UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

| | [X] |  |  |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
  OF THE SECURITIES EXCHANGE ACT OF 1934
| | --- |  |  |  | -----------------------------------------------------------------------------------

For the quarterly period ended March 31, 2001Commission file number
0-37053

FIRST FEDERAL BANCSHARES, INC.(Exact name of small business issuer as specified in its charter)

|DELAWARE                 | 37-1397683                       
|------------------------ | ---------------------------------
|(State of incorporation) | (IRS Employer Identification No.)

109 East Depot Street, Colchester, Illinois 62326(Address of
Principal Executive Offices)

(309) 776-3225
(Issuers telephone number, including area code)

State the number of shares outstanding of each of the issuers
classes of common equity as of the latest practicable date.

As of April 30, 2001 the Registrant had outstanding 2,242,500 shares of
common stock.

Transitional Small Business Disclosure format (Check one): Yes [ ] No [X]



FIRST FEDERAL BANCSHARES, INC.

Form 10-QSB Quarterly Report

Index

`Page
                                                                                 ----
PART I  Financial Information

   Item 1    Financial Statements                                                   1

   Item 2    Managements Discussion and Analysis of Financial Condition
               and Results of Operations                                            7

PART II - Other Information

   Item 1    Legal Proceedings                                                     10

   Item 2    Changes in Securities                                                 10

   Item 3    Defaults Upon Senior Securities                                       10

   Item 4    Submission of Matters to a Vote of Securities Holders                 10

   Item 5    Other Information                                                     10

   Item 6    Exhibits and Reports on Form 8-K                                      10

SIGNATURES                                                                         11`



First Federal Bancshares, Inc. and Subsidiary
Consolidated Statements of Financial Condition
(in thousands of dollars, except share data) 
(unaudited)

|                                                              | March 31,2001 | December 31,2000
|------------------------------------------------------------- | ------------- | ----------------
|                                                             
|ASSETS                                                        |               |                 
|Cash and cash equivalents                                     |               |                 
|Time deposits in other financial institutions                 |               |                 
|Securities available-for-sale                                 |               |                 
|Securities held-to-maturity (fair value: March 31 - $34,820   |               |                 
|December 31 - $60,991)                                        |               |                 
|Loans receivable, net                                         |               |                 
|Premises and equipment                                        |               |                 
|Accrued interest receivable                                   |               |                 
|Other assets                                                  |               |                 
|                                                             
|                                                              |               |                 
|TOTAL ASSETS                                                  |               |                 
|                                                             
|                                                              |               |                 
|LIABILITIES AND SHAREHOLDERS EQUITY                          |               |                 
|LIABILITIES                                                   |               |                 
|Deposits                                                      |               |                 
|Advances from borrowers for taxes and insurance               |               |                 
|Federal Home Loan Bank advances                               |               |                 
|Accrued interest payable                                      |               |                 
|Other liabilities                                             |               |                 
|                                                             
|Total liabilities                                             |               |                 
|                                                              |               |                 
|SHAREHOLDERS EQUITY                                          |               |                 
|Preferred stock, $.01 par value, 1,000,000 shares authorized; |               |                 
|none issued or outstanding                                    |               |                 
|Common stock, $.01 par value, 4,000,000 shares authorized;    |               |                 
|2,242,500 shares issued                                       |               |                 
|Additional paid-in capital                                    |               |                 
|Unearned ESOP shares                                          |               |                 
|Retained earnings                                             |               |                 
|Accumulated other comprehensive income                        |               |                 
|                                                             
|Total shareholders equity                                    |               |                 
|                                                             
|                                                              |               |                 
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                    |               |                 
|                                                             

See notes to consolidated financial statements.

1

First Federal Bancshares, Inc. and Subsidiary
Consolidated Statements of Income
(in thousands of dollars, except share data) 
(unaudited)

|                                        | Three MonthsEnded March 31,
|--------------------------------------- | ---------------------------
|
|                                       
|Interest income                         |                            
|Loans                                   |                            
|Securities                              |                            
|Other interest income                   |                            
|                                       
|Total interest income                   |                            
|                                        |                            
|Interest expense                        |                            
|Deposits                                |                            
|Federal Home Loan Bank Advances         |                            
|                                       
|Total interest expense                  |                            
|                                       
|Net interest income                     |                            
|Provision for loan losses               |                            
|                                       
|Net interest income after provision for |                            
|loan losses                             |                            
|                                        |                            
|Noninterest income                      |                            
|Service charges                         |                            
|Other fee income                        |                            
|Other income                            |                            
|                                       
|Total noninterest income                |                            
|                                        |                            
|Noninterest expense                     |                            
|Compensation and benefits               |                            
|Occupancy and equipment                 |                            
|Data processing                         |                            
|Federal insurance premiums              |                            
|Advertising                             |                            
|Other noninterest expenses              |                            
|                                       
|Total noninterest expense               |                            
|                                       
|Income before income taxes              |                            
|Provision for income taxes              |                            
|                                       
|Net income                              |                            
|                                       
|Earnings per share                      |                            
|Basic and diluted                       |                            
|                                       
|                                        |                            
|Comprehensive income                    |                            
|                                       

See notes to consolidated financial statements.

2

First Federal Bancshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(in thousands of dollars)
(unaudited)

|                                                              | Three Months EndedMarch 31,
|------------------------------------------------------------- | ---------------------------
|
|                                                             
|CASH FLOWS FROM OPERATING ACTIVITIES                          |                            
|Net income                                                    |                            
|Adjustments to reconcile net income to net cash provided by   |                            
|operating activities                                          |                            
|Provision for depreciation                                    |                            
|Loss on sale of real estate owned                             |                            
|Net amortization of premiums and discounts                    |                            
|ESOP compensation expense                                     |                            
|Dividend reinvestments                                        |                            
|Net changes in                                                |                            
|Accrued interest receivable and other assets                  |                            
|Accrued interest payable and other liabilities                |                            
|                                                             
|Net cash provided by (used in) operating activities           |                            
|                                                              |                            
|CASH FLOWS FROM INVESTING ACTIVITIES                          |                            
|Net change in time deposits in other financial institutions   |                            
|Purchase of securities available-for-sale                     |                            
|Principal paydowns on mortgage-backed securities              |                            
|available-for-sale                                            |                            
|Principal paydowns on mortgage-backed securities              |                            
|held-to-maturity                                              |                            
|Proceeds from maturities of securities held-to-maturity       |                            
|Net increase in loans receivable                              |                            
|Proceeds from sale of real estate owned                       |                            
|Purchase of property and equipment                            |                            
|                                                             
|Net cash provided by (used in) investing activities           |                            
|                                                              |                            
|CASH FLOWS FROM FINANCING ACTIVITIES                          |                            
|Net increase in deposits                                      |                            
|Net change in advances from borrowers for taxes and insurance |                            
|Federal Home Loan Bank advances                               |                            
|Repayment of Federal Home Loan Bank advances                  |                            
|                                                             
|Net cash provided by (used in) financing activities           |                            
|                                                             
|Net change in cash and cash equivalents                       |                            
|                                                              |                            
|Cash and cash equivalents                                     |                            
|Beginning of period                                           |                            
|                                                             
|End of period                                                 |                            
|                                                             
|Supplemental disclosures of cash flow information             |                            
|Cash paid during the period for                               |                            
|Interest                                                      |                            
|Taxes, net of refunds                                         |                            

See notes to consolidated financial statements.

3

First Federal Bancshares, Inc. and Subsidiary
Consolidated Statements of Shareholders Equity
Three months ended March 31, 2001
(in thousands of dollars, except share data)
(unaudited)

|                                               | CommonStock | AdditionalPaid-inCapital | UnearnedESOPShares | RetainedEarnings | AccumulatedOtherCompre-hensiveIncome | TotalStock-holdersEquity
|---------------------------------------------- | ----------- | ------------------------ | ------------------ | ---------------- | ------------------------------------ | -------------------------
|                                              
|Balance at December 31, 2000                   |             |                          | $                  | 22               |                                      | $                        
|ESOP shares earned                             |             |                          |                    |                 |                                      |                          
|Comprehensive income                           |             |                         
|Net income                                     |             |                          |                    |                 |                                      |                          
|Change in fair value of securities classified  |             |                         
|as available-for-sale, net of reclassification |             |                         
|and tax effects                                |             |                          |                    |                 |                                      |                          
|                                              
|Total comprehensive income                     |             |                          |                    |                  |                                      |                          
|                                              
|BALANCE AT MARCH 31, 2001                      |             |                          | $                  | 22               |                                      | $                        
|                                              

See notes to consolidated financial statements.

4

FIRST FEDERAL BANCSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(table amounts in thousands of dollars, except share data)

Note 1  Basis of Presentation

The accompanying interim consolidated financial statements have
been prepared pursuant to the rules and regulations for reporting on Form
10-QSB. Accordingly, certain disclosures required by generally accepted
accounting principles are not included herein. These interim statements should
be read in conjunction with the Companys Annual Report on Form 10-KSB.
The December 31, 2000 balance sheet presented herein has been derived from the
audited financial statements included in the Companys Annual Report on
Form 10-KSB, but does not include all disclosures required by generally accepted
accounting principles.

Interim statements are subject to possible adjustment in
connection with the annual audit of the Company for the year ending December 31,
2001. In the opinion of management of the Company, the accompanying unaudited
interim consolidated financial statements reflect all adjustments (consisting of
normal recurring adjustments) necessary for a fair presentation of the
consolidated financial position and consolidated results of operations for the
periods presented. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year.

Note 2  Conversion to Stock Form of Ownership

On December 8, 1999, the Board of Directors of First Federal
Bank (the Bank) adopted a Plan of Conversion to convert from
a federally chartered mutual savings bank to a federally chartered stock savings
bank with the concurrent formation of a holding company. The conversion was
accomplished through the sale of all of the Banks stock to the Company
and the sale of the Companys stock to the public on September 27,
2000.

In connection with the conversion, the Company issued 2,242,500
shares of common stock for gross proceeds of $22.4 million. The aggregate
purchase price was determined by an independent appraisal. The Bank issued all
of its outstanding capital stock to the Company in exchange for one-half of the
net proceeds of the offering. The Company accounted for the purchase in a manner
similar to a pooling of interests whereby assets and liabilities of the Bank
maintain their historical cost basis in the consolidated company.

5

Note 3  Employee Stock Ownership Plan

In connection with the conversion, the Bank established an
Employee Stock Ownership Plan (ESOP) for the benefit of its
employees. The Company issued 179,400 shares of common stock to the ESOP in
exchange for a 10 year note in the amount of approximately $1.8 million. The
$1.8 million for the ESOP purchase was borrowed from the Company.

Shares issued to the ESOP are allocated to ESOP participants
based on principal repayments made by the ESOP on the loan from the Company. The
loan is secured by shares purchased with the loan proceeds and will be repaid by
the ESOP with funds from the Companys discretionary contributions to
the ESOP and earnings on ESOP assets. Principal payments are scheduled to occur
over a ten-year period. However, in the event the Corporations
contributions exceed the minimum debt service requirements, additional principal
payments will be made.

Note 4  Earnings Per Share

Amounts reported as earnings per common share reflect earnings
available to common shareholders for the period divided by the weighted average
number of common shares outstanding during the period. Weighted average shares
for the quarter ended March 31, 2001 were 2,069,828. Earnings per share is
calculated beginning with the date of conversion and, therefore, no earnings per
share is reported for periods prior to the conversion.

6

|ITEM 2. | MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

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

This report contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The Company
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Reform Act of 1995 as amended, and is including this statement for purposes of
these safe harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words such as
believe, expect, intend, anticipate,
estimate, project, or similar expressions. The Companys
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse affect on the operations
and future prospects of the Company and its wholly-owned subsidiaries include, but are not limited to,
changes in: interest rates; general economic conditions; legislative/regulatory
provisions; monetary and fiscal policies of the U.S. Government, including
policies of the U.S. Treasury and the Federal Reserve Board; the quality or
composition of the loan or investment portfolios; demand for loan products;
deposit flows; competition; demand for financial services in the
Companys market area; and accounting principles, policies, and
guidelines. These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements. Further information concerning the Company and its business,
including additional factors that could materially affect the Companys
financial results, is included in the Companys filings with the
Securities and Exchange Commission.

The following discussion compares the financial condition of
First Federal Bancshares, Inc. (Company) and its wholly owned subsidiary, First
Federal Bank (Bank), at March 31, 2001 to its financial condition at
December 31, 2000 and the results of operations for the three-month period
ended March 31, 2001 to the same period in 2000. This discussion should be
read in conjunction with the interim financial statements and footnotes included
herein.

FINANCIAL CONDITION

Total assets at March 31, 2001 were $242.8 million compared to
$237.6 million at December 31, 2000, an increase of $5.2 million. During
the three months ended March 31, 2001, securities available-for-sale
increased $22.8 million while securities held-to maturity decreased $24.3
million. The decrease in held-to-maturity securities was primarily due to calls
during the three months ended March 31, 2001. The proceeds from the calls of
securities held-to-maturity were used to purchase $24.0 million of securities
available-for sale.

The allowance for loan losses was $568,000 at March 31,
2001 and $572,000 at December 31, 2000. There were no impaired loans at
either date.

Total liabilities at March 31, 2001 were $195.9 million compared
to $191.7 million at December 31, 2000, an increase of $4.2 million,
primarily due to an increase in deposits of $6.8 million and a $3.0 million
decrease in Federal Home Loan Bank advances. The increase in deposits was used
to invest in interest-earning deposits at other institutions, as well as pay
down Federal Home Loan Bank advances.

Shareholders equity at March 31, 2001 was $46.8
million compared to $45.9 million at December 31, 2000, an increase of $.9
million. The increase primarily reflects net income of $553,000 and an increase
in the fair value of securities available-for-sale, net of tax, of $324,000.

7

RESULTS OF OPERATIONS

Net income increased $174,000 to $553,000 for the quarter ended
March 31, 2001 compared to the same period in 2000. The increase was
primarily a result of the investment of proceeds from the Companys
initial public offering.

Net interest income was $1.7 million for the quarter ended March
31, 2001 compared to $1.3 million for the same period in 2000. The increase was
primarily a result of an increase in the ratio of interest-earning assets to
interest-bearing liabilities as a result of the proceeds from the stock
conversion. The net interest margin increased to 2.97% for the three months
ended March 31, 2001 from 2.42% for the three months ended March 31, 2000.
This increase is primarily due to higher market interest rates for loans and
increased average balances of loans, which have higher yields than securities.
Although the average cost of funds also increased, the average yield on assets
increased at a higher rate resulting in increased margins and spreads.

The provision for loan losses was zero for the quarter ended
March 31, 2001 and $53,000 for the same period in 2000. The decrease in the
provision for loan losses was a direct result of decreased delinquencies and
non-performing loans.

On a quarterly basis, management of the Bank meets to review the
adequacy of the allowance for loan losses. Management classifies loans in
compliance with regulatory classifications. Classified loans are individually
reviewed to arrive at specific reserves for those loans. Once the specific
portion of the allowance is calculated, management calculates a historical
portion for each loan category based on loan loss history, peer data, current
economic conditions and trends in the portfolio, including delinquencies and
impairments, as well as changes in the composition of the loan portfolio.
Although management believes that the allowance for loan losses was at a level
adequate to absorb probable incurred losses on existing loans at March 31,
2001, there can be no assurance that such losses will not exceed estimated
amounts.

Noninterest income was $73,000 for the three-month period ended
March 31, 2001 and was consistent with the prior period.

Noninterest expense was $910,000 and $685,000 for the quarters
ended March 31, 2001 and 2000. The increase in noninterest expense
primarily reflects increased salaries and compensation expense associated with
the ESOP established as part of the stock conversion. Other non-interest expense
increased as a result of higher insurance premiums. Various other expenses also
increased during this period.

The Companys federal income tax expense increased
$106,000 to $337,000 for the quarter ended March 31, 2001 compared to the
same period in 2000. Income tax expense was approximately 39% of pretax income
in both periods.

LIQUIDITY

First Federal must maintain an adequate level of liquidity to
ensure the availability of sufficient funds to fund loan originations and
deposit withdrawals, to satisfy other financial commitments and to take
advantage of investment opportunities. First Federal invests excess funds in
overnight deposits and other short-term interest-bearing assets to provide
liquidity to meet these needs. At March 31, 2001, cash and cash equivalents
totaled $17.8 million. At March 31, 2001, First Federal had commitments to
fund loans of $719,000. At the same time, certificates of deposit which are
scheduled to mature in one year or less totaled $117.2 million. Management
believes, based on past experience, that a significant portion of those deposits
will remain with First Federal. Based on the foregoing, in addition to First
Federals high level of core deposits and capital, First Federal
considers its liquidity and capital resources sufficient to meet its outstanding
short-term and long-term needs.

8

CAPITAL RESOURCES

The Bank is subject to capital-to-asset requirements in
accordance with bank regulations. The following table summarizes the
Banks regulatory capital requirements versus actual capital as of
March 31, 2001:

|                           | ACTUAL | REQUIRED | EXCESS
|-------------------------- | ------ | -------- | ------
|
|                           |        |          |       
|Core capital               |        |          | $     
|(to adjusted total assets) |        |         
|Risk-based capital         |        |          |       
|(to risk-weighted assets)  |        |         

9

PART II - - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

| | Periodically,
there have been various claims and lawsuits involving the Company, such as claims to
enforce liens, condemnation proceedings on properties in which the Company holds security
interest, claims involving the making and servicing of real property loans and other
issues incident to the Companys business. In the opinion of management, after
consultation with the Companys legal counsel, no significant loss is expected from
any of such pending claims or lawsuits. The Company is not a party to any material
pending legal proceedings.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 2. CHANGES IN SECURITIES.

| |  |  | None | 
| |  |  | ---- | 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

| | None
| | ----

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

| | None
| | ----

ITEM 5. OTHER INFORMATION.

| | None
| | ----

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

| | (a)
Exhibits
| | ------------

| | None
| | ----

| | (b)
Reports on Form 8-K.
| | ------------------------

| | A
current report on Form 8-K was filed by the Company on February 14, 2001 reporting that
the Company issued a press release announcing the date of the 2001 annual meeting of
stockholders. A copy of the press release was attached as an exhibit to the Form 8-K.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

SIGNATURES

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

|                  | FIRST FEDERAL BANCSHARES, INC.       
|----------------- | -------------------------------------
|                 
|DATE: MAY 8, 2001 | /s/ JAMES J. STEBOR                  
|                  | James J. Stebor                      
|                  | President and Chief Executive Officer
|                 
|                 
|DATE: MAY 8, 2001 | /s/ CATHY D. PENDELL                 
|                  | Cathy D. Pendell                     
|                  | Treasurer                            

11