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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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Form 10-Q



For the quarterly period ended March 31, 2000

OR

- /  /  Transition report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934



 
Commission File Number 0-27982

FIRST NORTHERN CAPITAL CORP.

(Exact name of registrant as specified in its charter)

|WISCONSIN                                                         |  | 39-1830142                       
|----------------------------------------------------------------- |  | ---------------------------------
|(State or other jurisdiction of                                   |  | (IRS Employer Identification No.)
|incorporation or organization)                                    |  |                                  
|                                                                  |  |                                  
|201 North Monroe Avenue                                          
|P.O. Box 23100                                                   
|Green Bay, WI 54305-3100                                         
|(920) 437-7101                                                   
|(Address, including Zip Code, and telephone number,              
|including area code, of registrant's principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months, and (2) has been subject to such filing requirements for the past 90 days.

|Yes | X |  | No | 
|--- | - |  | -- | 

The number of shares outstanding of the issuer's common stock $1.00 par value per
share, was 8,567,808shares, at April 28, 2000.

---





INDEX

PART 1 - FINANCIAL INFORMATION

|Item 1.                     | Financial Statements                           | Page No.
|--------------------------- | ---------------------------------------------- | --------
|                            |                                                |         
|                            | Unaudited Consolidated Statements of Financial |         
|                            | Condition as of March 31, 2000                 |         
|                            | and December 31, 1999                          | 3       
|                            |                                                |         
|                            | Unaudited Consolidated Statements of Income    |         
|                            | for the Three Months Ended                     |         
|                            | March 31, 2000 and March 31, 1999              | 4       
|                            |                                                |         
|                            | Unaudited Consolidated Statements of           |         
|                            | Stockholders' Equity                           |         
|                            | for the Three Months Ended                     |         
|                            | March 31, 2000 and March 31, 1999              | 5       
|                            |                                                |         
|                            | Unaudited Consolidated Statements of Cash      |         
|                            | Flows for the Three Months Ended               |         
|                            | March 31, 2000 and March 31, 1999              | 6       
|                            |                                                |         
|                            | Notes to Unaudited Consolidated                |         
|                            | Financial Statements                           | 7 - 11  
|                            |                                                |         
|Item 2.                     | Management's Discussion and Analysis of        |         
|                            | Financial Condition and Results of Operations  | 12 - 28 
|                            |                                                |         
|Item 3.                     | Quantitative and Qualitative Disclosures About |         
|                            | Market Risk                                    | 29      
|                            |                                                |         
|PART II - OTHER INFORMATION
|                            |                                                |         
|                            |                                                |         
|                            |                                                |         
|Item 6.                     | Exhibits and Reports on Form 8-K               | 29      
|                            |                                                |         
|Signatures                  | 30                                            



PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

FIRST NORTHERN CAPITAL CORP.

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                          | March 31,
    2000 | December
    31, 1999
|------------------------------------------------------------------------- | ------------------ | ---------------------
|                                                                          | (In Thousands)    
|Assets                                                                    |                    |                      
|                                                                          |                    |                      
|Cash                                                                      | $ 4,340            | $ 8,043              
|Interest-earning deposits                                                 | 372                | 4,329                
|                                                                          |                    |                      
|CASH AND CASH
    EQUIVALENTS                                             | 4,712              | 12,372               
|                                                                          |                    |                      
|Securities available-for-sale, at
    fair value                          |                    |                      
|Investment securities                                                     | 9,018              | 8,444                
|Mortgage-related securities                                               | 5,375              | 5,554                
|Securities held-to-maturity                                               |                    |                      
|Investment securities                                                     |                    |                      
|(estimated fair value of $25,747 -
    2000; $25,644 - 1999)              | 26,231             | 26,215               
|Mortgage-related securities                                               |                    |                      
|(estimated fair value of $10,234 -
    2000; $9,976 - 1999)               | 10,310             | 10,048               
|Loans held for sale                                                       | 2,347              | 1,085                
|Loans receivable                                                          | 766,554            | 736,880              
|Accrued interest receivable                                               | 4,518              | 4,229                
|Foreclosed properties and
    repossessed assets                          | 432                | 382                  
|Office properties and equipment                                           | 7,752              | 7,463                
|Federal Home Loan Bank stock                                              | 10,750             | 9,250                
|Life insurance policies                                                   | 13,831             | 13,548               
|Prepaid expense and other assets                                          | 4,238              | 4,153                
|                                                                          |                    |                      
|                                                                          | $866,068           | $839,623             
|                                                                          |                    |                      
|Liabilities                                                               |                    |                      
|                                                                          |                    |                      
|Deposits                                                                  | $567,693           | $566,908             
|Borrowings                                                                | 211,484            | 185,899              
|Advance payments by borrowers for
    taxes and insurance                 | 3,472              | 3,887                
|Other liabilities                                                         | 5,991              | 6,134                
|                                                                          |                    |                      
|TOTAL LIABILITIES                                                         | 788,640            | 762,828              
|                                                                          |                    |                      
|Stockholders' Equity                                                      |                    |                      
|                                                                          |                    |                      
|Cumulative preferred stock, $1 par
    value; 10,000,000                  |                    |                      
|shares authorized; none
    outstanding                                   |                    |                      
|Common stock, $1 par value;
    30,000,000 shares authorized;             |                    |                      
|shares issued: 9,134,735 - 2000
    and 1999                              |                    |                      
|shares outstanding: 8,572,808 -
    2000; 8,548,658 - 1999                | 9,135              | 9,135                
|Additional paid-in capital                                                | 8,528              | 8,780                
|Retained earnings                                                         | 65,180             | 64,468               
|Accumulated other comprehensive
    income                                | 415                | 479                  
|Treasury stock at cost (561,927
    shares - 2000; 586,077 shares - 1999) | (5,830)            | (6,067)              
|                                                                          |                    |                      
|TOTAL
    STOCKHOLDERS' EQUITY                                            | 77,428             | 76,795               
|                                                                          |                    |                      
|                                                                          | $866,068           | $839,623             

See Notes to Unaudited Consolidated Financial Statements.

FIRST NORTHERN CAPITAL CORP.

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

|                                                            | Three Months Ended       
|----------------------------------------------------------- | -------------------------
|                                                            | March 31                 
|                                                            | 2000                     
|                                                            | (In Thousands,           
|                                                            | Except Per Share Amounts)
|                                                            |                          
|Interest and dividend income:                               |                          
|Loans                                                       | $13,645                  
|Investment securities                                       | 678                      
|Interest-earning deposits                                   | 19                       
|Mortgage-related securities                                 | 254                      
|                                                            |                          
|TOTAL INTEREST
    AND DIVIDEND INCOME                      | 14,596                   
|Interest expense:                                           |                          
|Deposits                                                    | 6,159                    
|Borrowings                                                  | 2,981                    
|Advance payments by borrowers for
    taxes and insurance   | 12                       
|                                                            |                          
|TOTAL INTEREST
    EXPENSE                                  | 9,152                    
|                                                            |                          
|NET INTEREST
    INCOME                                     | 5,444                    
|Provision for loan losses                                   | 165                      
|NET INTEREST
    INCOME AFTER                               |                          
|PROVISION FOR
    LOAN LOSSES                               | 5,279                    
|                                                            |                          
|Non-interest income:                                        |                          
|Fees on serviced loans                                      | 55                       
|Loan fees and service charges                               | 58                       
|Deposit account service charges                             | 390                      
|Insurance commissions                                       | 111                      
|Gains on sales of loans                                     | 11                       
|Other                                                       | 383                      
|                                                            |                          
|TOTAL
    NON-INTEREST INCOME                               | 1,008                    
|                                                            |                          
|Non-interest expense:                                       |                          
|Compensation, payroll taxes and
    other employee benefits | 2,113                    
|Federal insurance premiums                                  | 30                       
|Occupancy                                                   | 300                      
|Data processing                                             | 403                      
|Furniture and equipment                                     | 112                      
|Telephone and postage                                       | 118                      
|Marketing                                                   | 105                      
|Other                                                       | 655                      
|                                                            |                          
|TOTAL
    NON-INTEREST EXPENSE                              | 3,836                    
|                                                            |                          
|INCOME BEFORE
    INCOME TAXES                              | 2,451                    
|Income taxes                                                | 795                      
|                                                            |                          
|NET INCOME                                                  | $ 1,656                  
|                                                            |                          
|BASIC NET INCOME
    PER SHARE                              | $0.19                    
|                                                            |                          
|DILUTED NET
    INCOME PER SHARE                            | $0.19                    
|                                                            |                          
|CASH DIVIDENDS
    PAID PER SHARE                           | $0.11                    

See Notes to Unaudited Consolidated Financial Statements.



FIRST NORTHERN CAPITAL CORP.

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY



|                                              |                |            |          |          |               |        
|--------------------------------------------- | -------------- | ---------- | -------- | -------- | ------------- | -------
|                                              |                |            |          |          | Accumulated   |        
|                                              |                | Additional |          |          | Other-        |        
|                                              | Common         | Paid-In    | Retained | Treasury | Comprehensive |        
|                                              | Stock          | Capital    | Earnings | Stock    | Income        | Total  
|                                              | (In Thousands)
|For the Three Months Ended
    March 31, 2000 |                |            |          |          |              
|                                              |                |            |          |          |               |        
|Balance at January 1, 2000                    | $9,135         | $8,780     | $64,468  | $(6,067) | $479          | $76,795
|Comprehensive income:                         |                |            |          |          |               |        
|Net income                                    |                |            | 1,656    |          |               | 1,656  
|Other comprehensive losses                    |                |            |          |          | (64)          | (64)   
|Total comprehensive income                    |                |            |          |          |               | 1,592  
|                                              |                |            |          |          |               |        
|Cash dividends ($.11 per share)               |                |            | (944)    |          |               | (944)  
|Purchase of treasury stock                    |                |            |          | (168)    |               | (168)  
|Exercise of stock options                     | -              | (252)      | -        | 405      | -             | 153    
|                                              |                |            |          |          |               |        
|Balance at March 31, 2000                     | $9,135         | $8,528     | $65,180  | $(5,830) | $415          | $77,428
|                                              |                |            |          |          |               |        
|                                              |                |            |          |          |               |        
|For the Three Months Ended
    March 31, 1999 |                |            |          |          |              
|                                              |                |            |          |          |               |        
|Balance at January 1, 1999                    | $9,135         | $9,126     | $60,582  | $(3,710) | $960          | $76,093
|Comprehensive income:                         |                |            |          |          |               |        
|Net income                                    |                |            | 1,791    |          |               | 1,791  
|Other comprehensive losses                    |                |            |          |          | (141)         | (141)  
|Total comprehensive income                    |                |            |          |          |               | 1,650  
|                                              |                |            |          |          |               |        
|Cash dividends ($.10 per share)               |                |            | (880)    |          |               | (880)  
|Purchase of treasury stock                    |                |            |          | (632)    |               | (632)  
|Exercise of stock options                     | -              | (291)      | -        | 495      | -             | 204    
|                                              |                |            |          |          |               |        
|Balance at March 31, 1999                     | $9,135         | $ 8,835    | $61,493  | $(3,847) | $819          | $76,435
|                                              |                |            |          |          |               |        
|                                              |                |            |          |          |               |        



See Notes to Unaudited Consolidated Financial Statements.

FIRST NORTHERN CAPITAL CORP.

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                           | Three Months Ended
|-------------------------------------------------------------------------- | ------------------
|                                                                           | March 31          
|                                                                           | 2000              
|                                                                           | (In Thousands)    
|Cash flows from operating activities:                                      |                   
|Net income                                                                 | $ 1,656           
|Adjustments to reconcile net income to cash
    provided                   |                   
|by operating activities:                                                   |                   
|Provision for losses on loans                                              | 165               
|Provision for depreciation and amortization                                | 212               
|Gains on sales of loans                                                    | (11)              
|Loans originated for sale                                                  | (1,731)           
|Proceeds from loan sales                                                   | 480               
|Increase in interest receivable                                            | (289)             
|Increase (decrease) in interest payable                                    | 5                 
|Increase in other assets                                                   | (275)             
|Decrease in other liabilities                                              | (182)             
|                                                                           |                   
|NET CASH PROVIDED (USED) BY
    OPERATING ACTIVITIES                       | 30                
|                                                                           |                   
|Cash flows from investing activities:                                      |                   
|Proceeds from maturities of available-for-sale
    investment securities   | 500               
|Proceeds from maturities of held-to-maturity
    investment securities     | 1,472             
|Purchases of available-for-sale investment
    securities                  | (1,163)           
|Purchases of held-to-maturity investment
    securities                    | (1,477)           
|Principal repayments on available-for-sale
    mortgage-related securities | 77                
|Principal repayments on held-to-maturity
    mortgage-related securities   | 830               
|Purchases of held-to-maturity mortgage-related
    securities              | (991)             
|Net increase in loans receivable                                           | (29,903)          
|Purchases of office properties and equipment                               | (501)             
|Purchase of Federal Home Loan Bank stock                                   | (1,500)           
|                                                                           |                   
|NET CASH USED BY INVESTING
    ACTIVITIES                                  | (32,656)          
|                                                                           |                   
|Cash flows from financing activities:                                      |                   
|Net increase in deposits                                                   | 780               
|Net increase in short-term borrowings                                      | 1,686             
|Proceeds from long-term borrowings                                         | 39,965            
|Repayments of long-term borrowings                                         | (16,066)          
|Cash dividend paid                                                         | (944)             
|Purchase of treasury stock                                                 | (168)             
|Proceeds from exercise of stock options                                    | 128               
|Net decrease in advance payments by borrowers
    for taxes and insurance  | (415)             
|                                                                           |                   
|NET CASH PROVIDED BY
    FINANCING ACTIVITIES                              | 24,966            
|                                                                           |                   
|DECREASE IN CASH AND CASH
    EQUIVALENTS                                  | (7,660)           
|Cash and cash equivalents at beginning of
    period                       | 12,372            
|                                                                           |                   
|CASH AND CASH EQUIVALENTS AT
    END OF PERIOD                             | $ 4,712           
|                                                                           |                   
|Supplemental Information to the Statement of
    Cash Flows:               |                   
|                                                                           |                   
|Interest on deposits                                                       | $6,153            
|Interest on borrowings                                                     | 2,729             
|Income taxes                                                               | -                 
|Loans transferred to foreclosed properties and
    repossessed assets      | 84                



See Notes to Unaudited Consolidated Financial Statements.

FIRST NORTHERN CAPITAL CORP.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

General

1. The consolidated financial statements include the accounts of First Northern Capital
    Corp. ("First Northern" or the "Company") and its wholly-owned
    subsidiary First Northern Savings Bank, S.A. and its subsidiaries (collectively, the
    "Savings Bank"): Great Northern Financial Services Corporation
    ("GNFSC"), First Northern Investments Incorporated ("FNII"), Keystone
    Financial Services, Incorporated ("Keystone") and First Northern Financial
    Services, Incorporated. All significant intercompany balances and transactions have been
    eliminated according to generally accepted accounting principles. The Savings Bank's
    ownership of Savings Financial Corporation ("SFC"), a 50% owned subsidiary, is
    accounted for by the equity method.
2. The accompanying unaudited financial statements have been prepared in accordance with
    generally accepted accounting principles for interim financial information, Rule 10-01 of
    Regulation S-X and the instructions to Form 10-Q. The financial statements do not include
    all of the information and footnotes required by generally accepted accounting principles
    for complete financial information. In the opinion of First Northern, the accompanying
    Unaudited Consolidated Statements of Financial Condition, Unaudited Consolidated
    Statements of Income, Unaudited Consolidated Statement of Stockholders' Equity and
    Unaudited Consolidated Statements of Cash Flows contain all adjustments, which are of a
    normal recurring nature, necessary to present fairly the consolidated financial position
    of the Company and subsidiaries at March 31, 2000 and December 31, 1999, the results of
    their income for the three months ended March 31, 2000 and 1999, the changes in
    stockholders' equity for the three months ended March 31, 2000 and 1999, and their cash
    flows for the three months ended March 31, 2000 and 1999. The accompanying Unaudited
    Consolidated Financial Statements and related notes should be read in conjunction with
    First Northern's 1999 Annual Report on Form 10-K. Operating results for the three months
    ended March 31, 2000, are not necessarily indicative of the results that may be expected
    for the year ending December 31, 2000.
3. Securities Available-for-Sale
4. Securities Held-to-Maturity
5. Loans Receivable
6. The weighted average number of shares outstanding, including common stock equivalents,
    for the three months ended March 31, 2000 and 1999 were 8,714,677 and 8,986,029,
    respectively.
7. Certain amounts in the 1999 financial statements have been reclassified to conform to
    the 2000 presentations.
8. On February 21, 2000, the Company entered into an Agreement and Plan of Merger (the
    "Merger Agreement") with Mutual Savings Bank ("Mutual"), a
    Wisconsin-chartered mutual savings bank and OV Corp. (the "Merger Corp."), a
    wholly owned subsidiary of Mutual organized for the purpose of effecting the transactions
    contemplated by the Merger Agreement. The Merger Corp. will be the surviving corporation.
    The Merger Agreement provides for the acquisition of the Company by Mutual through a
    merger of the Company with and into the Merger Corp.

Subject to the terms and conditions of the Merger Agreement, at the time of the merger,
  each outstanding share of the Company's common stock will be converted into the right to
  receive cash in the amount of $15.00 or 1.5 shares of common stock of the Merger Corp. or
  a combination of cash and shares of the Merger Corp.

In connection with the Merger, the Company and Mutual will engage in a restructuring.
  As part of the restructuring, Mutual will form a mutual holding company. The mutual
  holding company will own a majority of the Merger Corp.'s common stock. The balance of the
  shares of the Merger Corp. will be offered for sale to Mutual's depositors and issued to
  First Northern stockholders in the Merger. As a result of the restructuring, the Savings
  Bank and Mutual will become wholly owned subsidiaries of the Merger Corp.

The Merger and subsequent restructuring are subject to approval by the stockholders of
  the Company, depositors of Mutual, and various regulatory agencies.

Concurrent with the execution of the Merger Agreement, the parties entered into a Stock
  Option Agreement by which the Company granted Mutual an irrevocable option to purchase up
  to 1,708,675 share of the Company's stock equal to 19.9% of the number of shares of the
  Company's stock outstanding on February 21, 2000, at an exercise price of $9.0375 per
  share. The option would become exercisable under certain circumstances if the Company
  becomes the subject of a third party proposal for a competing transaction.





Item 2. Managements' Discussion and Analysis of Financial Condition and Results of

Operations.

CAUTIONARY FACTORS

This 10-Q contains various forward-looking statements concerning the Company's
prospects that are based on the current expectations and beliefs of management.
Forward-looking statements may also be made by the Company from time to time in other
reports and documents as well as oral presentations. When used in written documents or
oral statements, the words "anticipate," "believe,"
"estimate," "expect," "objective" and similar expressions
are intended to identify forward-looking statements. The statements contained herein and
such future statements involve or may involve certain assumptions, risks and
uncertainties, many of which are beyond the Company's control, that could cause the
Company's actual results and performance to differ materially from what is expected. In
addition to the assumptions and other factors referenced specifically in connection with
such statements, the following factors could impact the business and financial prospects
of the Company: general economic conditions; legislative and regulatory initiatives;
monetary and fiscal policies of the federal government; deposit flows; disintermediation;
the cost of funds; general market rates of interest; interest rates or investment returns
on competing investments; demand for loan products; demand for financial services; changes
in accounting policies or guidelines; changes in the quality or composition of the Savings
Bank's and FNII's loan and investment portfolios; the status of our proposed merger with
Mutual Savings Bank; and other factors referred to in the reports filed with the
Securities and Exchange Commission.



RECENT DEVELOPMENTS

Merger Agreement with Mutual Savings Bank. On February 22, 2000, First
Northern, and Mutual Savings Bank, a Wisconsin-chartered mutual savings bank
("Mutual"), announced that they had entered into an Agreement and Plan of
Merger, dated as of February 21, 2000 ( the "Merger Agreement"), by and among
Mutual, First Northern and OV Corp., a Wisconsin corporation organized as a wholly owned
subsidiary of Mutual for the purpose of effecting the transactions contemplated by the
Merger Agreement ("Merger Corp."). The Merger Agreement provides for the
acquisition of First Northern by Mutual through a merger of First Northern with and into
Merger Corp. (the "Merger"), which will be the surviving corporation
("Survivor"). The Merger Agreement has been approved by the boards of directors
of Mutual and First Northern.

Subject to the terms and conditions of the Merger Agreement, at the time of the Merger,
each outstanding share of First Northern common stock, par value $1.00 per share
("First Northern Common Stock"), will be converted into the right to receive
cash in the amount of $15.00, or 1.5 shares of common stock, par value $.01 per share, of
Survivor ("Survivor Common Stock"), or a combination of cash and shares of
Survivor Common Stock (the "Merger Consideration"). Prior to the closing date,
Mutual will select the percentage of the total Merger Consideration to be paid in the
Survivor Common Stock, which may not be less than 40% or more than 70%; the balance will
be paid in cash. Each First Northern stockholder will be entitled to elect to receive (a)
cash, (b) Survivor Common Stock or (c) as to First Northern stockholders holding not less
than 170 shares of First Northern Common Stock, a combination of cash and Survivor Common
Stock, with the percentage of such shares of their First Northern Common Stock equal to
the lesser of the Stock Percentage and 50% converted into Survivor Common Stock and the
balance converted into cash. Elections will be subject to proration if the cash or stock
elections exceed the maximum amounts permitted under the Merger Agreement. Cash will be
paid in lieu of any fractional shares of the Survivor Common Stock which holders of First
Northern Common Stock would otherwise receive.

In connection with the Merger, Mutual and First Northern will engage in a restructuring
involving a number of steps (the "Restructuring"). As a part of the
Restructuring, Mutual will form a mutual holding company in which Mutual's depositors will
hold all the voting rights. The mutual holding company will own a majority of the Survivor
Common Stock; the balance of the shares of Survivor Common Stock will be offered for sale
to Mutual's depositors and issued to First Northern stockholders in the Merger. As a
result of the Restructuring, Mutual Savings Bank and the Savings Bank will become wholly
owned subsidiaries of Survivor. Thus, Survivor will be a subsidiary mid-tier stock holding
company.

Consummation of the Merger is subject to the satisfaction of certain closing conditions
set forth in the Merger Agreement, including approval by the stockholders of First
Northern and approval by the OTS, the FDIC and the WDFI--Administrator. The depositors of
Mutual must also approve Mutual's plan for the Restructuring. The Merger is also subject
to receipt of an opinion of counsel to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code and the
receipt of an opinion of counsel or a private letter ruling from the Internal Revenue
Service as to the federal income tax treatment of certain transactions contemplated by the
Merger Agreement. In addition, the Merger is conditioned upon the approval for listing on
the NASDAQ National Market of the shares of Survivor Common Stock to be issued in the
Merger, which shares will be registered under the Securities Act of 1933 by a registration
statement to be filed by Survivor with the Securities and Exchange Commission.

Concurrently with the execution of the Merger Agreement, in order to induce Mutual to
enter into the Merger Agreement, the parties entered into a Stock Option Agreement by
which First Northern granted to Mutual an irrevocable option to purchase up to 1,708,675
shares of First Northern Common Stock, which equals 19.9% of the number of shares of First
Northern Common Stock outstanding at February 21, 2000, at an exercise price of $9.0375
per share. The option would become exercisable under certain circumstances if First
Northern becomes the subject of a third-party proposal for a competing transaction.



FINANCIAL CONDITION

BALANCE SHEET

Cash and Cash Equivalents. Cash and cash equivalents decreased $7.7 million at
March 31, 2000, as compared to December 31, 1999, primarily because the Savings Bank
maintained additional cash at December 31, 1999, as a precaution against possible events
associated with Year 2000 concerns. Shortly after December 31, 1999, the cash was
redeployed by paying down short-term borrowings.

Securities Available-for-Sale. Investment securities available-for-sale
increased $0.6 million as of March 31, 2000, as compared to December 31, 1999, primarily
as a result of the reinvestment of maturing securities and the interest earnings on
securities being reinvested, partially offset by decreased market value. (See Notes to
Unaudited Consolidated Financial Statements--3. Securities Available-for-Sale)

Mortgage-related securities available-for-sale decreased $0.2 million at March 31,
2000, as compared to December 31, 1999, as a result of prepayments and repayments of the
underlying security.

Securities Held-to-Maturity. Investment securities held-to-maturity were almost
unchanged from March 31, 2000 as compared to December 31, 1999.

Mortgage-related securities held-to-maturity increased $0.3 million as a result of the
purchase of additional mortgage-related securities.

Loans Held for Sale. At March 31, 2000, First Northern had $2.3 million of
fixed interest rate mortgage and education loans classified as held for sale as compared
to $1.1 million at December 31, 1999. The increase in loans held for sale is primarily the
result of education loans originated during the first quarter of 2000, all of which are
contractually assigned to be sold.



Loans Receivable. Loans receivable increased $29.7 million at March 31, 2000,
as compared to December 31, 1999, as a result of: (i) mortgage loan originations and
purchases; (ii) reduced prepayments or refinancing of mortgage loans; (iii) increased
automobile and second mortgage loan originations; and (iv) the initiation of a commercial
lending program in the second quarter of 1999. Loan originations and purchases are as
follows:

LOAN ORIGINATIONS AND PURCHASES

|                                              | Three Months Ended |        
|--------------------------------------------- | ------------------ | -------
|                                              | March 31           |        
|                                              | 2000               | 1999   
|                                              | (In Thousands)     |        
|                                              |                    |        
|Mortgage loans originated and purchased:      |                    |        
|Construction                                  | $ 15,313           | $8,821 
|Loans on existing property                    | 17,247             | 8,707  
|Refinancing                                   | 5,186              | 29,202 
|Other loans                                   | 573                | 241    
|Total mortgage loans originated               |                    |        
|and purchased                                 | 38,319             | 46,971 
|                                              |                    |        
|Consumer loans originated andpurchased:       |                    |        
|Consumer                                      | 2,411              | 1,753  
|Second mortgage                               | 10,986             | 9,129  
|Automobile                                    | 15,274             | 11,857 
|Education                                     | 1,178              | 950    
|                                              |                    |        
|Total consumer loans originated and purchased | 29,849             | 23,689 
|                                              |                    |        
|Commercial loans                              | 5,308              | -      
|                                              |                    |        
|Total loans originated and purchased          | $ 73,476           | $70,660

Mortgage loan originations and purchases decreased $7.7 million for the first quarter
of 2000, as compared to the same period in 1999, primarily as the result of decreased
refinancing of existing First Northern mortgage loans. Construction and purchase mortgage
loan originations increased in the first quarter of 2000 primarily as a result of
increased construction and purchase activity within First Northern's market. Although
total mortgage loan originations decreased for the first quarter of 2000, the mortgage
loan portfolio outstanding increased $16.8 million (before deductions for undisbursed loan
proceeds, allowance for loan losses and unearned loan fees) for the first quarter of 2000.
The increased mortgage loan portfolio was primarily the result of: (i) increased
adjustable interest rate mortgage loan originations; (ii) reduced prepayments of principal
on outstanding loans; and (iii) reduced refinancing of existing mortgage loans, all of
which, we believe, is attributable to the increase in interest rates on fixed interest
rate mortgage loans.

First Northern added commercial banking services to its existing product lines in the
second quarter of 1999. To manage the commercial banking department, First Northern hired
a commercial loan manager with 20 years of commercial banking experience. At March 31,
2000, First Northern's commercial loan portfolio outstanding was at $9.7 million and
management anticipates that this segment of its loan portfolio will continue to increase.
Management believes commercial banking will enable First Northern to enhance its interest
earning assets and its interest rate spread management.

Consumer loan originations and purchases increased $6.2 million in the first quarter of
2000 as compared to the same period in 1999, primarily as the result of the increase in
second mortgage loan originations and indirect automobile originations from SFC. Second
mortgage originations have increased as a result of: (i) management's emphasis; (ii)
increased marketing; and (iii) the use of an introductory interest rate for a
line-of-credit product secured by a second mortgage. SFC increased its automobile
originations by continued personalized service and competitive interest rates.

LOAN SALES

|                 | Three Months Ended |       
|---------------- | ------------------ | ------
|                 | March 31           |       
|                 | 2000               | 1999  
|                 | (In Thousands)     |       
|                 |                    |       
|Mortgage Loans   | $303               | $9,639
|Education Loans  | 166                | 1     
|                 |                    |       
|Total Loans Sold | $469               | $9,640
|                 |                    |       

Loans sold in the first quarter of 2000, as compared to the first quarter of 1999,
decreased as a result of the reduction in 30 year fixed interest rate mortgage loan
originations. First Northern retains all adjustable interest rate mortgage loan
originations in its portfolio; retains the majority of 15 and 20 year fixed interest rate
mortgage loans; and sells most 30 year fixed interest rate mortgage loans in the secondary
market. First Northern is contractually committed to sell its current education loan
portfolio as well as, future originations.

Office Properties and Equipment. First Northern entered into an operating lease
for approximately 14,000 square feet of office space in the third quarter of 1999. This
office space centralized the loan servicing, origination processing, information systems,
marketing and customer support services departments of the Savings Bank. The additional
leased space is needed to accommodate growth in these areas. Total annual cost of this
office space and its associated equipment is approximately $152,000 (after-tax).



Federal Home Loan Bank Stock. Stock in the Federal Home Loan Bank
("FHLB") increased $1.5 million to $10.8 million at March 31, 2000, as compared
to $9.3 million at December 31, 1999. This increase in FHLB stock is the result of
increased borrowings outstanding from the FHLB of Chicago. The FHLB requires member
institutions to purchase one share of FHLB stock for every $20,000 of FHLB borrowings. The
FHLB borrowings are secured by First Northern's 1-4 family residential mortgage loans.

Life Insurance Policies. Life insurance policies or bank owned life insurance
("BOLI") increased $0.3 million in the first three months of 2000 as a result of
the increased value of the policies. BOLI is long-term life insurance on the lives of
certain current and past Savings Bank employees where the insurance policy benefits and
ownership are retained by the Savings Bank. The cash value accumulation on BOLI is
permanently tax deferred if the policy is held to the participant's death. Management
believes this an effective method to help offset a portion of future employee benefit
costs.

Deposits. Deposits increased $0.8 million for the first three months of 2000 as
a result of offering competitive interest rates and the acquisition of "jumbo"
(certificates of deposit in excess of $100,000) deposits. Jumbo deposits consist of
wholesale, negotiated retail and municipal deposits which at times, are a cheaper source
of funds than retail deposits or borrowing. First Northern's total jumbo deposits were
$55.5 million at March 31, 2000.

Borrowings. FHLB borrowings increased $25.6 million in the first three months
of 2000, primarily to fund purchases of investment securities and the growth of the loan
portfolio. First Northern will borrow monies if borrowing is a less costly form of funding
for loans and investments than the cost of acquiring deposits. First Northern anticipates
that it will continue to utilize borrowings in 2000 if borrowings incrementally add to the
overall profitability of the Company.

Advance Payments by Borrowers for Taxes and Insurance. Advance payments by
borrowers for taxes and insurance ("escrow") decreased $0.4 million at March 31,
2000, as compared to December 31, 1999. The decrease in escrow dollars was the result of
year-end disbursement of real estate taxes from escrow accounts.

Stockholders' Equity. First Northern paid a cash dividend of $0.11 per share on
February 9, 2000, to stockholders of record on January 31, 2000. The increase of $0.01 per
share represents an 10.0% increase over the fourth quarter of 1999 cash dividend of $0.10
per share.

On March 20, 2000, First Northern approved a fourth stock repurchase program to
repurchase up to 429,315 shares (5% of total shares then outstanding) in the open market.
At March 31, 2000, 18,500 shares had been purchased or committed to be purchased at an
average price of $12.4375 per share.

ASSET QUALITY

First Northern currently classifies any loan on which a payment is greater than 90 days
past due as non-performing. The following table summarizes non-performing loans and
assets:

|                                   | NON-PERFORMING LOANS AND ASSETS
|---------------------------------- | -------------------------------
|                                   | At March 31                    
|                                   | 2000                           
|                                   | (Dollars in Thousands)         
|Non-accrual mortgage loans         | $186                           
|Non-accrual consumer loans         | 47                             
|                                   |                                
|Total non-performing loans         | 233                            
|Properties subject to foreclosure  | 339                            
|Foreclosed properties and          |                                
|repossessed assets                 | 93                             
|                                   |                                
|Total non-performing assets        | $665                           
|                                   |                                
|Non-performing loans as a percent  |                                
|of total loans                     | 0.03%                          
|                                   |                                
|Non-performing assets as a percent |                                
|of total assets                    | 0.08%                          
|                                   |                                

Total non-performing loans decreased as of March 31, 2000, as compared to December 31,
1999, primarily as a result of a decrease in non-performing mortgage loans. Management
believes non-performing loans and assets, expressed as a percentage of total loans and
assets, are far below state and national averages for financial institutions. There are no
material accruing loans which, at March 31, 2000, management has reason to believe will
become non-performing or result in potential losses.

In addition, management believes that First Northern's allowance for loan losses are
adequate. While management uses available information to recognize losses on loans and
real estate owned, future additions to the allowances may be necessary based on changes in
economic conditions. Furthermore, various regulatory agencies, as an integral part of
their examination process, periodically review First Northern's allowances for losses on
loans and real estate owned. Such agencies may require First Northern to recognize
additions to the allowances based on the agencies' judgement of information available to
them at the time of their examination.

All of First Northern's loans are domestic, meaning the loans are secured by real
estate or other collateral located in the continental United States.

A summary of the allowance for losses is shown below.

|                                                    | LOAN LOSS ALLOWANCE   
|--------------------------------------------------- | ----------------------
|                                                    | At and for the        
|                                                    | Three Months Ended    
|                                                    | March 31, 2000        
|                                                    | (Dollars in Thousands)
|Mortgage Loans:                                     |                       
|Balance at the beginning of the period              | $2,108                
|Provisions for the period                           | 150                   
|Charge-offs:                                        |                       
|One-to-four family residential                      | --                    
|Recoveries:                                         |                       
|One to four family residential                      | 3                     
|Net recoveries                                      | 3                     
|                                                    |                       
|Balance at the end of the period                    | 2,261                 
|                                                    |                       
|Consumer Loans:                                     |                       
|Balance at the beginning of the period              | 1,678                 
|Provisions for the period                           | 15                    
|Charge-offs:                                        |                       
|Consumer                                            | (14)                  
|Automobile                                          | (7)                   
|Total charge-offs                                   | (21)                  
|Recoveries:                                         |                       
|Consumer                                            | 3                     
|Automobile                                          | 2                     
|Total recoveries                                    | 5                     
|Net charge-offs                                     | (16)                  
|                                                    |                       
|Balance at the end of the period                    | 1,677                 
|                                                    |                       
|Commercial Loans                                    |                       
|Balance at the beginning of the period              | 124                   
|Provisions for the period                           | -                     
|Balance at the end of the period                    | 124                   
|                                                    |                       
|Total loan loss allowances at the end of the period | $4,062                
|                                                    |                       
|Allowance as a percent of total loans               | 0.53%                 
|                                                    |                       
|Allowance as a percent of non-performing loans      | 1,743.35%             
|                                                    |                       
|Allowance as a percent of total assets              | 0.47%                 
|                                                    |                       
|Allowance as a percent of non-performing assets     | 610.83%               

RESULTS OF OPERATIONS

AVERAGE BALANCE SHEET AND YIELD/RATE ANALYSIS

The following table presents, for the periods indicated, the total dollar amount of
interest income from average interest-earning assets, the resultant yields, and the
interest expense on average interest-bearing liabilities, expressed both in dollars and
rates. No tax equivalent adjustments were made since First Northern's investment portfolio
does not contain tax-exempt securities. Average balances are derived from average daily
balances. The yields and rates are established by dividing income or expense dollars by
the average balance of the asset or liability. The yields and rates for the three months
ended March 31, 2000 and 1999, have been annualized.

|                                     | Three Months Ended March 31
|------------------------------------ | ---------------------------
|                                     | 2000                       
|                                     |                            
|                                     | Average                    
|                                     | Balance                    
|                                     | (Dollars in
    Thousands) 
|Interest-earning assets (1):         |                            
|Mortgage loans                       | $547,607                   
|Consumer loans                       | 199,453                    
|Commercial loans                     | 6,198                      
|Investment securities (2)            | 43,607                     
|Interest-earning deposits            | 1,755                      
|Mortgage-related securities (2)      | 16,113                     
|                                     |                            
|TOTAL                                | 814,733                    
|                                     |                            
|Interest-bearing liabilities:        |                            
|Passbook accounts                    | 69,448                     
|NOW and variable rate insured        |                            
|money market accounts                | 134,440                    
|Time deposits                        | 355,446                    
|Advance payments by borrowers        |                            
|for taxes and insurance              | 2,208                      
|Borrowings                           | 202,680                    
|                                     |                            
|TOTAL                                | 764,222                    
|                                     |                            
|Net interest-earning assets balance  |                            
|and interest rate spread             | $ 50,511                   
|                                     |                            
|Average interest-earning assets, net |                            
|interest income and net yield on     |                            
|average interest-earning assets      | $814,733                   
|                                     |                            
|Average interest-earning assets to   |                            
|interest-bearing liabilities         | 106.6%                     

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

1. For the purpose of these computations, non-accruing loans are included in the average
    loan amounts outstanding.
2. For the purpose of these computations, the available-for-sale investment securities and
    mortgage-related securities are presented and yields calculated based upon the historical
    cost basis.



|                                     | Year Ended December 31
|------------------------------------ | ----------------------
|                                     | 1999                  
|                                     |                       
|                                     | Average               
|                                     | Balance               
|                                     | (Dollars in Thousands)
|Interest-earning assets (1):         |                       
|Mortgage loans                       | $500,111              
|Consumer loans                       | 175,577               
|Commercial loans                     | 5,454                 
|Investment securities (2)            | 38,789                
|Interest-earning deposits            | 1,702                 
|Mortgage-related securities (2)      | 14,765                
|                                     |                       
|TOTAL                                | 736,398               
|                                     |                       
|Interest-bearing liabilities:        |                       
|Passbook accounts                    | 70,425                
|NOW and variable rate insured        |                       
|money market accounts                | 132,629               
|Time deposits                        | 350,423               
|Advance payments by borrowers        |                       
|for taxes and insurance              | 7,002                 
|Borrowings                           | 124,186               
|                                     |                       
|TOTAL                                | 684,665               
|                                     |                       
|Net interest-earning assets balance  |                       
|and interest rate spread             | $ 51,733              
|                                     |                       
|Average interest-earning assets, net |                       
|interest income and net yield on     |                       
|average interest-earning assets      | $736,398              
|                                     |                       
|Average interest-earning assets to   |                       
|interest-bearing liabilities         | 107.6%                

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

1. For the purpose of these computations, non-accruing loans are included in the average
    loan amounts outstanding.
2. For the purpose of these computations, the available-for-sale investment securities and
    mortgage-related securities are presented and yields calculated based upon the historical
    cost basis.



RATE VOLUME ANALYSIS OF NET INTEREST INCOME

The interaction of changes in volume and rates earned or paid with regard to
interest-earning assets and interest-bearing liabilities has a significant impact on net
income between periods. The volume of interest-earning dollars in loans and investments
compared to the volume of interest-bearing dollars in deposits and borrowings combined
with the interest rate spread produces the changes in net interest income between periods.

The following table sets forth the relative contribution of changes in volume and
effective interest rates on changes in net interest income for the periods indicated.

|                                  | Three Month Ended March 31
|--------------------------------- | --------------------------
|                                  | 2000 vs 1999              
|                                  | Increase(decrease) due to:
|                                  |                           
|                                  | Rate                      
|                                  | (In Thousands)            
|Interest-earning assets:          |                           
|Mortgage loans                    | $ (48)                    
|Consumer loans                    | (92)                      
|Commercial loans                  | -                         
|Investments securities            | 28                        
|Interest-earning deposits         | -                         
|Mortgage-related securities       | 9                         
|                                  |                           
|TOTAL                             | $(103)                    
|                                  |                           
|Interest-bearing liabilities:     |                           
|Passbook accounts                 | $ (12)                    
|NOW and variable rate             |                           
|insured money market accounts     | 80                        
|Time deposits                     | 120                       
|Advance payments by borrowers     |                           
|for taxes and insurance           | (2)                       
|Borrowings                        | 98                        
|                                  |                           
|TOTAL                             | $ 284                     
|                                  |                           
|Net change in net interest income |                           





|                                  | Year Ended December 31    
|--------------------------------- | --------------------------
|                                  | 1999 vs 1998              
|                                  | Increase(decrease) due to:
|                                  |                           
|                                  | Rate                      
|                                  | (In Thousands)            
|Interest-earning assets:          |                           
|Mortgage loans                    | $(1,371)                  
|Consumer loans                    | (627)                     
|Commercial loans                  | -                         
|Investments securities            | (42)                      
|Interest-earning deposits         | (20)                      
|Mortgage-related securities       | (10)                      
|                                  |                           
|TOTAL                             | $(2,070)                  
|                                  |                           
|Interest-bearing liabilities:     |                           
|Passbook accounts                 | $(108)                    
|NOW and variable rate             |                           
|insured money market accounts     | (177)                     
|Time deposits                     | (1,114)                   
|Advance payments by borrowers     |                           
|for taxes and insurance           | (1)                       
|Borrowings                        | (201)                     
|                                  |                           
|TOTAL                             | $(1,601)                  
|                                  |                           
|Net change in net interest income |                           



STATEMENTS OF INCOME

General. Net income decreased 7.5% for the first quarter of 2000 as compared to
the first quarter of 1999. This decrease was primarily the result of a reduction of the
net interest margin and increased operating expenses.

Interest and Dividend Income. Interest income on loans increased $1,911,000 in
the first quarter of 2000 as a result of the increased dollar amount of mortgage, consumer
and commercial loans outstanding. The average mortgage loans outstanding increased $64.7
million or 13.4% in the first quarter of 2000 as compared to the same period in 1999 and
average consumer loans outstanding increased $40.1 million. Commercial loans, which were
introduced to First Northern customers in the second quarter of 1999, had a balance
outstanding at March 31, 2000 of $9.7 million. The yield on the mortgage loan portfolio
decreased in the first quarter of 2000 as compared to the first quarter of 1999 as a
result of interest rates on mortgage loan originations during the first nine months of
1999 being less than the yield on the existing portfolio. Since September of 1999, the
interest rates on mortgage loan originations have exceeded the yield on the existing
mortgage portfolio. See Financial Condition - Balance Sheet - Loans Receivable. Consumer
loan yields also decreased during the first quarter of 2000 as compared to the same period
in 1999 as a result of interest rates on originations and purchases being below the
portfolio average yield.

Interest income on investment securities increased $133,000 for the three months ended
March 31, 2000, as a result of an increase in the dollar amount of investment securities
outstanding and an increase in the yield earned on investment securities.

Interest income on interest-earning deposits increased slightly primarily as a result
of additional interest-earning deposits outstanding.

Interest income on mortgage-related securities increased $69,000 as a result of the
increased average mortgage-related securities outstanding and the increase in the average
interest rate earned.

Interest Expense. Interest expense on deposits increased $429,000 primarily as
the result of increased cost of deposits and increased deposits outstanding. The average
cost of deposits increased as a result of rising general market interests and
competition's deposit interest rates offered. Since June 1999, the Federal Open Market
Committee ("FOMC") has increased interest rates five times for a total of 1.25%.
The rise in FOMC interest rates raises the interest rate expectations of consumers and
hence the need to increase interest rates on new or renewing deposits.

First Northern has utilized various time deposit terms and "special" interest
rates on various time deposit terms to attract new deposits. In addition, the Savings Bank
has acquired jumbo deposits to aid in its deposit growth. See Financial Condition -
Balance Sheet - Deposits.

Interest expense on borrowings increased $1,583,000 in the first quarter of 2000 as
compared to the first quarter of 1999 as a result of increased dollars outstanding and
increased average interest paid on those borrowings. First Northern's growth in interest
earning assets outpaced the growth in deposits thereby necessitating an increase in
borrowings. First Northern anticipates it will continue to emphasize growth in interest
earning assets and will fund a portion of that growth with borrowings. First Northern
primarily borrows from the Federal Home Loan Bank of Chicago and staggers the borrowing
maturities from overnight to 9 years in term.

Provision for Loan Losses. First Northern increased its general loan loss
allowance in the first quarter of 2000 as a result of the growth in the loan portfolio and
the type of loans originated. The loan loss allowance as of March 31, 2000, was $4,062,000
or .53% of total loans and 610.8% of non-performing assets.

Management believes that the current loan loss allowance is adequate; however, the
adequacy of the loan loss allowance is reviewed as historical loan loss changes, changes
in the size and composition of the loan portfolio, changes in the general economy and as
may otherwise be deemed necessary.

Non-Interest Income. Fees on serviced loans increased $19,000 in the first
quarter of 2000 as a result of decreased repayments or prepayments on loans sold (with
servicing retained). As the principal of a mortgage loan which was sold, repays or
prepays, the mortgage servicing asset is reduced and netted from fees on serviced loans,
thereby reducing the income on the serviced loans. When the repayments or prepayments
decrease, such as in the first quarter of 2000, the amortization from the mortgage
servicing assets also decreases and hence, the income on serviced loans increases. First
Northern's mortgage loan servicing asset at March 31, 2000 was $562,700.

Loan fees and service charges increased slightly primarily as the result of late
charges collected on loans and fees collected from the Savings Bank's line-of-credit home
equity loans.

Income from deposit account service charges increased $74,000 as a result of debit card
fee income and fees from customers who overdraw their checking account. Each time First
Northern's debit card is used, a fee which varies with each merchant, is paid to the
Savings Bank by the debit card company. The Savings Bank promotes the use of its debit
card by direct mail.

Insurance commissions increased $51,000 as a result of First Northern receiving an
insurance bonus. If First Northern obtains a predetermined threshold of insurance sales
and insurance losses are below another threshold, insurance bonuses are earned. First
Northern received $49,000 in insurance bonuses in the first quarter of 2000.

Gains on the sale of loans decreased $157,000 as a result of decreased loan sales.
First Northern sold $469,000 of loans in the first quarter of 2000 as compared to
$9,640,000 in the first quarter of 1999. Loan sales decreased substantially in the first
quarter of 2000 as a result of decreased thirty year fixed interest rate mortgage loan
originations, which are sold to the secondary market.

Other income increased $96,000 for the three months ended March 31, 2000, as compared
to the same period last year as a result of: (i) ATM surcharges; (ii) interest income on
Bank Owned Life Insurance; and (iii) interest from officers' life insurance.

Non-Interest Expense. Compensation expense increased $259,000 as a result of
increased: (i) number of employees; (ii) compensation to existing employees; (iii)
education and training costs; (iv) reduced expense deferrals associated with loan
originations; and (v) 2000 being a leap year which added one additional day of
compensation for hourly paid employees.

Federal insurance premiums decreased $51,000 as a result of a decrease in federal
deposit premiums charged First Northern and other Savings Association Insurance Fund
("SAIF") insured institutions. Beginning in the year 2000, the Financing Income
Corporation Obligations ("FICO") bonds interest cost was spread out to all
insured financial institutions rather than just the SAIF insured institutions.

Occupancy expense increased 24.5% in the first quarter of 2000 as a result of the
Savings Bank's rental of approximately 14,000 square feet of office space in downtown
Green Bay. This rental space consolidated various operational departments in one location
that were in three separate Savings Bank offices.

Data processing expense increased $12,000 in the three months ended March 31, 2000, as
a result of an increase in service bureau expense and service contracts on data processing
equipment. Service bureau expense increased as a result of increased contract cost,
additional transactions processed and additional products offered.

Furniture and equipment expense increased $9,000 in the first quarter of 2000 as a
result of increased cost of service contracts on equipment and increased depreciation on
furniture and equipment at the remodeled Kiel Office.

Marketing expense decreased $10,000 in the first quarter of 2000 primarily as a result
of timing of the marketing expense. It is anticipated marketing expenses will increase in
the second quarter of 2000 as compared to the first quarter of 2000.

Other expenses increased $73,000 in the three months ended March 31, 2000, as a result
of: (i) debit card expenses; (ii) costs associated with the operation of SFC and (iii)
employees expense.



Income Taxes. The effective income tax rate for the first quarter of 2000 was
32.4% as compared to 34.0% for the first quarter of 1999. The decrease in the effective
income tax rate was the result of the purchase of BOLI and an increase in the earnings of
FNII, which is not subject to state income taxes. Since First Northern intends to hold the
life insurance policies until the participants' death, BOLI interest income is not
taxable. In addition, First Northern moved its indirect automobile loan portfolio to FNII
at the beginning of the second quarter of 1999, which has reduced state income taxes. In
March 1999, First Northern moved approximately $56.3 million in mortgage loan
participations to FNII and further reduced its state income tax.



Legislation. The Gramm-Leach-Bliley Act ("Act") passed by Congress
could significantly alter the environment in which First Northern and the Savings Bank
operate. This Act tore down the former artificial statutory barriers between financial
institutions, insurance companies, and investment firms and may lead to increased
competition among such entities. In addition, the Act will prevent the sale of unitary
thrift holding companies, such as First Northern, to commercial companies. Finally, the
Act placed additional obligations on First Northern and the Savings Bank in the areas of
customer privacy, CRA-related agreements, and the operation of ATMs.



LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY

Historically, federal regulations have required the Savings Bank to maintain a minimum
percentage of liquid assets to net withdrawable accounts plus short-term borrowings. The
required percentage (liquidity ratio) has varied from time to time based upon economic
conditions and deposit flows. The liquidity ratio is set by the Office of Thrift
Supervision ("OTS") and it is currently 4% of average of net withdrawable
accounts plus short-term borrowings payable on demand or in one year or less during the
current calendar quarter. In general, liquid assets, for the purposes of calculating the
liquidity ratio, include cash, certain time deposits, and U.S. government and agency
obligations. The Savings Bank has historically maintained a liquidity ratio that exceeds
the OTS requirement. The Savings Bank's quarterly average liquidity ratio at March 31,
2000, was 5.20%. At December 31, 1999, its monthly average liquidity ratio was 5.45%. The
slight decrease in the liquidity ratio at March 31, 2000, is mainly attributable to the
growth in the loan portfolio. The Savings Bank believes that its maintenance of excess
liquidity, above the 4% federally required liquidity ratio, is an appropriate strategy to
aid in proper asset/liability management.

Liquidity management is both a daily and long-term responsibility of management. The
Savings Bank adjusts its investments in liquid assets based upon management's assessment
of: (i) expected loan demand; (ii) expected deposit flows; (iii) yields available on
interest-earning deposits; and (iv) the objectives of its asset/liability management
program. Excess liquidity is invested generally in interest-earning overnight deposits and
other short-term government and agency obligations. When the Savings Bank requires funds
beyond its ability to generate them internally, it can borrow funds from the FHLB of
Chicago or other sources. The FHLB of Chicago limits advances to member institutions to an
aggregate amount not to exceed 35% of the member institution's total assets. Wisconsin law
permits First Northern, without the prior written approval of the Wisconsin Department of
Financial Institutions --- Division of Savings Institutions, to borrow an aggregate amount
not to exceed 50% of its total assets.

CAPITAL RESOURCES AND REGULATORY INFORMATION

First Northern's net worth to total assets ratio at March 31, 2000, for State of
Wisconsin regulatory requirements was 8.6%, or 2.6% over the Wisconsin minimum legal
requirement of 6.00% of total assets established by the Division of Savings Institutions
of the Department of Financial Institutions, which regulates First Northern.

As of March 31, 2000, the most recent notification from the OTS categorized the Savings
Bank as well capitalized under the regulatory framework for prompt corrective action. To
be categorized as well capitalized, the Savings Bank must maintain minimum tangible, core
and risk based ratios as set forth in the following table. As a state-chartered savings
institution, the Savings Bank is also subject to a minimum capital requirement of the
State of Wisconsin. Management believes that, at March 31, 2000, the Savings Bank exceeded
all capital adequacy requirements to which it is subject. There are no conditions or
events since that notification that management believes have changed the Savings Bank's
categorization as well capitalized.

The Savings Bank's required and actual capital amounts and ratios are presented in the
following table.

|                           |                        |                   |                   |         | To Be Well
|-------------------------- | ---------------------- | ----------------- | ----------------- | ------- | ----------
|                           |                        | Minimum Required  | Capitalized Under
|                           |                        | For Capital       | Prompt Corrective
|                           | Actual                 | Adequacy Purposes | Action Provisions
|                           | Amount                 | Ratio             | Amount            | Ratio   | Amount    
|                           | (Dollars in Thousands)
|As of March 31, 2000:      |                        |                   |                   |         |           
|Risk-based capital         | $73,904                | 12.90%            | >=$45,746         | >=8.00% | >=$57,183 
|(to risk-weighted assets)  |                        |                   |                   |         |           
|Tier 1 (core) capital      | $69,842                | 12.20%            | >=$22,873         | >=4.00% | >=$34,310 
|(to risk-weighted assets)  |                        |                   |                   |         |           
|Tier 1 (core) capital      | $69,842                | 8.10%             | >=$34,599         | >=4.00% | >=$43,248 
|(to adjusted assets)       |                        |                   |                   |         |           
|Tangible equity            | $69,842                | 8.10%             | >=$34,599         | >=4.00% | >=$43,248 
|(to tangible assets)       |                        |                   |                   |         |           
|State of Wisconsin capital | $74,792                | 8.60%             | >=$51,976         | >=6.00% | N/A       
|(to total assets)          |                        |                   |                   |         |           
|                           |                        |                   |                   |         |           
|As of December 31, 1999:   |                        |                   |                   |         |           
|Risk-based capital         | $76,326                | 14.00%            | >=$43,770         | >=8.00% | >=$54,713 
|(to risk-weighted assets)  |                        |                   |                   |         |           
|Tier 1 (core) capital      | $72,416                | 13.20%            | >=$21,885         | >=4.00% | >=$32,828 
|(to risk-weighted assets)  |                        |                   |                   |         |           
|Tier 1 (core) capital      | $72,416                | 8.60%             | >=$33,546         | >=4.00% | >=$41,783 
|(to adjusted assets)       |                        |                   |                   |         |           
|Tangible equity            | $72,416                | 8.60%             | >=$33,546         | >=4.00% | >=$41,783 
|(to tangible assets)       |                        |                   |                   |         |           
|State of Wisconsin capital | $77,197                | 9.20%             | >=$50,377         | >=6.00% | N/A       
|(to total assets)          |                        |                   |                   |         |           



Item 3. Quantitative and Qualitative Disclosures about Market Risk.

See item 7A. Quantitative and Qualitative Disclosures about Market Risk in 1999 Form
      10-K.



PART II - OTHER INFORMATION





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

1. Exhibits:
2. Reports on Form 8-K:

A Form 8-K dated February 21, 2000, was filed on February 23, 2000, to report the
        merger agreement with Mutual Savings Bank.



















SIGNATURE



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.





FIRST NORTHERN CAPITAL CORP.

(Registrant)











---

---

Date: May 11, 2000

Rick B. Colberg

Vice President and Chief Financial Officer

(Mr. Colberg is also duly authorized to

sign on behalf of registrant)









FIRST NORTHERN CAPITAL CORP

(the "Registrant")

Commission File No. 0-27982

* * * *

EXHIBIT INDEX

TO

FIRST QUARTER 2000 REPORT ON FORM 10-Q



|Exhibit |                                       | Incorporated Herein              | Filed or Submitted
|------- | ------------------------------------- | -------------------------------- | ------------------
|Number  | Description                           | By Reference To                  | Herewith          
|        |                                       |                                  |                   
|2.1     | Agreement and Plan of Merger, dated   | Exhibit 2.1 to Registrant's      |                   
|        | as of February 21, 2000, by and among | Current Report on Form 8-K dated |                   
|        | Mutual Savings Bank, OV Corp. and     | as of February 21, 2000 (the     |                   
|        | First Northern Capital Corp.          | "2/21/00 8-K")                   |                   
|        |                                       |                                  |                   
|2.2     | Stock Option Agreement, dated as of   | Exhibit 2.2 to the 2-21-00 8-K   |                   
|        | February 21, 2000, by and between     |                                  |                   
|        | Mutual Savings Bank and               |                                  |                   
|        | First Northern Capital Corp.          |                                  |                   
|        |                                       |                                  |                   
|11.1    | Statement regarding computation       |                                  |                   
|        | of per share earnings                 |                                  | X                 
|        |                                       |                                  |                   
|        |                                       |                                  |                   
|27.1    | Financial Data Schedule, which is     |                                  |                   
|        | Submitted electronically to the       |                                  |                   
|        | Securities and Exchange Commission    |                                  |                   
|        | for information only and not filed    |                                  | X                 

Exhibit 11.1





First Northern Capital Corp.

Computation of Net Income Per Common Share



|                                   | Three Months Ended |            | 
|---------------------------------- | ------------------ | ---------- | 
|                                   | March 31           |            | 
|                                   | 2000               | 1999       | 
|BASIC:                             |                    |            | 
|Weighted average common shares     |                    |            | 
|outstanding during each period     | 8,579,335          | 8,791,342  | 
|                                   |                    |            | 
|DILUTED:                           |                    |            | 
|Weighted average common shares     |                    |            | 
|outstanding during each period     | 8,579,335          | 8,791,342  | 
|Incremental shares relating to:    |                    |            | 
|dilutive stock options outstanding |                    |            | 
|at end of each period (1)          | 135,342            | 194,687    | 
|                                   |                    |            | 
|                                   | 8,714,677          | 8,986,029  | 
|                                   |                    |            | 
|NET INCOME FOR EACH PERIOD         | $1,656,303         | $1,791,340 | 
|                                   |                    |            | 
|                                   |                    |            | 
|PER COMMON SHARE AMOUNTS:          |                    |            | 
|Basic net income                   | $0.19              | $0.20      | 
|                                   |                    |            | 
|Diluted net income                 | $0.19              | $0.20      | 

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

Notes:

(1) Based on treasury stock method using average market price.