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: September 30, 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 --
                               September 30, 1996 and March 31, 1996         

                          Consolidated Statements of Income --
                               Six and Three Months Ended September 30, 
                               1996 and 1995

                          Consolidated Statements of Stockholders' Equity--
                               Six Months Ended September 30, 1996 and 1995    

                          Consolidated Statements of Cash Flows --
                               Six Months Ended September 30, 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)
                                                                                                  ------------------------
                                                                                                  September 30,  March 31,
                                                                                                       1996         1996
                                                                                                  -------------  ---------
<S>                                                                                                <C>           <C>
ASSETS
Cash and due from banks .........................................................................   $  18,233    $  14,423
Interest-bearing deposits with other financial institutions .....................................       4,942        4,861
Investment securities:
             Held-to-maturity (approximate market value September 30, 1996-$31,111 and
                March 31, 1996-$29,072) .........................................................      32,064       29,115
             Available-for-sale (amortized cost September 30, 1996-$63,534 and
            March 31, 1996-$61,948) .............................................................      61,937       61,308
Federal funds sold ..............................................................................       8,200       11,900

Loans and direct financing leases ...............................................................     271,684      255,965
             Less:  Allowance for possible loan and lease losses ................................      (4,691)      (4,463)
                                                                                                    ---------    ---------
                Total loans and leases, net .....................................................     266,993      251,502

Premises, furniture and equipment, net ..........................................................       5,571        5,953
Accrued interest receivable .....................................................................       2,750        2,653
Other real estate, net ..........................................................................         143          457
Other assets ....................................................................................       5,300        4,795
                                                                                                    ---------    ---------
                Total ...........................................................................   $ 406,133    $ 386,967
                                                                                                    =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
             Non-interest-bearing demand ........................................................   $  36,686    $  36,286
             Interest-bearing:
                N.O.W. accounts .................................................................      23,405       24,420
                Savings .........................................................................      37,920       41,814
                Insured money market ............................................................      30,396        8,638
                Other time ......................................................................     192,624      190,660
                                                                                                    ---------    ---------
                Total deposits ..................................................................     321,031      301,818

Accounts payable and accrued liabilities ........................................................       4,943        4,766
Securities sold under agreements to repurchase ..................................................      46,923       48,846
Other short-term borrowings .....................................................................       2,050        1,500
Notes payable ...................................................................................       4,500        4,500
Mandatory convertible debentures ................................................................       1,250        1,250
                                                                                                    ---------    ---------
                Total liabilities ...............................................................     380,697      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 ............................................        (839)        (422)
Retained earnings ...............................................................................      22,260       20,694
Treasury stock ..................................................................................      (5,249)      (5,249)
                                                                                                    ---------    ---------
                Total stockholders' equity ......................................................      25,436       24,287
                                                                                                    ---------    ---------
                Total ...........................................................................   $ 406,133    $ 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)
                                                                          -------------------   -------------------
                                                                            Six Months Ended    Three Months Ended
                                                                              September 30,       September 30,
                                                                            1996       1995        1996        1995
                                                                          --------   --------   --------   --------
<S>                                                                       <C>        <C>        <C>        <C>
Interest income: ......................................................  
             Interest and fees on loans and leases ....................   $ 13,385   $ 11,411   $  6,800   $  5,953
             Interest on investment securities ........................      2,903      2,215      1,470      1,186
             Interest on federal funds sold ...........................        182        729        110        240
             Interest on interest-bearing deposits with other financial
            institutions ..............................................        129          4         65          1
                                                                          --------   --------   --------   --------
                Total interest income .................................     16,599     14,359      8,445      7,380
                                                                          --------   --------   --------   --------
Interest expense:
             Interest on deposits .....................................      6,897      6,217      3,500      3,142
             Interest on securities sold under agreements to repurchase      1,268      1,035        643        529
             Interest on other short-term borrowings ..................         49         31         26         18
             Interest on notes payable ................................        191        213         96        107
             Interest on mandatory convertible debentures .............         49         52         25         25
                                                                          --------   --------   --------   --------
                Total interest expense ................................      8,454      7,548      4,290      3,821
                                                                          --------   --------   --------   --------

                Net interest income ...................................      8,145      6,811      4,155      3,559
Provision for possible loan and lease losses ..........................      1,050        730        525        300
                                                                          --------   --------   --------   --------
                Net interest income after provision for possible loan
                   and lease losses ...................................      7,095      6,081      3,630      3,259
                                                                          --------   --------   --------   --------
Other income:
             Trust fees ...............................................        200        224        100        112
             Loan servicing fees ......................................        364        333        186        165
             Gain on sales of loans and leases ........................        180        172         68         81
             Service charges on deposit accounts ......................        553        536        279        273
             Insurance commissions ....................................        149        137         70         62
             Other ....................................................        361        258        229        154
                                                                          --------   --------   --------   --------
                Total other income ....................................      1,807      1,660        932        847
                                                                          --------   --------   --------   --------
Other expenses:
             Salaries and employee benefits ...........................      3,164      2,793      1,570      1,425
             Occupancy, net ...........................................        424        309        219        146
             Insurance ................................................         55        194         27         20
             Equipment ................................................        484        339        246        177
             Data processing ..........................................        328        263        156        126
             Advertising ..............................................        230        232        109        117
             Other operating ..........................................      1,043        963        644        472
                                                                          --------   --------   --------   --------
                Total other expenses ..................................      5,728      5,093      2,971      2,483
                                                                          --------   --------   --------   --------
                Income before income taxes ............................      3,174      2,648      1,591      1,623
Income taxes ..........................................................      1,133        877        590        538
                                                                          --------   --------   --------   --------
Net income ............................................................   $  2,041   $  1,771   $  1,001   $  1,085
                                                                          ========   ========   ========   ========
Net income available for Common Stock .................................   $  1,743   $  1,472   $    852   $    935
                                                                          ========   ========   ========   ========

Earnings per common share:
Primary ...............................................................       9.87   $   8.40   $   4.83   $   5.34
                                                                          ========   ========   ========   ========
Fully diluted                                                                 6.27   $   5.36   $   3.09   $   3.28
                                                                          ========   ========   ========   ========
Weighted average common shares outstanding ............................    176,611    175,111    176,611    175,111
                                                                          ========   ========   ========   ========
Weighted average common and contingently issuable
 common shares outstanding ............................................    336,929    336,873    336,929    335,874
                                                                          ========   ========   ========   ========
</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   
                                            ------------------------------   Common     Capital   For Sale     Retained    Treasury
                                             Class A   Class B    Class C    Stock      Surplus  Securities1   Earnings     Stock
                                            --------   --------   --------   --------   -------- -----------  -----------  --------
<S>                                         <C>        <C>        <C>        <C>        <C>      <C>

Six Months Ended
September 30, 1996 (Unaudited)

Balance at March 31, 1996 ...............   $  5,000   $    500   $  1,020   $    170   $2,574 $       (422)   $ 20,694    $ (5,249)
Net income ..............................       --         --         --         --         --         2,041        --
Change in net unrealized loss on
   available-for-sale securities1 .......       --         --         --         --         --         (417)        --         --
Cash dividends declared:
   Class A Preferred, $4.62 per share ...       --         --         --         --         --         --          (231)       --
   Class B Preferred, $23.18 per share ..       --         --         --         --         --         --           (23)       --
   Class C Preferred, $18.06 per share ..       --         --         --         --         --         --           (43)       --
   Common, $1.00 per share ..............       --         --         --         --         --         --          (178)       --
                                            --------   --------   --------   --------   --------   --------    --------    --------
Balance at September 30, 1996 ...........   $  5,000   $    500   $  1,020   $    170   $  2,574   $   (839)   $ 22,260    $ (5,249)
                                            ========   ========   ========   ========   ========   ========    ========    ========


Six Months Ended
September 30, 1995 (Unaudited)

Balance at March 31, 1995 ...............   $  5,000   $    500   $  1,020   $    170   $  2,521   $   --      $ 18,047    $ (5,297)
Net income ..............................       --         --         --         --         --         1,771       --
Change in net unrealized gain on
   available-for-sale securities1 .......       --         --         --         --         --            8        --          --
Cash dividends declared:
   Class A Preferred, $4.62 per share ...       --         --         --         --         --         --          (231)       --
   Class B Preferred, $24.77 per share ..       --         --         --         --         --         --           (25)       --
   Class C Preferred, $18.06 per share ..       --         --         --         --         --         --           (43)       --
   Common, $0.76 per share ..............       --         --         --         --         --         --          (133)       --
                                            --------   --------   --------   --------   --------   --------    --------    --------
Balance at September 30, 1995 ...........   $  5,000   $    500   $  1,020   $    170   $ 2,521    $      8    $ 19,386    $ (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)
                                                                                                 ---------------------
                                                                                                    Six Months Ended
                                                                                                     September 30,
                                                                                                 --------     --------
                                                                                                   1996         1995
                                                                                                 --------     --------
<S>                                                                                              <C>          <C>
Cash Flows From Operating Activities:
Net income ..................................................................................    $  2,041     $  1,771
Adjustments to reconcile net income to net cash provided by operating activities:
             Depreciation and amortization ..................................................         670          313
             Provision for possible loan and lease losses ...................................       1,050          730
             Investment amortization ........................................................         133           87
             Loans and leases originated for sale ...........................................     (18,965)     (22,791)
             Proceeds from sales of loans and leases ........................................      27,071       21,771
             Gain on sales of loans and leases ..............................................        (180)        (172)
             Increase in interest receivable ................................................         (97)        (772)
             Increase in interest payable ...................................................          83          375
             (Increase) decrease in other assets ............................................        (366)          20
             Increase in other liabilities ..................................................          95          557
                                                                                                 --------     --------
Net cash provided by operating activities ...................................................      11,535        1,889
                                                                                                 --------     --------

Cash Flows From Investing Activities:
Net decrease in federal funds sold ..........................................................       3,700       27,800
Net (increase) decrease in interest-bearing deposits with other financial institutions ......         (81)          99
Purchase of investment securities held-to-maturity ..........................................     (11,915)     (16,076)
Proceeds from maturity or call of investment securities held-to-maturity ....................      10,000        7,000
Purchase of investment securities available-for-sale ........................................      (8,604)      (5,006)
Proceeds from maturity or call of investment securities available-for-sale ..................       6,177           --
Net increase in loans and leases ............................................................     (24,467)     (26,847)
         Net (increase) decrease in other investing activities ..............................         101       (1,957)
                                                                                                 --------     --------
         Net cash used in investing activities ..............................................     (25,089)     (14,987)
                                                                                                 --------     --------

Cash Flows From Financing Activities:
Net increase in deposits ....................................................................      19,213        5,935
Net increase (decrease) in short-term borrowings ............................................      (2,198)       6,801
Proceeds from other borrowings ..............................................................      41,074        8,937
Payments on other borrowings ................................................................     (40,800)      (9,773)
Proceeds from bank note advance .............................................................         550           --
Cash dividends paid on Preferred Stock ......................................................        (297)        (299)
Cash dividends paid on Common Stock .........................................................        (178)        (133)
                                                                                                 --------     --------
         Net cash provided by financing activities ..........................................      17,364        1,468
                                                                                                 --------     --------

         Net increase (decrease) in cash and due from banks .................................       3,810       (1,630)
         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 ...................................    $ 18,233     $ 12,325
                                                                                                 ========     ========
</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:

                                                            Six Months Ended
                                                        (Dollars in Thousands)
                                                            September  30,
                                                       -------------------------
                                                        1996               1995
                                                       ------             ------

Interest .................................             $8,371             $7,175
Income taxes .............................              1,395                675

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 six and three month periods.
<TABLE>
                                                                                   Six Months Ended         Three Months Ended
                 (Dollars in Thousands)                                              September 30,            September 30,
                  -----------------------------------------------------------   ----------------------    ----------------------
                                                                                  1996         1995         1996          1995
                                                                                ---------    ---------    ---------    ---------
<S>                                                                             <C>          <C>          <C>          <C> 
  Net income ................................................................   $   2,041    $   1,771    $   1,001    $   1,085
  Accrued preferred dividends ...............................................        (298)        (299)        (149)        (150)
                                                                                ------------------------------------------------
  Primary earnings ..........................................................       1,743        1,472          852          935
  Accrued convertible dividends .............................................         298          299          149          150
  Mandatory convertible debentures interest expense, net of tax .............          32           34           16           17
                                                                                ------------------------------------------------
  Fully diluted earnings ....................................................   $   2,073    $   1,805    $   1,017    $   1,102
                                                                                ================================================

  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 ..................................................      68,924       76,651       68,577       75,652
  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 ........................................     330,646      336,873      330,299      335,874
                                                                                ================================================
<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 August 22, 1996,  the Board of Directors of FSCM approved  resolutions  which
authorized  the  issuance of $10  million,  twelve  year,  public  Notes  ("1996
Notes"),  the proceeds of which 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"),  (iii) allow for the  repayment of the  correspondent  bank loan which
approximated $550,000, (iv) pay the underwriting fees and other offering related
costs of approximately $525,000, and (v) supplement working capital.

FSCM's Form S-2 registration  statement became effective on November 8, 1996 and
the  Underwriting  Agreement  was executed as of said date.  Funding of the 1996
Notes  occurred on November 13, 1996.  The unsecured  1996 Notes are dated as of
November 1, 1996 and will  mature on November 1, 2008.  The 1996 Notes will bear
interest at a rate of 8% which is payable  semiannually  on the first of May and
November  commencing  on May 1, 1997.  The 1996 Notes are subject to a mandatory
redemption  of $750,000 on November 1, in each of the years 2000  through  2007.
FSCM may  redeem  any or all of the 1996 Notes at any time upon not less than 15
days  notice for the  principal  amount  plus  accrued  interest  to the date of
redemption.  If redeemed prior to November 1, 1999,  the redemption  shall be at
103% of the principal amount.

Income Statement

Overview

Although the $2,041,000  net income for the six months ended  September 30, 1996
exceeded 1995's six months income of $1,771,000 by $270,000 due to the increased
net interest income, the results for the comparative three month periods reflect
a $84,000  decease in net income  with  September  30,  1996's  income  totaling
$1,001,000  as  compared to 1995's  income of  $1,085,000.  The  decrease in the
comparative  three  month  period  primarily  resulted  from the  $167,000  FDIC
insurance  refund received in September 1995.  Earnings per fully diluted common
share equaled $6.27 and $5.36 for the six months ended  September 30, 1996,  and
1995, respectively,  and $3.09 and $3.28 for the respective three month periods.
Changes in net income  between the six and three month periods  ended  September
30, 1996, and 1995 were as follows:

GRAPHIC OMITTED]


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

Interest income ....................................      $2,240        $ 1,065
Interest expense ...................................        (906)          (469)
Net interest income ................................       1,334            596
Provision for possible loan and lease losses .......        (320)          (225)
Other income .......................................         147             85
Other expenses .....................................        (635)          (488)
Income taxes .......................................        (256)           (52)
                                                          ------        -------
Net increase (decrease) in net income ..............      $  270        $   (84)
                                                          ======        =======
                                                                             
<PAGE>

         
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 September 30, 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 March 31,
1996--the most recent date available.  The improvement in the ratios between six
month  comparative  periods was  primarily  the result of increased net interest
income.

                                                                       
                                                    September 30,          
                                               --------------------     Peer
                                                1996          1995     Group
                                               ------         -----    ------

Efficiency Ratio ....................           57.6%         60.1%    62.86%
Overhead Ratio ......................           48.1          50.4        N/A

Net Interest Income

Net interest income increased $1,334,000, or 19.59%, to total $8,145,000 for the
six  months  ended   September   30,  1996   compared  to  $6,811,000  in  1995.
Correspondingly,  net interest  income for the three months ended  September 30,
1996 as compared to 1995  reflected  an increase  of  $596,000,  or 16.75%.  The
increases resulted from higher interest income, primarily generated by net loans
and leases, which was only partially offset by higher interest expense.

Between the six month comparative periods, the average  interest-earning  assets
and average interest-bearing  liabilities increased $39,814,000 and $39,611,000,
respectively.  The yield and cost of such funds  equaled 9.19% and 5.17% for the
six  months  ended  September  30,  1996,  respectively,  and 8.93%  and  5.25%,
respectively,  for the 1995 period,  reflecting  positive changes in both the 26
basis point  improvement in the yield on assets and the 8 basis point  reduction
in the cost of funds.  The resulting net interest  margin,  net interest  income
divided by average  interest-earning assets, equaled 4.51% and 4.24% for the six
months ended September 30, 1996 and 1995, respectively.  FSCM's Peer Group yield
on interest-earning assets, cost of funds and net interest margin equaled 8.29%,
4.38%,  and 4.66%,  respectively.  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.
<PAGE>



In terms of interest rate and balance variances, a positive net balance variance
of $873,000  combined  with a positive  net interest  rate  variance of $461,000
resulted in the $1,334,000 increase in net interest income between the six month
periods ended  September 30, 1996 and 1995.  Loan and lease fees of $796,000 for
the six months ended September 30, 1996 and $703,000 for the corresponding  1995
period were included in interest income.
<TABLE>

                   AVERAGE BALANCE AND INTEREST RATE ANALYSIS

                                                                                           Six Months Ended
                                                           -------------------------------------------------------------------------
    (Dollars in Thousands)                                              September 30, 1996                  September 30, 1995
    ------------------------------------------------       -------------------------------------  ----------------------------------
                                                                                         Average                             Average
                                                           Average                       Annual   Average                    Annual
                                                           Balance       Interest         Rate    Balance      Interest       Rate
                                                           -------------------------------------------------------------------------
<S>                                                        <C>           <C>             <C>      <C>          <C>            <C>
    Interest-bearing deposits with other
       financial institutions ........................     $  4,899      $    129          5.27%  $    133     $      4        6.02%
    Investment securities ............................       96,258         2,903          6.03     78,112        2,215        5.67
    Federal funds sold ...............................        6,866           182          5.30     24,367          729        5.98
    Loans and leases, net1 ...........................      253,412        13,385         10.56    219,009       11,411       10.42
                                                           --------      --------                 --------     --------
       Total interest-earning assets .................     $361,435        16,599          9.19   $321,621       14,359        8.93
                                                           ========      --------                 ========     --------

                         LIABILITIES

    Savings deposits .................................     $ 81,851         1,129          2.76   $ 74,161          927        2.50
    Time deposits ....................................      189,320         5,768          6.09    168,852        5,290        6.27
    Federal funds purchased ..........................          203             6          5.91         19            1       10.53
    Securities sold under agreements to
       repurchase ....................................       48,673         1,268          5.21     37,292        1,035        5.55
    Other short-term borrowings ......................        1,443            43          5.96      1,055           30        5.69
    Notes payable ....................................        4,500           191          8.49      5,000          213        8.52
    Mandatory convertible debentures .................        1,250            49          7.84      1,250           52        8.32
                                                           --------      --------                 --------     --------
       Total interest-bearing liabilities ............     $327,240         8,454          5.17   $287,629        7,548        5.25
                                                           ========      --------                 ========     --------

    Net interest income ..............................                   $  8,145                              $  6,811
                                                                         ========                              ========
    Net interest margin (net interest income
       divided by average total interest-
       earning assets) ...............................                                    4.51%                                4.24%
                                                                                          =====                                =====
<FN>
1  Nonaccruing loans and leases are included in the average balance.
</FN>
</TABLE>
<PAGE>



                           INTEREST VARIANCE ANALYSIS
<TABLE>

                                                                     Six Months Ended
                                                            September 30, 1996 vs. September 30, 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   $   143    $   (18)   $   125
   Investment securities .....................................       515        173        688
   Federal funds sold ........................................      (524)       (23)      (547)
   Loans and leases ..........................................     1,792        182      1,974
                                                                 -------    -------    -------
       Total interest income .................................     1,926        314      2,240
                                                                 -------    -------    -------

Interest expense:
   Savings deposits ..........................................        96        106        202
   Time deposits .............................................       641       (163)       478
   Federal funds purchased ...................................        10         (5)         5
   Securities sold under agreements to repurchase ............       316        (83)       233
   Short-term borrowings .....................................        11          2         13
   Notes payable .............................................       (21)        (1)       (22)
   Mandatory convertible debentures ..........................      --           (3)        (3)
                                                                 -------    -------    -------
       Total interest expense ................................    1 ,053       (147)       906
                                                                 -------    -------    -------

Change in net interest income ................................   $   873    $   461    $ 1,334
                                                                 =======    =======    =======
<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 $796 and $703 for the six
     months ended September 30, 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 $1,050,000 and $730,000
for the six months ended September 30, 1996 and 1995, respectively, and $525,000
and  $300,000  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  non-performing
loans  (those  past-due  90 days or more and loans in a  nonaccrual  status) and
total loans and leases outstanding.  For the six months ended September 30, 1996
and 1995,  net  charge-offs  totaled  $822,000 and $587,000,  respectively.  Net
charge-offs  for the three months ended  September 30, 1996 totaled  $664,000 as
compared to net recoveries of $108,000 for the three months ended  September 30,
1995.  Non-performing  loans and leases  totaled  $2,688,000 as of September 30,
1996 and  $1,467,000 on March 31, 1996 and $2,656,000 on September 30, 1995. The
allowance,  stated as a percentage of non-performing  loans and leases,  equaled
174.55%,  304.23%  and  149.66%  as of  September  30,  and March  31,  1996 and
September 30, 1995. FSCM's comparative Peer Group ratio equaled 334.45%.

Of the $1,221,000 increase in non-performing  loans and leases between September
and March 1996, the increase in nonaccrual  residential  mortgage  loans,  which
totaled  $1,101,000 at September  30, and $388,000 at March 31, 1996,  comprised
the majority of the change.

Other Income

Total other income  equaled  $1,807,000  and $1,660,000 for the six months ended
September  30, 1996 and 1995,  respectively,  and  $932,000 and $847,000 for the
respective three month periods.  The $147,000 increase between the six month and
$85,000  increase  between the three month  periods  primarily  resulted  from a
$78,000  syndication  fee  received  from  structuring  a financing  arrangement
between a customer and an  investment  house.  Loan  servicing  fees and service
charges on deposit  accounts were also slightly  higher in 1996 than in 1995 for
both the six and three month periods.
<PAGE>


Other Expenses

Total other expense  equaled  $5,728,000 and $5,093,000 for the six months ended
September  30,  1996 and 1995,  respectively,  a $635,000,  or 12.47%,  increase
between  periods.  For the three  month  periods,  total other  expense  equaled
$2,971,000 and $2,483,000, respectively, a $488,000, or 19.65%, increase between
periods.

Salaries  and  employee  benefits  comprised  approximately  55% of total  other
expense and equaled $3,164,000 and $2,793,000 for the six months ended September
30,  1996  and  1995,  respectively,  and  $1,570,000  and  $1,425,000  for  the
respective  three month periods.  The number of full-time  equivalent  employees
totaled 181 and 162 at September 30, 1996 and 1995,  respectively.  The increase
in number of employees  was  partially  due to the expansion of the 18th Avenue,
Rock Island,  Illinois  ("Hilltop") office and the opening the Bettendorf,  Iowa
office, both of which occurred in November 1995. Personnel expense,  stated as a
percentage of average  assets equaled 1.63% for both the six month periods ended
September 30, 1996 and 1995 as compared to FSCM's Peer Group ratio which equaled
1.72%.

The  aforementioned  expansion/opening  of the new  offices  also  significantly
increased  the cost of occupancy  and  equipment.  For the 1996 and 1995 six and
three month  periods,  costs in these areas  increased  $260,000  and  $142,000,
respectively.  Further,  other  operating  expense  for  the  six  months  ended
September  30,  1995  included  an accrual of  $136,000  related to  anticipated
occupancy expenses.

Insurance  expense  totaled  $55,000  and  $194,000  for  the six  months  ended
September  30,  1996 and 1995,  respectively,  and  $27,000  and $20,000 for the
respective  three  month  periods.  During the 1995  three  month  period,  TRIB
received  a premium  refund  of  $167,000  from the  Federal  Deposit  Insurance
Corporation  ("FDIC").  As a result, the FDIC premium expense totaled $1,000 and
$130,000  for the 1996 and 1995 six month  periods,  respectively,  and $500 and
($13,000) for the respective three month periods.

Changes in items included in other operating expense were as follows.

         o    The  amortization of 1992 Note offering costs totaled $140,000 and
              $26,000 for the 1996 and 1995 six month periods, respectively, and
              $127,000 and $13,000 for the respective  three month periods.  The
              unamortized  balance of the 1992 Note offering  costs was expensed
              due to the November 13, 1996 early redemption.
         o    Dealer  fees paid for the  generation  of indirect  consumer  loan
              financings  totaled  $91,000 and $40,000 for the 1996 and 1995 six
              month  periods,  respectively,  and  $43,000  and  $30,000 for the
              respective three month periods.  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 regulator  examination  fees totaled  $49,000 and $22,000 for
              the 1996 and 1995 six month periods, respectively, and $22,000 and
              $12,000 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 $4,000 and $90,000 for the 1996 and 1995
              six month  periods,  respectively,  and $2,000 and $38,000 for the
              respective three month periods.  Included in the 1995 amounts were
              costs associated with the employment of a national consulting firm
              to perform a bank-wide "best practices" review.

Income Taxes

Income taxes  increased  $256,000,  or 29.19%,  to total  $1,133,000 for the six
months ended September 30, 1996 from $877,000 for the 1995 six month comparative
period,  and  $52,000,  or 9.67%,  to total  $590,000 for the three months ended
September 30, 1996 from $538,000 for the 1995 three month period.  The effective
tax rates  equaled  35.70% and  33.12% for the 1996 and 1995 six month  periods,
respectively,  and 37.08% and 33.15% 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.
<PAGE>


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  interest  rate  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 six months ended  September 30,
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
six months ended  September 30, 1995. For both six month periods,  cash was used
in investing  activities  primarily to fund the net increase in loans and leases
and was provided by financing  activities from the net increases in deposits and
short-term  borrowings.  The  resulting  net  change in cash and due from  banks
reflected an increase of $3,810,000 for the six months ended  September 30, 1996
and a decrease of $1,630,000 for the corresponding 1995 six month period.

Balance Sheet

Overview

Assets increased $19,166,000, or 4.95%, to total $406.1 million at September 30,
1996 as compared to $387.0 million at March 31, 1996. The increase was primarily
distributed to net loans and leases which  increased  $15.5  million,  or 6.16%.
Loans and  leases,  net,  comprised  65.74% of total  assets  at  September  30,
1996--FSCM's  Peer  Group  comparative  ratio was  58.94%.  The ratio of average
interest-earning  assets to total  average  assets as of September  30, 1996 for
FSCM  and for  FSCM's  Peer  Group  equaled  93.08%  and  82.08%,  respectively.
Correspondingly,  the increase in assets was funded by increased  insured  money
market accounts which totaled $30.4 million at September 30, 1996 as compared to
$8.6 million at March 31, 1996 and resulted from a targeted marketing  campaign.
FSCM's  September  30,  1996 and Peer Group  ratios of average  interest-bearing
liabilities to total average assets equaled 84.27% and 76.41%, respectively. The
unfavorable   variance  primarily  resulted  from  FSCM's  funding  and  capital
structure in which the average  balances in both  non-interest-bearing  deposits
and stockholders' equity were lower than that of its Peer Group.

Investments

Investments  totaled  $94.0  million at September  30, 1996,  or 23.15% 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. At March 31, 1996, the amortized
cost of the available-for-sale securities exceeded the fair market value by $640
thousand.  Due to an increased  interest rate curve between March and September,
1996, the difference between the two values grew to $1.6 million.
<PAGE>


Loans and Direct Financing Leases

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


                           LOAN AND LEASE DISTRIBUTION

                                                         September 30, March 31,
                (Dollars in Thousands)                       1996         1996
                ----------------------                   ------------- ---------

Commercial, financial and agricultural ...............     $ 89,491     $ 85,578
Direct financing leases ..............................        5,726        5,719
Real  estate:
    Residential mortgage1 ............................       61,014       64,248
    Construction .....................................       25,652       21,823
    Commercial mortgage ..............................       64,332       62,746
Consumer, not secured by a real estate mortgage2 .....       25,469       15,851
                                                           --------     --------
          Total loans and leases .....................     $271,684     $255,965
                                                           ========     ========

1    Includes first mortgages  pending  conclusion of their sale to 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.

As depicted in the above  table,  with the  exception  of  residential  mortgage
loans, the increase in loans and leases between  September 30 and March 31, 1996
was distributed between all other types of financing arrangements.  The decrease
in residential  mortgage loans  resulted from the  servicing-retained  sale of a
$7.4 million  adjustable rate portfolio during the three month period ended June
30, 1996. The outstanding balance of residential  mortgage loans which have been
originated and sold to investors  while  retaining the servicing  rights totaled
$180.0  million as of September 30, 1996 as compared to $165.0  million at March
31, 1996.

During the three  months  ended June 30,  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.

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

As of  September  30,  1996,  FSCM had drawn $550  thousand on its $10  million,
secured,  correspondent  bank line of credit. The proceeds were used to fund the
aforementioned  loan  accommodation with TRIB and was repaid as part of the 1996
Note offering transaction.
<PAGE>



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  September  30, 1996 and March 31,
1996,  as  well  as  the  regulatory   ratios  for  minimum   requirements   and
"well-capitalized" institutions.


                                 CAPITAL RATIOS
<TABLE>
                                                                                                            
                                                                             September 30,     March 31,    Regulatory    Well
                                                                                   1996          1996        Minimum   Capitalized
                                                                             -------------    ----------    ---------  ------------
<S>                                                                             <C>           <C>           <C>        <C> 
Risk-based capital ratios:
                Tier 1 Capital ..............................................        8.99%         8.97%       4.00%         6.00%
                Total Capital ...............................................       11.39         11.66        8.00         10.00
           Leverage .........................................................        6.75          6.83        3.00          5.00

           Stockholders' equity .............................................   $  25,436     $  24,287
           Net unrealized loss on available-for-sale securities, net of taxes         839           422
           Intangible assets ................................................          (7)         (140)
                                                                                ---------     ---------
                Tier 1 capital ..............................................      26,268        24,569
           Supplementary capital ............................................       7,017         7,387
                                                                                ---------     ---------
                Total capital ...............................................   $  33,285     $  31,956
                                                                                =========     =========

           Total  adjusted average assets ...................................   $ 389,139     $ 359,486
                                                                                =========     =========

           Risk weighted assets .............................................   $ 292,259     $ 273,981
                                                                                =========     =========

</TABLE>
<PAGE>




                  FINANCIAL SERVICES CORPORATION OF THE MIDWEST



Part II - Other Information and Signatures


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:  November  14, 1996                    By:   /s/ Douglas M. Kratz
                                                  ------------------------------
                                                  Douglas M. Kratz
                                                  President, CEO, CFO, Secretary



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