estate mortgage2 .....       27,506       15,851
                                                           --------     --------

         Total loans and leases ......................     $284,317     $255,965
                                                           ========     ========

1    Includes first  mortgages  pending  conclusion of their sale to the Federal
     National Mortgage Association  ("Freddie Mac"), Fannie Mae and the Illinois
     Housing Development  Authority ("IHDA"),  home equity lines of credit, home
     improvement  loans, and consumer loans for which junior liens were taken as
     primary and secondary sources of security.

2    Consumer loans, both direct and indirect and credit card plans.

As depicted in the above table,  both  commercial and commercial  mortgage loans
increased  between the  comparative  periods.  In addition,  significant  growth
occurred in the consumer lending area. The growth primarily  focused in the area
of indirect  loans in which TRIB  purchased  from dealers (e.g.  auto,  boat and
recreational  vehicle  dealerships)  consumer  loans rather than  providing  the
financing directly to the consumer. The decrease between balances in residential
mortgage  loans  resulted  from the  servicing-retained  sale of a $7.4  million
adjustable  rate  portfolio   during  May  1996.  The  outstanding   balance  of
residential  mortgage  loans which have been  originated  and sold to  investors
while  retaining the servicing  rights totaled $183.8 million as of December 31,
1996 as compared to $165.0 million at March 31, 1996.

In June 1996,  FSCM  purchased a $1.5 million  commercial  real estate loan from
TRIB pursuant to lending  authority  received from the Federal Reserve Board. It
is not the intent of FSCM's management to actively generate loans but merely use
such authority to primarily supplement TRIB's lending capabilities.
<PAGE>



Deposits,   Securities  Sold  Under  Agreements  to  Repurchase  and  Short-Term
Borrowings

As of December 31, 1996,  noninterest-bearing  deposits were  unusually  high by
approximately  $10  million due to weather  related  problems in delivery of the
overnight  cash letter.  The insured money market  account has  increased  $28.5
million to $37.1 million from $8.6 million as of December 31 and March 31, 1996,
respectively.  The  increase  resulted  from the  successful  marketing of a new
tiered-rate  product.  Of the $9.3  million  decrease in  securities  sold under
agreements to repurchase ("repurchase agreements"), $5 million was attributed to
a switch in State funds from  repurchase  agreements to tine deposits  products.
Time  deposits  have also  increased  between  periods as the result of targeted
marketing of specific term products.

Notes Payable

The change between  December 31 and March 31, 1996 in notes payable reflects the
8.0%,  $10 million new notes issued as of November 1, 1996 and the use of a part
of the  proceeds to early  redeem the 8.5% , $4.5  million  notes which had been
issued in 1992..

Capital Resources

FSCM's  capital,  as measured by standards  established  by the federal  banking
regulators,  exceeded  those defined for  "well-capitalized"  institutions.  The
table below sets forth FSCM's ratios as of December 31, 1996 and March 31, 1996,
as well as the regulatory ratios for minimum requirements and "well-capitalized"
institutions.

                                 CAPITAL RATIOS
<TABLE>
                                                                              FSCM
                                                                     ------------------------      Regulatory Requirements     
                                                                     December 31,  March 31,    ----------------------------  
                                                                        1996         1996       Minimum     Well Capitalized
                                                                     ----------    ----------   -------     ----------------
<S>                                                                  <C>           <C>          <C>         <C>
Risk-based capital ratios:
     Tier 1 Capital ..............................................        8.69%         8.97%     4.00%           6.00%
     Total Capital ...............................................       13.64         11.66      8.00           10.00
Leverage .........................................................        6.35          6.83      3.00            5.00

Stockholders' equity .............................................   $  26,672     $  24,287
Net unrealized loss on available-for-sale securities, net of taxes         257           422
Intangible assets ................................................        (515)         (140)
                                                                     ---------     ---------
     Tier 1 capital ..............................................      26,414        24,569
Supplementary capital ............................................      15,072         7,387
                                                                     ---------     ---------
     Total capital ...............................................   $  41,486     $  31,956
                                                                     =========     =========

Total  adjusted average assets ...................................   $ 416,012     $ 359,486
                                                                     =========     =========

Risk weighted assets .............................................   $ 304,051     $ 273,981
                                                                     =========     =========

</TABLE>
<PAGE>




                  FINANCIAL SERVICES CORPORATION OF THE MIDWEST



Part II - Other Information and Signatures


Item 4.  Submission of Maters to a Vote of Security Holders

a)  The Annul Meeting of Stockholders was held August 22, 1996.

b)  The names of the directors who were re-elected at the Annual Meeting were:

    1.  Benjamin D. Farrar, Jr.
    2.  Perry B. Hansen
    3.  Douglas M. Kratz
    4.  John T. Kustes

c)  Details of matters voted upon:
<TABLE>
                                                           Votes Casted
                                               -------------------------------------
                                                 For    Against Withheld Abstentions
                                               -------  ------- -------- -----------
<S>                                            <C>      <C>     <C>      <C>
For the election of directors:
    Benjamin D. Farrar, Jr .................   151,788      --     --        822
    Perry B. Hansen ........................   151,788      --     --        822
    Douglas M. Kratz .......................   151,788      --     --        822
    John T. Kustes .........................   151,788      --     --        822

For the appointment of McGladrey &
    Pullen, LLP as FSCM's independent
    accountants for the fiscal year
    ending March 31, 1996 ..................   151,257       531   --        822

For the approval of the 1996 Combined
    Incentive and Nonstatutory
    Stock Option Plan ......................   148,529     3,127   --        954

</TABLE>

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

    None

(b) Reports on Form 8-K

    None

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.


                                   FINANCIAL SERVICES CORPORATION OF THE MIDWEST




Date:  February 14, 1997           By:   /s/ Douglas M. Kratz
                                        ----------------------------------------
                                        Douglas M. Kratz
                                        President, CEO, CFO, Secretary


                                  By:   /s/ Jean M. Hanson
                                        ----------------------------------------
                                        Jean M. Hanson
                                        Controller, Chief Accounting Officer