<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   FORM 10 - Q


     (Mark One)
     |X|                   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                                OF THE SECURITIES EXCHANGE ACT OF 1934

     For the quarterly period ended MARCH 31, 2000.
                                    --------------
Commission file number             000-21553
                      ----------------------------------------------------


                          METROPOLITAN FINANCIAL CORP.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                  OHIO                                    34-1109469
     -------------------------------                 -------------------
     (State or Other Jurisdiction of                   (I.R.S. Employer
     Incorporation or Organization)                  Identification No.)

                 6001 LANDERHAVEN DRIVE, MAYFIELD HEIGHTS, OHIO 44124
-------------------------------------------------------------------------------
        (Address of Principal Executive Offices)               (Zip Code)

                                 (440) 646-1111
-------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)

     Indicate by check mark whether the registrant (1) has filed all reports
     required to be filed by Section 13 or 15(d) of the Securities Exchange Act
     of 1934 during the preceding 12 months (or for such shorter period that the
     registrant was required to file such reports), and (2) has been subject to
     such filing requirements for the past 90 days.
     Yes     X       No
          --------

     As of May 12, 2000, there were 8,075,637 shares of the Registrant's Common
Stock issued and outstanding.




<PAGE>   2


                           METROPOLITAN FINANCIAL CORP.

                                      FORM 10-Q
                              QUARTER ENDED MARCH 31, 2000

                                   TABLE OF CONTENTS

     PART I.    FINANCIAL INFORMATION                               PAGE

     Item 1.  Financial Statements:

       Consolidated Statements of Financial Condition
       as of March  31, 2000 and December 31, 1999                    3

       Consolidated Statements of Operations for the
       three months ended March 31, 2000 and 1999                     4

       Condensed Consolidated Statements of Cash Flows
       for the three months ended March 31, 2000 and 1999             5

       Consolidated Statement of Changes in Shareholders'
       Equity for the three months ended March 31, 2000               6

       Notes to Consolidated Financial Statements                   7-18

     Item 2.  Management's Discussion and Analysis of
     Financial Condition and Results of Operations                  19-28

     Item 3. Quantitative and Qualitative Disclosures About
     Market Risk                                                    29-32

     PART II.   OTHER INFORMATION

     Item 6. Exhibits and Reports on Form 8-K                       33-34

     SIGNATURE                                                       35


                                                                               2
<PAGE>   3



                          METROPOLITAN FINANCIAL CORP.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                   MARCH 31, 2000        DECEMBER 31, 1999
                                                                                   --------------        -----------------
<S>                                                                                      <C>                     <C>
         ASSETS
         Cash and cash equivalents                                                       $ 18,216                $  21,751
         Securities available for sale, at fair value                                      35,029                   35,829
         Securities held to maturity                                                       15,980                   15,879
         Mortgage-backed securities available for sale                                    223,776                  255,727
         Loans held for sale                                                                6,335                    6,718
         Loans receivable, net                                                          1,204,893                1,183,954
         Federal Home Loan Bank stock                                                      13,290                   10,948
         Premises and equipment, net                                                       36,350                   31,820
         Real estate owned, net                                                             3,691                    5,263
         Intangible assets                                                                  2,395                    2,461
         Loan servicing rights, net                                                        10,015                   10,374
         Accrued income, prepaid expenses and other assets                                 32,418                   27,395
                                                                                       ----------               ----------
              Total assets                                                             $1,602,388               $1,608,119
                                                                                       ==========               ==========

         LIABILITIES
         Noninterest-bearing deposits                                                    $ 56,678                 $ 70,891
         Interest-bearing deposits                                                      1,048,696                1,065,739
         Borrowings                                                                       387,060                  360,396
         Other liabilities                                                                 22,272                   22,475
         Guaranteed Preferred Beneficial Interests in the
           Corporation's Junior Subordinated Debentures                                    43,750                   43,750
                                                                                       ----------               ----------
            Total liabilities                                                           1,558,456                1,563,251
                                                                                       ----------               ----------

         SHAREHOLDERS' EQUITY
         Preferred stock, 10,000 shares authorized,
           none issued                                                                         --                       --
         Common stock, no par value, 10,000 shares
           authorized, 8,073 and 8,064 shares  issued
           and outstanding, respectively                                                       --                       --
         Additional paid-in capital                                                        20,781                   20,744
         Retained earnings                                                                 28,778                   28,171
         Accumulated other comprehensive loss                                              (5,627)                  (4,047)
                                                                                       ----------               ----------
            Total shareholders' equity                                                     43,932                   44,868
                                                                                       ----------               ----------
              Total liabilities and shareholders' equity                               $1,602,388               $1,608,119
                                                                                       ==========               ==========
</TABLE>

See notes to consolidated financial statements.


                                                                               3
<PAGE>   4


                          METROPOLITAN FINANCIAL CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                             THREE MONTHS ENDED MARCH 31,
                                                                                             ----------------------------
                                                                                             2000                       1999
                                                                                             -----                      ----
<S>                                                                                         <C>                        <C>
INTEREST INCOME
  Interest and fees on loans                                                                $24,604                    $21,687
  Interest on mortgage-backed securities                                                      4,184                      3,292
  Interest and dividends on other investments                                                 1,121                        915
                                                                                            -------                    -------
    Total interest income                                                                    29,909                     25,894
                                                                                            -------                    -------
INTEREST EXPENSE
  Interest on deposits                                                                       13,519                     13,174
  Interest on borrowings                                                                      5,749                      3,136
  Interest on Junior Subordinated Debentures                                                    998                        608
                                                                                            -------                    -------
    Total interest expense                                                                   20,266                     16,918
                                                                                            -------                    -------
NET INTEREST INCOME                                                                           9,643                      8,976
Provision for loan losses                                                                     1,500                        650
                                                                                            -------                    -------
Net interest income after provision for loan losses                                           8,143                      8,326
                                                                                            -------                    -------
NONINTEREST INCOME
  Net gain on sale of loans                                                                     309                        400
  Loan servicing income, net                                                                    335                        335
  Service charges on deposit accounts                                                           320                        272
  Net gain on sale of securities                                                                333                         --
  Other operating income                                                                        818                        450
                                                                                            -------                    -------
    Total noninterest income                                                                  2,115                      1,457
                                                                                            -------                    -------
NONINTEREST EXPENSE
  Salaries and related personnel costs                                                        5,177                      4,062
  Occupancy and equipment expense                                                             1,340                      1,088
  Federal deposit insurance premiums                                                            359                        201
  Data processing expense                                                                       331                        236
  Marketing expense                                                                             222                        201
  State franchise taxes                                                                         262                        248
  Amortization of intangibles                                                                    66                         66
  Other operating expenses                                                                    1,602                      1,439
                                                                                            -------                    -------
    Total noninterest expense                                                                 9,359                      7,541
                                                                                            -------                    -------
INCOME BEFORE INCOME TAXES                                                                      899                      2,242
Provision for income taxes                                                                      292                        804
                                                                                            -------                    -------
NET INCOME                                                                                 $    607                  $   1,438
                                                                                            =======                    =======
Basic earnings per share                                                                   $   0.08                  $    0.19
                                                                                            =======                   ========
Diluted earnings per share                                                                 $   0.08                  $    0.19
                                                                                            =======                   ========

Weighted average shares outstanding for basic earnings per share                          8,068,467                  7,756,393
Effect of dilutive options                                                                        0                          0
                                                                                            -------                    -------
Weighted average shares outstanding for diluted earnings per share                        8,068,467                  7,756,393
                                                                                          =========                  =========
</TABLE>

See notes to consolidated financial statements.


                                                                               4
<PAGE>   5


                          METROPOLITAN FINANCIAL CORP.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                   THREE MONTHS ENDED MARCH 31,
                                                                                                   ----------------------------
                                                                                                       2000         1999
                                                                                                       ----         ----
<S>                                                                                                <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES                                                               $ (12,860)   $ (19,226)

CASH FLOWS FROM INVESTING ACTIVITIES
  Disbursement of loan proceeds                                                                      (81,636)    (106,481)
  Purchases of:
    Loans                                                                                            (16,883)     (39,225)
    Securities available for sale                                                                        (12)     (20,020)
    Securities held to maturity                                                                         (100)        --
    Mortgage loan servicing rights                                                                      --         (2,037)
    Premises and equipment                                                                            (5,102)      (2,842)
  Proceeds from maturities and repayments of:
    Loans                                                                                             72,739       73,481
    Mortgage-backed securities available for sale                                                     17,903       13,735
  Proceeds from sale of:
    Loans                                                                                              4,276       18,851
    Mortgage-backed securities available for sale                                                     21,419         --
    Securities available for sale                                                                       --          1,275
    Premises, equipment, and real estate owned                                                         1,275          532
                                                                                                    ---------    ---------
      Net cash provided by (used in) investing activities                                             13,879      (62,731)
                                                                                                   ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net change in deposit accounts                                                                     (31,256)      87,435
  Proceeds from borrowings                                                                           141,150       29,043
  Repayment of borrowings                                                                            (65,385)     (31,279)
  Net activity on lines of credit with commercial banks
    and Federal Home Loan Bank                                                                       (49,100)      (6,900)
  Proceeds from issuance of common stock                                                                  37         --
                                                                                                   ---------    ---------
    Net cash provided by (used in) financing activities                                               (4,554)      78,299
                                                                                                   ---------    ---------

Net change in cash and cash equivalents                                                               (3,535)      (3,658)
Cash and cash equivalents at beginning of period                                                      21,751       29,086
                                                                                                   ---------    ---------
Cash and cash equivalents at end of period                                                         $  18,216    $  25,428
                                                                                                   =========    =========


Supplemental disclosures of cash flow information:
Cash paid during the period for:
    Interest                                                                                       $  19,945      $17,854
    Income taxes                                                                                          --           --
    Loans securitized                                                                                  8,557           --
</TABLE>

See notes to consolidated financial statements.


                                                                               5
<PAGE>   6

                          METROPOLITAN FINANCIAL CORP.
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                                                          ACCUMULATED
                                                    ADDITIONAL                OTHER         TOTAL
                                          COMMON     PAID-IN     RETAINED  COMPREHENSIVE  SHAREHOLDERS'
                                           STOCK     CAPITAL     EARNINGS  INCOME (LOSS)   EQUITY
                                           -----     -------     --------  -------------   ------
<S>                                      <C>         <C>         <C>        <C>         <C>
BALANCE DECEMBER 31, 1999                $   --      $ 20,744    $ 28,171   $ (4,047)   $ 44,868
Comprehensive income (loss):
   Net income                                                         607                    607
   Change in unrealized gain on
     securities                                                               (1,580)     (1,580)
                                                                                        --------
     Total comprehensive income (loss)                                                      (973)
Issuance of shares of Common stock
   Stock purchase plan-9,033 shares                        37                                 37
                                                     --------    --------   --------    --------
BALANCE MARCH 31, 2000                   $   --      $ 20,781    $ 28,778   $ (5,627)   $ 43,932
                                                     ========    ========   ========    ========
</TABLE>

See notes to consolidated financial statements.



                                                                               6

<PAGE>   7

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Metropolitan Financial Corp. ("Metropolitan" or the "Corporation") is a savings
and loan holding company and an Ohio corporation. Metropolitan's primary
operating subsidiary is Metropolitan Bank & Trust Company (the "Bank").
Metropolitan is engaged in the business of originating multifamily and
commercial real estate loans primarily in Ohio, Pennsylvania, Michigan, and
Kentucky and purchasing multifamily and commercial real estate loans throughout
the United States. Metropolitan offers full service banking services to
communities in Northeast Ohio where its additional lending activities include
originating one- to four-family residential real estate, construction, business
and consumer loans. The accounting policies of the Corporation conform to
generally accepted accounting principles and prevailing practices within the
financial services industry. All significant intercompany transactions have been
eliminated. In the opinion of management, the accompanying financial statements
include all adjustments, consisting only of normal recurring accruals, which the
Corporation considers necessary for a fair presentation of (a) the results of
operations for the three month periods ended March 31, 2000 and 1999; (b) the
financial condition at March 31, 2000 and December 31, 1999; (c) the statement
of cash flows for the three month periods ended March 31, 2000 and 1999; and (d)
the statement of changes in shareholders' equity for the three month period
ended March 31, 2000. The results of operations for the three month period ended
March 31, 2000 are not necessarily indicative of the results that may be
expected for any other period. The annual report for Metropolitan for the year
ended December 31, 1999, contains consolidated financial statements and related
notes which should be read in conjunction with the accompanying consolidated
financial statements.


2. ACCOUNTING POLICIES

SECURITIES: The Corporation classifies debt and mortgage-backed securities as
held to maturity or available for sale. The Corporation classifies marketable
equity securities as available for sale.

Securities classified as held to maturity are those that management has the
positive intent and ability to hold to maturity. Securities held to maturity are
stated at cost, adjusted for amortization of premiums and accretion of
discounts.

Securities classified as available for sale are those that management intends to
sell or that could be sold for liquidity, investment management, or similar
reasons, even if there is not a present intention for such sale. Securities
available for sale are carried at fair value with unrealized gains and losses
included as a separate component of shareholders' equity, net of tax, and
recognized as part of comprehensive income. Gains or losses on dispositions are
based on net proceeds and the adjusted historic cost of securities sold, using
the specific identification method.

LOANS: All loans are held for investment unless specifically designated as held
for sale. When the Bank originates or purchases loans, it makes a determination
whether or not to classify loans as held for sale. The Bank re-evaluates its
intention to hold or sell loans at each balance sheet date based on the current
environment and, if appropriate, reclassifies loans as held for sale. Sales of
loans are dependent upon various factors including interest rate movements,
deposit flows, the availability and attractiveness of other sources of funds,
loan demand by borrowers, and liquidity and capital requirements.

                                                                               7
<PAGE>   8

Loans held for investment are stated at the principal amount outstanding
adjusted for amortization of premiums and deferred costs and accretion of
discounts and deferred fees using the interest method. At March 31, 2000 and
December 31, 1999, management had the intent and the Bank had the ability to
hold all loans being held for investment purposes for the foreseeable future.

Loans held for sale are recorded at the lower of cost or market. When the Bank
purchases real estate loans and simultaneously writes an option giving the
holder the right to purchase those loans, those loans are designated as held for
sale. Gains and losses on the sale of loans are determined by the identified
loan method and are reflected in operations at the time of the settlement of the
sale.

Interest on loans is accrued over the term of the loans based upon the principal
outstanding. Management reviews loans that are delinquent 90 days or more to
determine if interest accrual should be discontinued based on the estimated fair
market value of the collateral. The carrying values of impaired loans are
periodically adjusted to reflect cash payments, revised estimates of future cash
flows and increases in the present value of expected cash flows due to the
passage of time.

ALLOWANCE FOR LOSSES ON LOANS: The allowance for loan losses is established by a
provision for loan losses charged against income. Estimating the risk of loss
and the amount of loss on any loan is necessarily subjective. Accordingly, the
allowance is maintained by management at a level considered adequate to cover
probable losses based on past loss experience, general economic conditions,
information about specific borrower situations including their financial
position and collateral values, and other factors and estimates which are
subject to change over time. While management may periodically allocate portions
of the allowance for specific problem loans, the whole allowance is available
for any loan charge-offs that occur. A loan is charged off against the allowance
by management as a loss when deemed uncollectible, although collection efforts
continue and future recoveries may occur.

Loans considered to be impaired are reduced to the present value of expected
future cash flows or to the fair value of collateral, by allocating a portion of
the allowance for losses on loans to such loans. If these allocations require an
increase in the allowance for losses on loans, such increase is reported as a
provision for loan losses. Management excludes all consumer loans from its
review for impairment. However, these loans are considered in determining the
appropriate level of the allowance for loss on loans. All impaired loans are
placed on nonaccrual status.

EARNINGS PER SHARE: Basic and diluted earnings per share are computed based on
weighted average shares outstanding during the period. Basic earnings per share
has been computed by dividing net income by the weighted average shares
outstanding. Diluted earnings per share has been computed by dividing net income
by the diluted weighted average shares outstanding. Diluted weighted average
common shares were calculated assuming the exercise of stock options less
treasury shares assumed to be purchased from the proceeds using the average
market price of the Corporation's stock. All per share information has been
retroactively adjusted to reflect the effect of the stock dividends and stock
splits.

                                                                               8
<PAGE>   9

COMPREHENSIVE INCOME: Comprehensive income consists of net income and other
comprehensive income. Other comprehensive income includes unrealized gains and
losses on securities available for sale and equity investments which are also
recognized as a separate component of equity.

CAPITALIZED INTEREST: Interest expenses incurred to finance construction of
premises and equipment which take more than six months to build are capitalized
as they are incurred. The amount of capitalized interest included as a portion
of the historical cost of acquiring assets will be depreciated over the useful
life of the asset.

NEW ACCOUNTING PRONOUNCEMENTS: In quarters beginning after June 15, 2000, a new
accounting standard will require all derivatives to be recorded at fair value.
Unless designated as hedges, changes in these fair values will be recorded in
the income statement. Fair value changes involving hedges will generally be
recorded by offsetting gains and losses on the hedge and on the hedged item,
even if the fair value of the hedged item is not recorded. This is not expected
to have a material effect, but the effect will depend on derivative holdings
when this standard applies.

3. SECURITIES

The amortized cost, gross unrealized gains and losses and fair values of
investment securities available for sale and held to maturity at March 31, 2000
and December 31, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                             March 31, 2000
                                          -------------------------------------------------------------------------------------
                                             Amortized         Gross Unrealized         Gross Unrealized                  Fair
                                               Cost                 Gains                    Losses                      Value
                                               ----                 -----                    ------                      -----
<S>                                               <C>                 <C>                   <C>                        <C>
AVAILABLE FOR SALE
Mutual funds                                       $  847                                                               $  847
FreddieMac preferred stock                          7,500                                  $(2,062)                      5,438
FannieMae notes                                    19,938                                     (794)                     19,144
FreddieMac note                                    10,000                                     (400)                      9,600
Mortgage-backed securities                        229,113             $200                  (5,537)                    223,776
                                                  -------              ---                    -----                     -------
                                                  267,398              200                  (8,793)                    258,805
HELD TO MATURITY
Tax-exempt municipal bond                          14,700              175                                              14,875
                                                                                                 -
Revenue bond                                        1,180                                                                1,180
                                                                                                 -
Certificate of deposit                                100                                                                  100
                                                  -------              ---                   -----                     -------
                                                   15,980              175                       0                      16,155
                                                  -------              ---                   -----                     -------
   Total securities                              $283,378             $375                 $(8,793)                   $274,960
                                                  =======              ===                   =====                     =======

</TABLE>

                                                                               9
<PAGE>   10

<TABLE>
<CAPTION>
                                                                           December 31, 1999
                                          ----------------------------------------------------------------------
                                             Amortized      Gross Unrealized    Gross Unrealized        Fair
                                               Cost              Gains               Losses             Value
                                               ----              -----               ------             -----
<S>                                            <C>             <C>                   <C>               <C>
AVAILABLE FOR SALE
Mutual funds                                 $     835                                               $     835
FreddieMac preferred stock                       7,500                            $  (1,350)             6,150
FreddieMac note                                 10,000                                 (236)             9,764
FannieMae notes                                 19,935                                 (855)            19,080
Mortgage-backed securities                     259,446         $     228             (3,947)           255,727
                                             ---------         ---------          ---------          ---------
                                               297,716               228             (6,388)           291,556
HELD TO MATURITY
Tax-exempt municipal bond                       14,699               176                                14,875
Revenue bond                                     1,180                                                   1,180
                                             ---------         ---------          ---------          ---------
                                                15,879               176                  0             16,055
                                             ---------         ---------          ---------          ---------
   Total securities                          $ 313,595         $     404          $  (6,388)         $ 307,611
                                             =========         =========          =========          =========

</TABLE>

4. LOANS RECEIVABLE

The composition of the loan portfolio at March 31, 2000 and December 31, 1999 is
as follows (in thousands):

<TABLE>
<CAPTION>
                                                                            March 31, 2000               December 31, 1999
                                                                            --------------               -----------------
<S>                                                                              <C>                             <C>
Real estate loans
   Construction loans:
      Residential single family                                                  $ 115,214                       $ 111,005
      Commercial                                                                       444                             447
      Land                                                                          43,506                          43,989
      Loans in process                                                             (56,349)                        (56,212)
                                                                                 ---------                       ---------
         Construction loans, net                                                   102,815                          99,229
   Permanent loans:
      Residential single family                                                    303,222                         295,061
      Multifamily                                                                  285,396                         292,015
      Commercial                                                                   257,939                         247,455
      Other                                                                            693                             671
                                                                                 ---------                       ---------
         Total real estate loans                                                   950,065                         934,431
Consumer loans                                                                     146,686                         143,585
Business and other loans                                                           117,355                         114,333
                                                                                 ---------                       ---------
         Total loans                                                             1,214,106                       1,192,349
Premiums on loans, net                                                               6,745                           7,178
Deferred loan fees, net                                                             (4,155)                         (4,548)
Allowance for losses on loans                                                      (11,803)                        (11,025)
                                                                                 ---------                       ---------
        Total loans receivable                                                  $1,204,893                      $1,183,954
                                                                                 =========                       =========
</TABLE>

                                                                              10
<PAGE>   11

Activity in the allowance for losses on loans for the periods ended March 31,
2000 and 1999 is as follows (in thousands):

                                                    Three Months Ended March 31,
                                                        2000            1999
                                                        ----            ----
Balance at the beginning of the period               $ 11,025        $  6,909
Provision for loan losses                               1,500             650
Net charge-offs                                          (722)           (281)
                                                     --------        --------
Balance at end of period                             $ 11,803        $  7,278
                                                     ========        ========


Nonperforming loans were as follows at (in thousands):

                                                        March 31,  December 31,
                                                          2000         1999
                                                          ----         ----
Loans past due over 90 days still on accrual            $   344      $   448
Nonaccrual loans                                         10,435        8,933

Nonperforming loans included all impaired loans and smaller balance homogeneous
loans, such as residential mortgage and consumer loans, that are collectively
evaluated for impairment.

Management analyzes loans on an individual basis and considers a loan to be
impaired when it is probable that all principal and interest amounts will not be
collected according to the loan contract based on current information and
events. Loans which are past due two payments or less and that management feels
are probable of being restored to current status within 90 days are not
considered to be impaired loans. All impaired loans are included in
nonperforming loans.

Information regarding impaired loans is as follows (in thousands):

                                                  March 31,      December 31,
                                                    2000              1999
                                                    -----             ----
Balance of impaired loans                          $4,527            $4,593
Less portion for which no allowance
  for losses on loans is allocated                  3,455             3,521
                                                    -----             -----
Balance of impaired loans for which
  an allowance for loan losses is allocated        $1,072            $1,072
                                                    =====             =====
Portion of allowance for losses on loans
  allocated to the impaired loan balance           $1,054            $1,054
                                                    =====             =====


                                                                              11
<PAGE>   12

                                                    March 31,         March 31,
                                                      2000              1999
                                                      ----             ----
Average investment in impaired loans
  during the period year to date                    $  4,620           $ 9,761
                                                    ========            ======
Interest income recognized during
  impairment year to date                           $     17           $   101
                                                     =======            ======
Interest income recognized on a
  cash basis during the period year to date         $     17           $   101
                                                     =======            ======


5. LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition. The unpaid principal balances of
these loans at March 31, 2000 and December 31, 1999 are summarized as follows
(in thousands):
                                                        March 31,   December 31,
                                                          2000          1999
                                                        ---------  ------------
Mortgage loan portfolios serviced for:
  FreddieMac                                          $  834,759    $  746,688
  FannieMae                                              428,701       725,045
  Others                                                 157,678       181,332
                                                      ----------    ----------
    Total loans serviced for others                   $1,421,138    $1,653,065
                                                      ==========    ==========

Custodial balances maintained in noninterest-bearing checking accounts in
connection with the foregoing loan servicing were approximately $15,444,000 and
$29,958,000 at March 31, 2000 and December 31, 1999, respectively.

The following is an analysis of the changes in cost of loan servicing rights for
the three month period ended March 31, 2000 and 1999 (in thousands):

                                                    Three Months Ended March 31,
                                                        2000            1999
                                                    ------------  -------------
Balance at the beginning of the period               $ 10,374        $ 13,412
Acquired or originated                                    251           2,650
Sold                                                     --              --
Amortization                                             (610)           (717)
                                                     --------        --------
Balance at the end of the period                     $ 10,015        $ 15,345
                                                     ========        ========


                                                                              12
<PAGE>   13

6. DEPOSITS

Deposits consist of the following (in thousands):

                                                         March 31,  December 31,
                                                           2000         1999
                                                         --------   ------------
Noninterest-bearing checking accounts                 $   56,678      $   70,891

Interest-bearing checking accounts                        80,821          57,136
Passbook savings and statement savings                   170,302         200,168
Certificates of deposit                                  797,573         808,435
                                                      ----------      ----------
  Total interest-bearing deposits                      1,048,696       1,065,739
                                                      ----------      ----------
  Total deposits                                      $1,105,374      $1,136,630
                                                      ==========      ==========


At March 31, 2000, scheduled maturities of certificates of deposit are as
follows (in thousands):

                   YEAR                                   WEIGHTED AVERAGE
                   ENDED              AMOUNT               INTEREST  RATE
                   -----              ------               --------------
                   2000              $468,835                 5.56%
                   2001               263,224                 6.15
                   2002                38,836                 6.43
                   2003                 7,941                 6.01
                   2004                16,192                 5.92
               Thereafter               2,545                 6.24
                                     --------
                                     $797,573                 5.81
                                     ========


                                                                              13
<PAGE>   14

 7. BORROWINGS

Borrowings consisted of the following at March 31, 2000 and December 31, 1999
(in thousands):

<TABLE>
<CAPTION>
                                                                                     March 31,               December 31,
                                                                                       2000                      1999
                                                                                     --------                  ---------
<S>                                                                                  <C>                       <C>
Federal Home Loan Bank Advances (6.0% and 5.6% at
  March 31, 2000 and December 31, 1999, respectively)                                $256,031                  $ 205,352

Reverse repurchase agreements (5.5% and 5.6% at
  March 31, 2000 and December 31, 1999, respectively)                                  80,044                     80,044

Commercial bank repurchase agreement (7.0% and 7.7% at
  March 31, 2000 and December 31, 1999, respectively)                                  30,000                     55,000

Commercial bank line of credit (8.5% at both March 31,
  2000 and December 31, 1999, respectively)                                             7,000                      6,000

Subordinated debt maturing January 1, 2005
  (9.625% fixed rate)                                                                  13,985                     14,000
                                                                                       ------                     ------
                                                                                     $387,060                   $360,396
                                                                                      =======                    =======
</TABLE>


At March 31, 2000, scheduled payments on borrowings are as follows (in
thousands):

                                                          WEIGHTED AVERAGE
                YEAR ENDED                    AMOUNT       INTEREST RATE
                ----------                    ------       -------------
                   2000                     $181,584            6.29%
                   2001                       24,509            6.71
                   2002                       45,655            5.83
                   2003                       39,920            5.65
                   2004                       61,540            6.01
                Thereafter                    33,852            7.69
                                             -------
                   Total                    $387,060            6.28
                                             =======


At March 31, 2000, Federal Home Loan Bank advances are collateralized by all of
our FHLB stock, one-to-four family first mortgage loans, multifamily loans, and
securities with aggregate carrying values of approximately $307 million, $27
million and $50 million, respectively.

The Corporation has a commercial line of credit agreement with a commercial
bank. The maximum borrowing under the line is $12,000,000. The balance
outstanding at March 31, 2000 was $7,000,000. The line matures

                                                                              14
<PAGE>   15

annually on May 30, including this year. The interest rate on the line is tied
to LIBOR or prime at the Corporation's option. As collateral for the loan, the
Corporation's largest shareholder, Robert Kaye, has agreed to pledge a portion
of his common shares in an amount of at least equal to 200% of any outstanding
balance.

In November, 1999, the Bank entered into a commercial bank repurchase agreement
involving a transaction which allows a line of credit for use by the Bank. The
agreement reprices monthly based on LIBOR. The agreement allows commercial loans
securitized by Metropolitan to be used as collateral. The maximum amount
available under this agreement is $55,000,000. The balance of this line of
credit at March 31, 2000 was $30,000,000.


8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Bank can be a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet financing needs of its customers. These
financial commitments include commitments to make loans. The Bank's exposure to
credit loss in the event of nonperformance by the other party to the financial
instrument for commitments to make loans is represented by the contractual
amount of these instruments. The Bank follows the same credit policy to make
such commitments as is followed for those loans recorded in the financial
statements.

As of March 31, 2000, the Bank had fixed and variable rate commitments to
originate and/or purchase loans (at market rates) of approximately $67,722,000
and $83,945,000, respectively. In addition, the Bank had firm commitments to
sell loans totaling $3,142,000 at March 31, 2000. Metropolitan's commitments to
originate and purchase loans are for loans with rates ranging from 6.13% to
16.00% and commitment periods up to one year.


9. SECURITIES ISSUED

On May 14, 1999, the Corporation issued 1,600,000 shares ($10 liquidation amount
per security), of 9.50% cumulative trust preferred securities (the "Trust
Preferred") through a newly formed, wholly-owned subsidiary, Metropolitan
Capital Trust II (the "Trust Issuer") and 300,000 Common shares of Metropolitan
Financial Corp. The Trust Issuer invested the total proceeds from the sale of
the Trust Preferred in the 9.50% Junior Subordinated Deferrable Interest
Debentures (the "Junior Subordinated Debentures") issued by the Corporation
which mature on June 30, 2029. The Corporation used the net proceeds from the
sale of the Junior Subordinated Debentures and the common shares to repay the
$12.0 million outstanding balance on the commercial bank line of credit and for
a $5 million additional capital contribution to the Bank to support growth. The
remainder is available for working capital at the Corporation. The Trust
Preferred securities are listed on the Nasdaq Stock Market's National Market
under the symbol "METFO."



                                                                              15
<PAGE>   16

The Corporation also issued trust preferred securities in 1998 through its
subsidiary, Metropolitan Capital Trust I. A description of the trust preferred
securities currently outstanding is presented below (Dollars in thousands):

<TABLE>
<CAPTION>
              Issuing                     Date of          Shares       Interest           Maturity        Principal Amount
               Entity                     Issuance         Issued         Rate               Date            March 31, 2000
               ------                     --------         ------         ----               ----            --------------
<S>                                    <C>                <C>             <C>           <C>                 <C>
Metropolitan Capital Trust I           April 27, 1998     2,775,000       8.60%         June 30, 2028           $27,750
Metropolitan Capital Trust II            May 14, 1999     1,600,000       9.50%         June 30, 2029            16,000
                                                                                                                -------
                                                                                                                $43,750
                                                                                                                =======
</TABLE>

10. SEGMENT REPORTING

Metropolitan's operations include two major operating segments. A description of
those segments follows:

Retail and Commercial Banking--Retail and commercial banking is the segment of
the business that brings in deposits and lends those funds out to businesses and
consumers. The local market for deposits is the consumers and businesses in the
neighborhoods surrounding our 22 retail sales offices in Northeastern Ohio. The
market for lending is Ohio and the surrounding states for originations and
throughout the United States for purchases. The majority of loans are secured by
multifamily and commercial real estate. Loans are also made to businesses
secured by business assets and consumers secured by real or personal property.
Business and consumer loans are concentrated in Northeastern Ohio.

Mortgage banking--Mortgage banking is the segment of our business that
originates, sells and services permanent or construction loans secured by one-
to four-family residential properties. These loans are primarily originated
through commissioned loan officers located in Northeastern and Central Ohio and
Southeastern Michigan. In general, fixed rate loans are originated for sale and
adjustable rate loans are originated to be retained in the portfolio. Loans
being serviced include loans originated and still owned by Metropolitan, loans
originated by Metropolitan but sold to others with servicing rights retained by
Metropolitan, and servicing rights to loans originated by others but purchased
by Metropolitan. The servicing rights Metropolitan purchases may be located in a
variety of states and are typically being serviced for FannieMae or FreddieMac.

The category below labeled Parent and Other consists of the remaining segments
of Metropolitan's business. It includes corporate treasury, interest rate risk,
and financing operations which do not generate revenue from outside customers.



                                                                              16
<PAGE>   17

         Operating results and other financial data for the current and
preceding year are as follows (in thousands):

         As of or for the three months ended March 31, 2000

<TABLE>
<CAPTION>
                                                      RETAIL AND
                                                      COMMERCIAL          MORTGAGE            PARENT
                                                        BANKING           BANKING           AND OTHER            TOTAL
                                                        -------           -------           ---------            -----
OPERATING RESULTS:
<S>                                                    <C>                <C>                <C>                <C>
Net interest income                                      $6,472            $1,317             $1,854              $9,643
Provision for losses on loans                               959               164                377               1,500
                                                         ------           -------             ------            --------
Net interest income after
  provision for loan losses                               5,513             1,153              1,477               8,143
Noninterest income                                        1,358               715                 42               2,115
Direct noninterest expense                                4,634             1,640                 95               6,369
Allocation of overhead                                    2,209               781                                  2,990
                                                          -----            ------             ------               -----
Net income before income taxes                           $   28           $  (553)            $1,424              $  899
                                                          =====            ======             ======              ======

FINANCIAL DATA:
Segment assets                                       $1,061,369          $424,499           $116,520          $1,602,388
Depreciation and amortization                               571               537                123               1,231
Expenditures for additions
  to premises and equipment                               4,710               392                                  5,102

</TABLE>

         As of or for the three months ended March 31, 1999

<TABLE>
<CAPTION>
                                                     RETAIL AND
                                                     COMMERCIAL          MORTGAGE            PARENT
                                                       BANKING            BANKING           AND OTHER            TOTAL
                                                       -------            -------           ---------            -----
OPERATING RESULTS:
<S>                                                      <C>               <C>                  <C>               <C>
Net interest income                                      $6,624            $1,775               $577              $8,976
Provision for losses on loans                               600                50                                    650
                                                         ------           -------             ------              ------
Net interest income after
  provision for loan losses                               6,024             1,725                577               8,326
Noninterest income                                          878               649                (70)              1,457
Direct noninterest expense                                3,802             1,355                 92               5,249
Allocation of overhead                                    1,606               686                                  2,292
                                                          -----            ------             ------               -----
Net income before income taxes                           $1,494           $   333               $415              $2,242
                                                          =====            ======                ===               =====
FINANCIAL DATA:
Segment assets                                       $1,032,373          $312,981            $94,817          $1,440,071
Depreciation and amortization                               430               639                 97               1,166
Expenditures for additions
  to premises and equipment                               2,707               135                                  2,842
</TABLE>

                                                                              17
<PAGE>   18

The financial information provided for each major operating segment has been
derived from the internal profitability system used to monitor and manage
financial performance and allocate resources.

The measurement of performance for the operating segments is based on the
organizational structure of Metropolitan and is not necessarily comparable with
similar information for any other financial institution. The information
presented is also not indicative of the segments' financial condition and
results of operations if they were independent entities.

Metropolitan evaluates segment performance based on contribution to income
before income taxes. Certain indirect expenses have been allocated based on
various criteria considered by management to best reflect benefits derived. The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Indirect expense allocations and
accounting policies have been consistently applied for the periods presented.
There are no differences between segment profits and assets and the consolidated
profits and assets of Metropolitan. The interest rate risk that results from
investing in assets and liabilities with different terms to maturity or
repricing has been eliminated from the two major operating segments and is
assumed in the category labeled Parent and Other.


11. CAPITALIZED INTEREST EXPENSE ON CONSTRUCTION OF NEW CORPORATE HEADQUARTERS

In the second quarter, 1999, the Corporation started the construction of a new
corporate headquarters building. As a result, interest expenses have been
incurred to finance construction. These costs will be capitalized as they are
incurred while the building is under construction and will be included as a
portion of the historical cost to be depreciated over the useful life of the
building. Interest expense capitalized for the three-month period ended March
31, 2000 was $118,000. No interest was capitalized during the three month period
ended March 31, 1999.

12. METROPOLITAN FINANCIAL CORP. STOCK PURCHASE PLAN

In July, 1999, the Board of Directors of Metropolitan Financial Corp. authorized
the adoption of a Stock Purchase Plan permitting directors, officers, and
employees of the Corporation and its subsidiaries and certain affiliated
companies to make purchases of the Corporation's common shares at 95% of the
fair market value. The plan authorized the issuance of an additional 160,000
common shares for purchases made under the plan. The purchases under the plan
commenced in the fourth quarter, 1999.



                                                                              18
<PAGE>   19

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

SELECTED FINANCIAL DATA

                                                  Three months ended March 31,
                                                   2000                 1999
                                                   ----                 ----
Net income (in thousands)                        $  607               $1,438
Basic earnings per share                           0.08                 0.19
Diluted earnings per share                         0.08                 0.19
Return on average assets                           0.15  %              0.41  %
Return on average equity                           5.47  %             13.42  %
Noninterest expense to average assets              2.35  %              2.17  %
Efficiency ratio                                  81.34  %             71.65  %
Net interest margin                                2.54  %              2.76  %
Net charge-offs to average loans                   0.24  %              0.11  %


<TABLE>
<CAPTION>
                                                              March 31,           December 31,                 March 31,
                                                               2000                    1999                      1999
                                                               ----                    ----                      ----
<S>                                                        <C>                      <C>                     <C>
Total assets (in thousands)                                $1,602,388               $1,608,119              $1,440,071
Shareholders' equity (in thousands)                            43,932                   44,868                  43,171
Shareholders' equity to total assets                             2.74  %                  2.79  %                 3.00  %
Shares outstanding                                          8,072,777                8,063,744               7,756,393
Book value per share                                            $5.44                    $5.56                   $5.57
Tangible book value per share                                    5.15                     5.26                    5.22
Market value of common stock                                     3.75                     4.50                    9.38
Nonperforming assets to total assets (2)                         0.90  %                  0.91  %                 1.27  %
Allowance for losses on loans to total loans (2)                 0.97  %                  0.92  %                 0.66  %
</TABLE>

(2) Ratios are based on period end balances.


                                                                              19
<PAGE>   20

OVERVIEW

The reported results of Metropolitan primarily reflect the operations of the
Bank. Our results of operations are dependent on a variety of factors, including
the general interest rate environment, competitive conditions in the industry,
governmental policies and regulations and conditions in the markets for
financial assets. Like most financial institutions, the primary contributor to
our income is net interest income, the difference between the interest we earn
on interest-earning assets, such as loans and securities, and the interest we
pay on interest-bearing liabilities, such as deposits and borrowings. Our
operations are also affected by noninterest income, such as loan servicing fees,
service charges on deposit accounts, gains or losses on the sales of loans and
securities and loan option income. Our principal operating expenses, aside from
interest expense, consist of compensation and employee benefits, occupancy
costs, and general and administrative expenses.


RESULTS OF OPERATIONS

Net Income. Net income decreased $0.8 million to $607,000 for the three months
ended March 31, 2000 as compared to net income of $1.4 million for the first
quarter, 1999. Net interest income and provision for loan losses increased $0.7
million and $0.9 million, respectively, for the three months ended March 31,
2000 over the prior year period and noninterest income increased $0.7 million
from the same prior year period. Noninterest expense increased $1.9 million to
$9.4 million for the quarter from $7.5 million from the prior year quarter
primarily as a result of increased personnel and occupancy costs.

Our net interest margin decreased twenty-two basis points to 2.54% for the three
month period ended March 31, 2000 as compared to 2.76% for the same period in
1999, primarily due to an increased cost of funds.

Interest Income. Total interest income increased 15.5% to $29.9 million in the
three month period ended March 31, 2000, as compared to $25.9 million in the
same period in 1999. This increase primarily resulted from a 15.1% increase in
average interest-earning assets in the three month period ended March 31, 2000
as compared to the prior year. Average earning assets increased as a result of
our strategy of increasing assets as long as assets with acceptable portfolio
characteristics are available. The increase in interest income attributable to
the increase in the average balance of interest-earning assets was partially
offset by the decline in the weighted average yield. The decline in the weighted
average yield is due primarily to the increase in single family residential
loans as a percent of total loans.

Interest Expense. Total interest expense increased 19.8% to $20.3 million for
the three month period ended March 31, 2000, as compared to $16.9 million for
the same period in 1999. Interest expense increased due to a higher average
balance of interest-bearing liabilities outstanding and an increased cost of
funds for the three month period ending March 31, 2000 compared to the same
period in 1999. The average balance of interest-bearing deposit accounts
increased $25.1 million at March 31, 2000 as compared to the same date in 1999.
The average balance of borrowings increased $160.0 million, or 75.4% for the
three month period ending March 31, 2000 as compared to the prior year period as
our deposit growth slowed in recent months and other sources of funds were
utilized. Also, the average balance of Junior Subordinated Debentures increased
from the prior year period as the second issuance

                                                                              20
<PAGE>   21

of these securities took place in the second quarter of 1999. All of these
categories experienced an increased in the rate of cost of funds, and as a
result, Metropolitan's cost of funds increased to 5.62% for the first quarter,
2000 as compared to 5.41% for the same period in 1999.

Average Balances and Yields. The following table presents the total dollar
amount of interest income from average interest-earning assets and the resulting
yields, as well as the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates, and the net interest margin. Net interest
margin is influenced by the level and relative mix of interest-earning assets
and interest-bearing liabilities. All average balances are daily average
balances. Nonaccruing loans are included in average loan balances. The average
balances of mortgage-backed securities and securities are presented at
historical cost.

<TABLE>
<CAPTION>
                                                                           THREE  MONTHS  ENDED MARCH 31,
                                              -----------------------------------------------------------------------------------
                                                                  2000                                         1999
                                              ----------------------------------------     --------------------------------------
                                                                               (Dollars in thousands)
                                               AVERAGE                                       AVERAGE
                                               BALANCE            INTEREST       RATE        BALANCE          INTEREST       RATE
                                               -------            --------       ----        -------          --------       ----
<S>                                           <C>                 <C>            <C>       <C>                <C>            <C>
Interest-earning assets:
Loans receivable                              $1,208,537          $24,604        8.14%     $1,068,940         $21,687        8.23%
Mortgage-backed securities                       240,008            4,184        6.97         189,843           3,292        7.03
Other                                             67,875            1,121        6.81          59,237             915        6.27
                                              ----------          -------                  ----------         -------
  Total interest-earning assets                1,516,420           29,909        7.90       1,318,020          25,894        7.97
Nonearning assets                                 79,482           ------                      71,882          ------
                                              ----------                                   ----------
  Total assets                                $1,595,902                                   $1,389,902
                                              ==========                                   ==========

Interest-bearing liabilities:
Deposits                                      $1,054,443           13,519        5.20      $1,029,351          13,174        5.19
Borrowings                                       372,085            5,867        6.39         212,094           3,136        6.00
Junior Subordinated Debentures                    43,750              998        9.12          27,750             608        8.76
                                              ----------         --------                  ----------         -------
  Total interest-bearing liabilities           1,470,278           20,384        5.62       1,269,195          16,918        5.41
Noninterest-bearing liabilities                   81,224           ------        ----          77,834          ------        ----
Shareholders' equity                              44,400                                       42,873
  Total liabilities and                       ----------                                   ----------
    shareholders' equity                      $1,595,902                                   $1,389,902
                                              ==========                                   ==========
Net interest income before capitalized
  interest and interest rate spread                                 9,525        2.28%                         8,976         2.56%
                                                                   ------        ====                         ------         ====
Net interest margin                                                              2.54%                                       2.76%
Interest expense capitalized                                          118                                          --
                                                                  -------                                     -------
Net interest income                                               $ 9,643                                     $ 8,976
                                                                   ======                                      ======
Average interest-earning
  assets to average interest-bearing
  liabilities                                    103.14%                                      103.85%
</TABLE>


                                                                              21
<PAGE>   22

Rate and Volume Variances. Net interest income is affected by changes in the
level of interest-earning assets and interest-bearing liabilities and changes in
yields earned on assets and rates paid on liabilities. The following table sets
forth, for the periods indicated, a summary of the changes in interest earned
and interest paid resulting from changes in average asset and liability balances
and changes in average rates. Changes attributable to the combined impact of
volume and rate have been allocated proportionately to change due to volume and
change due to rate.

                                                   Three Months ended March 31,
                                                          2000 vs. 1999
                                                       Increase  (Decrease)
                                                 ------------------------------
                                                              Change      Change
                                                  Total       Due to      Due to
                                                 Change       Volume      Rate
                                                 ------       ------      ----
                                                         (In thousands)

INTEREST INCOME ON:
  Loans receivable                               $2,917      $3,202      $ (285)
  Mortgage-backed securities                        892         929         (37)
  Other                                             206         123          83
                                                 ------      ------      ------
    Total interest income                         4,015      $4,254      $ (239)
                                                 ------      ======      ======
INTEREST EXPENSE ON:
  Deposits                                       $  345      $  321      $   24
  Borrowings                                      2,731       2,364         367
  Junior Subordinated Debentures                    390         610        (220)
                                                 ------      ------      ------
    Total interest expense                        3,466      $3,295      $  171
                                                             ======      ======
  Interest expense capitalized                      118
                                                 ------
Increase in net interest income                  $  667
                                                 ======


Provision for Loan Losses. The provision for loan losses increased $0.9 million
for the first quarter, 2000, as compared to the first quarter, 1999. Management
increased the provision for loan losses due to the ongoing analysis of the
appropriate allowance for loan losses as the Bank continues to grow and increase
its amount of loans, and not as a response to any material change in the level
of nonperforming loans. The allowance for losses on loans at March 31, 2000 was
$11.8 million or 0.97% of total loans, as compared to $11.0 million, or 0.92% of
total loans, at December 31, 1999.

Noninterest Income. Total noninterest income increased 45.2% to $2.1 million in
the three months ended March 31, 2000 as compared to $1.5 million in the same
period in 1999.

Gain on sale of loans was $309,000 in the three month period ended March 31,
2000, as compared to $400,000 during the same period in 1999. The primary reason
for the decrease in the first quarter, 2000 was an increase in interest rates
which has caused a decline in origination volumes and therefore in loans
available to sell as compared to the same period in

                                                                              22
<PAGE>   23

1999. The proceeds of residential loan sales in the first quarter, 2000 were
$23.0 million as compared to $59.7 million in the same period in 1999.

Net loan servicing income remained stable at $335,000 for both the three month
periods ended March 31, 2000 and March 31, 1999. The portfolio of loans serviced
for others declined to $1.4 billion at March 31, 2000 as compared to $1.7
billion at December 31, 1999. Servicing rights for approximately $400 million of
loans were sold in the fourth quarter, 1999 and these loans were included in the
year end balance until their transfer in the first quarter. A gain of $762,000
was recognized on this sale of rights in the fourth quarter, 1999. Purchases of
loan servicing rights and origination of loan servicing partially offset
payoffs, sales, and the amortization of existing loans serviced. Metropolitan
remains committed to this line of business and continues to evaluate new
acquisitions. Metropolitan will only acquire the rights to service portfolios
where the loan characteristics and pricing are consistent with management's
long-term profitability objectives.

Service charges on deposit accounts increased $48,000 to $320,000 in the three
month period ended March 31, 2000 compared to the first quarter, 1999. The
primary reasons for the increase were the overall growth in deposit accounts and
increases in deposit account prices for fees in 2000 as compared to 1999.

Gains on sale of securities in the three months ended March 31, 2000, were
$333,000 while there were no gains in the first quarter of 1999. The gain in the
first quarter, 2000 was the result of the sale of $12.7 million of FNMA
securities originated by Metropolitan in 1999 as part of the multifamily
securitization and $8.6 million of FHLMC securities comprised of residential
loans originated by Metropolitan.

Other noninterest income increased $368,000 to $818,000 in the three month
period ended March 31, 2000, compared to the same period in the previous year.
This increase was primarily due to increased fee income generated from the
increased level of business and increased rental income in the first quarter,
2000.

Noninterest Expense. Total noninterest expense increased to $9.4 million in the
three month period ended March 31, 2000 as compared to $7.5 million for the same
period in 1999.

Personnel related expenses increased $1.1 million in the three month period
ended March 31, 2000 as compared to the same period in 1999. These increases
were primarily a result of increased staffing levels to support new retail sales
offices locations, new mortgage origination offices, and increased business
levels.

Occupancy costs increased $252,000 in the three month period ended March 31,
2000, over the same period in 1999. This increase was generally the result of
three additional full service retail sales offices and three mortgage
origination offices opened in 1999 and two retail sales offices opened in 2000.

Federal deposit insurance premiums increased $158,000, or 78.6%, to $359,000 in
the first quarter, 2000 as compared to $201,000 in the first quarter of 1999.
The primary reason for the increase was the Bank's regulatory capital level and
the Bank's regulatory rating.

                                                                              23
<PAGE>   24

Data processing expense increased $95,000 in the three month period ending March
31, 2000 as compared to the same period in 1999. This increase was the result of
expenses incurred for electronic banking which is scheduled to begin in 2000 and
overall increases in data processing costs related to additional retail sales
offices, numbers of accounts, and account activity.

Other operating expenses, which include miscellaneous general and administrative
costs such as loan servicing, loan processing costs, business development, check
processing and ATM expenses, increased $163,000 for the three month period ended
March 31, 2000 as compared to the same period in 1999. This increase was
generally the result of increases in expenses pertaining to increased business
activities, real estate owned expenses, and increased costs for professional
services.

Provision for Income Taxes. The provision for income taxes decreased $512,000
for the three month period ended March 31, 2000 as compared to the same period
in 1999. The primary reason for the decrease in the provision was the decreased
level of income over the prior year. The effective tax rate was 32.5% for the
three month period ended March 31, 2000 as compared to 35.9% for the same period
in 1999.

ASSET QUALITY

Metropolitan's goal is to maintain high quality loans in the loan portfolio
through conservative lending policies and prudent underwriting. We undertake
detailed reviews of the loan portfolio regularly to identify potential problem
loans or trends early and to provide for adequate estimates of potential losses.
In performing these reviews, management considers, among other things, current
economic conditions, portfolio characteristics, delinquency trends, and
historical loss experiences. We normally consider loans to be nonperforming when
payments are 90 days or more past due or when the loan review analysis indicates
that repossession of the collateral may be necessary to satisfy the loan. In
addition, a loan is considered impaired when, in management's opinion, it is
probable that the borrower will be unable to meet the contractual terms of the
loan. When loans are classified as nonperforming, we assess the collectability
of the unpaid interest. Interest determined to be uncollectible is reversed from
interest income. Future interest income is recorded only if the loan principal
and interest due is considered collectible and is less than the estimated fair
value of the underlying collateral.



                                                                              24
<PAGE>   25


The table below provides information concerning Metropolitan's nonperforming
assets and the allowance for losses on loans as of the dates indicated. All
loans classified by management as impaired were also classified as
nonperforming.
                                                      March 31,   December 31,
                                                       2000           1999
                                                       ----           ----
                                                       (Dollars in thousands)

Nonaccrual loans                                   $   10,435        $    8,933
Loans past due greater than
  90 days or impaired, still accruing                     344               448
                                                   ----------        ----------
Total nonperforming loans                              10,779             9,381
Real estate owned                                       3,691             5,263
                                                   ----------        ----------
Total nonperforming assets                         $   14,470        $   14,644
                                                   ==========        ==========
Allowance for losses on loans                      $   11,803        $   11,025
                                                   ==========        ==========

Nonperforming loans to total loans                       0.89%             0.79%
Nonperforming assets to total assets                     0.90%             0.91%
Net charge-offs to average loans                         0.24%(1)          0.19%
Provision for loan losses to average loans               0.50%(1)          0.54%
Allowance for losses on loans to total
  nonperforming loans at end of period                 109.50%           117.52%
Allowance for losses on loans to
  total loans at end of period                           0.97%             0.92%

(1) Annualized for comparative purposes.

Nonperforming assets at March 31, 2000 decreased $100,000 to $14.5 million as
compared to $14.6 million at December 31, 1999. In spite of the growth
experienced in the loan portfolio, total nonperforming assets have decreased
slightly in 2000.

In addition to the nonperforming assets included in the table above, we identify
potential problem loans which are still performing but have a weakness which
causes us to classify those loans as substandard for regulatory purposes. There
was $3.2 million of loans in this category at March 31, 2000. Management
believes the Bank is well secured against loss.


FINANCIAL CONDITION

Total assets amounted to $1.602 billion at March 31, 2000, as compared to $1.608
billion at December 31, 1999, a decrease of $6 million. The decrease in assets
was concentrated in mortgage-backed securities and was partially offset by an
increase in loans receivable, net.

                                                                              25
<PAGE>   26

Mortgage backed securities decreased $32.0 million to $223.8 million compared to
December 31, 1999. The decrease was due to the sale of $12.7 million of FNMA
securities and paydowns of various other securities.

Loans receivable, including loans held for sale, increased $20.6 million, or
1.7%, during the three months ended March 31, 2000. This increase was primarily
due to increases in single family loans of $8.2 million, commercial real estate
loans of $10.5 million, and modest increases in other loan categories which were
partially offset by a $6.6 million decrease in multifamily loans. These
increases resulted from the relatively stable loan demand, increased loan
production staff, and increased marketing efforts.

Federal Home Loan Bank stock increased $2.3 million, or 21.4%, to $13.3 million
at March 31, 2000 as compared to $10.9 million at December 31, 1999. This
increase is a result of increased FHLB borrowings in the first quarter, 2000.

Real estate owned decreased $1.6 million, or 29.9%, to $3.7 million at March 31,
2000. The sale of three properties, including a strip shopping center with a
book value of $1.1 million, occurred in the first quarter, 2000. These three
properties were included in the year-end 1999 balance.

Deposits totaled $1.105 billion at March 31, 2000, a decrease of $31 million, or
2.7%, from the balance at December 31, 1999. The decrease resulted principally
from the net outflow of $19.4 million in out-of-state deposits and $8.0 in
custodial balances.

Borrowings increased $26.7 million, or 7.4% from December 31, 1999 to March 31,
2000. The increase was the result of increased use of Federal Home Loan Bank
advances of $50.7 million offset by a $25.0 million decrease in the commercial
bank repurchase agreement. The net increase in borrowings was a strategic
decision to replace high cost deposits with borrowings.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity. The term "liquidity" refers to our ability to generate adequate
amounts of cash for funding loan originations, loan purchases, deposit
withdrawals, maturities of borrowings, and operating expenses. Our primary
sources of internally generated funds are principal repayments and payoffs of
loans, cash flows from operations, and proceeds from sales of assets. External
sources of funds include increases in deposits and borrowings, and public or
private offerings by Metropolitan.

The Corporation's primary source of funds currently is dividends from the Bank,
which are subject to restrictions imposed by federal bank regulatory agencies.
The Corporation's primary use of funds is for interest payments on its existing
debt. At March 31, 2000, the Corporation, excluding the Bank, had cash and
readily convertible investments of $1.6 million. The Corporation has a $12
million line of credit with a commercial bank. At March 31, 2000, the
Corporation had a balance of $7 million outstanding, leaving $5 million
available to borrow.

The Bank is required by regulation to maintain a liquidity ratio (average daily
balance of liquid assets to average daily balance of net withdrawable accounts
and short-term borrowings) of 4%. The Bank's liquidity ratio for

                                                                              26
<PAGE>   27

March, 2000 was 4.00%. Historically, Metropolitan has maintained its liquidity
close to the required minimum since the yield available on qualifying
investments is lower than alternative uses of funds and is generally not at an
attractive spread over incremental cost of funds.

While principal repayments and FHLB advances are fairly stable sources of funds,
deposit flows and loan prepayments are greatly influenced by prevailing interest
rates, economic conditions, and competition. Metropolitan regularly reviews cash
flow needed to fund its operations and believes that the existing resources are
adequate for its foreseeable requirements.

At March 31, 2000, $166.7 million, or 15.1%, of Metropolitan's deposits were in
the form of certificates of deposit of $100,000 and over. If a large number of
these certificates of deposits matured at approximately the same time and were
not renewed, there could be an adverse effect on Metropolitan's liquidity.
Metropolitan monitors maturities to attempt to minimize the potential adverse
effect on liquidity.

When evaluating sources of funds, we consider the cost of various alternatives
such as local retail deposits, FHLB advances and other wholesale borrowings. One
option considered and utilized in the past has been the acceptance of
out-of-state time deposits from individuals and entities, predominantly
financial institutions. These deposits typically have balances of $90,000 to
$100,000 and have a term of one year or more. At March 31, 2000, approximately
$162.2 million, or 14.6% of our deposits were held by these individuals and
entities. If we were unable to replace these deposits upon maturity, there could
be an adverse effect on our liquidity. We monitor maturities to attempt to
minimize any potential adverse effect on liquidity. In addition, $24.7 million
of the certificates of deposit of $100,000 or more are also included in
out-of-state time deposits discussed above.

We have access to wholesale borrowings based on the availability of eligible
collateral. The FHLB makes funds available for housing finance based upon the
blanket or specific pledge of certain one- to four-family loans and various
types of investment and mortgage-backed securities. The Bank had borrowing
capacity at the FHLB under its blanket pledge agreement of approximately $282
million at March 31, 2000, of which $265 million was utilized. The financial
market makes funds available through reverse repurchase agreements by accepting
various investment and mortgage-backed securities as collateral. The Bank had
borrowings through reverse repurchase agreements of approximately $80 million at
March 31, 2000, which utilized substantially all of the Bank's eligible
collateral. Also, the Bank has a $55 million line of credit available through a
commercial bank repurchase agreement. The balance on this line was $30 million
at March 31, 2000.

Capital. The Office of Thrift Supervision ("OTS") imposes capital requirements
on savings associations. Savings associations are required to meet three minimum
capital standards: (i) a leverage requirement, (ii) a tangible capital
requirement, and (iii) a risk-based capital requirement. Such standards must be
no less stringent than those applicable to national banks. In addition, the OTS
is authorized to impose capital requirements in excess of these standards on
individual associations on a case-by-case basis.



                                                                              27
<PAGE>   28

The Bank's regulatory capital ratios at March 31, 2000 were in excess of the
capital requirements specified by OTS regulations as shown by the following
table:

<TABLE>
<CAPTION>
                                  TANGIBLE CAPITAL                    CORE CAPITAL                  RISK-BASED CAPITAL
                                  ----------------                    ------------                  ------------------
                                                                (Dollars in thousands)
<S>                                    <C>        <C>                 <C>          <C>                  <C>          <C>
Capital amount
Actual                                 $107,274   6.67%               $107,338     6.68%                $116,442     9.58%
Required                                 24,111   1.50                  64,300     4.00                   97,246     8.00
                                         ------   ----                  ------     ----                   ------     ----
Excess                                  $83,163   5.17%                $43,038     2.68%               $  19,196     1.58%
                                         ======   ====                  ======     ====                   ======     ====
</TABLE>

We anticipate that under the current regulations, the Bank will continue to meet
its minimum capital requirements in the foreseeable future. However, events
beyond the control of the Bank, such as increased interest rates or a downturn
in the economy, could adversely affect future earnings and consequently, the
ability of the Bank to meet its future capital requirements.


RECENT ACCOUNTING DEVELOPMENTS

In June, 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 addresses the
accounting for derivative instruments and certain derivative instruments
embedded in other contracts and hedging activities. The statement standardizes
the accounting for derivative instruments by requiring that an entity recognize
those items as assets or liabilities in the statement of financial position and
measure them at fair value. This statement is effective for all fiscal years
beginning after June 15, 1999. The adoption date of SFAS No. 133 was
subsequently deferred by SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities-Deferral of the Effective Date of FASB Statement No.
133." Under Statement No. 137 issued in June, 1999, the effective date was
delayed to all fiscal years beginning after June 15, 2000. We do not expect this
statement to have a material effect on the Corporation's consolidated financial
position or results of operation, but the effect will depend on derivative
holdings when this standard applies.


FORWARD LOOKING STATEMENTS

Certain statements contained in this report that are not historical facts are
forward looking statements that are subject to certain risks and uncertainties.
When used herein, the terms "anticipates," "plans," "expects," "believes," and
similar expressions as they relate to Metropolitan or its management are
intended to identify such forward looking statements. Metropolitan's actual
results, performance or achievements may materially differ from those expressed
or implied in the forward looking statements. Risks and uncertainties that could
cause or contribute to such material differences include, but are not limited
to, general economic conditions, interest rate environment, competitive
conditions in the financial services industry, changes in law, governmental
policies and regulations, and rapidly changing technology affecting financial
services.


                                                                              28
<PAGE>   29

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Metropolitan, like other financial institutions, is subject to market risk.
Market risk is the risk that a company can suffer economic loss due to changes
in the market values of various types of assets or liabilities. As a financial
institution, we make a profit by accepting and managing various types of risks.
The most significant of these risks are credit risk and interest rate risk. The
principal market risk for us is interest rate risk. Interest rate risk is the
risk that changes in market interest rates will cause significant changes in net
interest income because interest-bearing assets and interest-bearing liabilities
mature at different intervals and reprice at different times.

The Office of Thrift Supervision currently looks to the Thrift Bulletin 13a,
issued December 1, 1998, to evaluate interest rate risk at institutions they
supervise. They categorize interest rate risk as minimal, moderate, significant,
or high based on a combination of the projected Net Portfolio Value ("NPV")
after a 200 basis point change in interest rates and the size of that change in
NPV due to a 200 basis point change in interest rates.

We manage interest rate risk in a number of ways. Some of the tools used to
monitor and quantify interest rate risk include:

     -    annual budgeting process;

     -    weekly review of certificate of deposit maturities by day;

     -    monthly forecast of balance sheet activity;

     -    monthly review of listing of liability rates and maturities by month;

     -    monthly shock report of effect of sudden interest rate changes on net
          interest income;

     -    monthly shock report of effect of sudden interest rate changes on net
          value of portfolio equity; and

     -    monthly analysis of rate and volume changes in historic net interest
          income.

We have established an asset and liability committee to monitor interest rate
risk. This committee is made up of senior officers from finance, lending and
deposit operations. The committee meets at least quarterly, reviews our current
interest rate risk position, and determines strategies to pursue for the next
quarter. The activities of this committee are reported to the Board of Directors
of the Bank quarterly. Between meetings, the members of this committee are
involved in setting rates on deposits, setting rates on loans and serving on
loan committees where they work on implementing the established strategies.

During 2000, like many financial institutions, we had exposure to potential
declines in net interest income from rising interest rates. This is because
Metropolitan has had more short-term interest rate sensitive liabilities than
short-term interest rate sensitive assets. One of the ways we monitor interest
rate risk quantitatively is to measure


                                                                              29
<PAGE>   30

the potential change in net interest income based on various immediate changes
in market interest rates. The following table shows the change in net interest
income for immediate sustained parallel shifts of 1% and 2% in market interest
rates for year-end 1999 and the most recent quarter.

                                 EXPECTED CHANGE IN NET INTEREST INCOME
                                 --------------------------------------
CHANGE IN INTEREST RATE     MARCH 31, 2000                    DECEMBER 31, 1999
-----------------------     --------------                    -----------------

           +2%                   -16%                             -18%
           +1%                    -8%                              -9%
           -1%                    +7%                              +8%
           -2%                   +14%                             +15%

The change in net interest income from a change in market rates is a short-term
measure of interest rate risk. The results above indicate that we have a
significant short-term exposure to rising rates but that the exposure declined
during the quarter.

Another quantitative measure of interest rate risk is the change in the market
value of all financial assets and liabilities based on various immediate
sustained shifts in market interest rates. This concept is also known as net
portfolio value and is the methodology used by the Office of Thrift Supervision
in measuring interest rate risk. The following table shows the change in net
portfolio value for immediate sustained parallel shifts of 1% and 2% in market
interest rates for year-end 1999 and the most recent quarter.

                                   EXPECTED CHANGE IN NET PORTFOLIO VALUE
                                   --------------------------------------
CHANGE IN INTEREST RATE     MARCH 31, 2000                    DECEMBER 31, 1999
-----------------------     --------------                    -----------------

           +2%                  -48%                             -51%
           +1%                  -24%                             -25%
           -1%                  +25%                             +24%
           -2%                  +54%                             +47%

The change in net portfolio value is a long-term measure of interest rate risk.
It assumes that no significant changes in assets or liabilities held would take
place if there were a sudden change in interest rates. Because we monitor
interest rate risk regularly and actively manage that risk, these projections
serve as a worst case scenario assuming no reaction to changing rates. The
results above indicate that our exposure to rising interest rates has declined
during 2000, but remains high. Under TB 13a, Metropolitan falls in the high
interest rate risk category as of March 31, 2000, based upon current sensitivity
to interest rate changes and the current level of regulatory capital.

Our strategies to limit interest rate risk from rising interest rates are as
follows:

     -    originate one- to four-family adjustable rate loans for the portfolio;

     -    originate one- to four-family fixed rate loans for sale;

                                                                              30
<PAGE>   31

     -    originate the majority of business loans to float with prime rates;

     -    increase core deposits which have low interest rate sensitivity;

     -    increase certificates of deposit with maturities over one year;

     -    borrow funds with maturities greater than a year; and

     -    increase the volume of loans serviced since they rise in value as
          rates rise.

We also follow strategies that increase interest rate risk in limited ways
including:

     -    originating and purchasing fixed rate multifamily and commercial real
          estate loans limited to ten year maturities; and

     -    originating and purchasing fixed rate consumer loans with terms from
          two to fifteen years.

The result of these strategies taken together is that Metropolitan has taken on
long-term interest rate risk by adding some ten year fixed rate loans and
financing those loans with certificates of deposit and borrowings with terms
from one year to five years and short term borrowings during 1999. In the first
quarter of 2000, we have strived to fund all significant additions of fixed rate
assets with borrowings with similar repayment terms. We plan to continue this
funding pattern throughout the remainder of 2000.

The Bank's level of interest rate risk as of March 31, 2000, is outside the
limits set by the Bank's Board of Directors. Therefore, management has
implemented a strategy to decrease interest rate risk during the remainder of
2000 by focusing on:

     -    limiting ten year fixed rate commercial real estate loans that can be
          readily sold;

     -    limiting the purchase of fixed rate consumer loans to those with high
          enough yields to be profitable when matched with similar borrowing
          maturities; and

     -    extending liability maturities when long term rates are favorable.

We are also aware that any method of measuring interest rate risk including the
two used above has certain shortcomings. For example, certain assets and
liabilities may have similar maturities or repricing dates but their repricing
rates may not follow the general trend in market interest rates. Also, as a
result of competition, the interest rates on certain assets and liabilities may
fluctuate in advance of changes in market interest rates while rates on other
assets and liabilities may lag market rates. In addition, any projection of a
change in market rates requires that prepayment rates on loans and early
withdrawal of certificates of deposits be projected and those projections may be
inaccurate. We focus on the change in net interest income and the change in net
portfolio value

                                                                              31
<PAGE>   32

as a result of immediate and sustained parallel shifts in interest rates as a
balanced approach to monitoring interest rate risk when used with budgeting and
the other tools noted above.

At the present time we do not hold any trading positions, foreign currency
positions, or commodity positions. Equity investments are approximately 1% of
assets and half of that amount is held in Federal Home Loan Bank stock which can
be sold to the Federal Home Loan Bank of Cincinnati at par. Therefore, we do not
consider any of these areas to be a source of significant market risk.


                                                                              32
<PAGE>   33

  PART II.   OTHER INFORMATION

  Items 1-5 are not applicable.

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     a. Exhibits
         Exhibit
         NUMBER            DESCRIPTION
         ------            -----------
             3.1        Amended and Restated Articles of Incorporation of
                        Metropolitan (filed as Exhibit 2 to the Corporation's
                        Form 8-A, filed October 15, 1996 and incorporated herein
                        by reference).

             3.2        Amended and Restated Code of Regulations of the
                        Corporation (filed as Exhibit 3.2 Metropolitan's
                        Registration Statement on Form S-1 , filed February 26,
                        1999 and incorporated herein by reference).

             4.1        Indenture, dated as of April 30, 1998, of the
                        Corporation relating to the 8.60% Junior Subordinated
                        Debentures due June 30, 2028 (filed as Exhibit 4.1 to
                        the Corporation's Form 10-Q, filed May 15, 1998 and
                        incorporated herein by reference).

             4.2        Amended and Restated Trust Agreement, dated as of April
                        30, 1998, of Metropolitan Capital Trust I (filed as
                        Exhibit 4.2 to the Corporation's Form 10-Q, filed May
                        15, 1998 and incorporated herein by reference).

             4.3        Guarantee of Metropolitan relating to the Trust
                        Preferred Securities dated April 30, 1998 (filed as
                        Exhibit 4.3 to the Corporation's Form 10-Q, filed May
                        15, 1998 and incorporated herein by reference).

             4.4        Agreement as to Expenses and Liabilities, dated as of
                        April 30, 1998 (filed as Exhibit 4.4 to Metropolitan's
                        Form 10-Q, filed May 15, 1998 and incorporated herein by
                        reference).

             4.5        Indenture, dated as of May 14, 1999, of Metropolitan
                        relating to the 9.50% Junior Subordinated Debentures due
                        June 30, 2029 (filed as Exhibit 4.1 to the Corporation's
                        Form S-1, filed May 11, 1999 and incorporated herein by
                        reference).

             4.6        Amended and Restated Trust Agreement, dated as of May
                        14, 1999, of Metropolitan Capital Trust II (filed as
                        Exhibit 4.4 to the Corporation's Form S-1, filed May 11,
                        1999 and incorporated herein by reference).


                                                                              33
<PAGE>   34


             4.7        Guarantee of the Corporation relating to the Trust
                        Preferred Securities dated May 14, 1999 (filed as
                        Exhibit 4.6 to the Corporation's Form S-1, filed May 11,
                        1999 and incorporated herein by reference).

             4.8        Agreement as to Expenses and Liabilities, dated as of
                        May 14, 1999 (filed as Exhibit D to Exhibit 4.4 to the
                        Corporation's Form S-1, filed May 11, 1999 and
                        incorporated herein by reference).

             10.1       The Restated Loan Agreement by and between the
                        Huntington National Bank and the Corporation dated as
                        of May 28, 1999 (incorporated herein by reference to
                        Exhibit 99.1 to Metropolitan's Form 10-Q filed May 14,
                        1998).

             27         Financial Data Schedule.(1)

       b.               Reports on Form 8-K - No reports on Form 8-K were filed
                        by Metropolitan  during the first three months of 2000.

               (1)      Filed only in electronic format pursuant to item
                        601(b)(27) of Regulation S-K.


                                                                             34
<PAGE>   35

                          METROPOLITAN FINANCIAL CORP.

                                    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.

                                            METROPOLITAN FINANCIAL CORP.



                                                 By: /S/ KENNETH T. KOEHLER
                                                     -------------------------
                                                        Kenneth T. Koehler,

                                       President,  Assistant Secretary and
                                                       Assistant Treasurer,
                                                       (principal financial
                                                    and accounting officer)

                                                         Date: May 15, 2000


                                                                              35