<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended.....................................JUNE 30, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from...................to.............................

Commission file number...................................................0-18046


                           FIRST FEDERAL CAPITAL CORP
             (Exact name of Registrant as specified in its charter)


WISCONSIN                                                             39-1651288
(State or other jurisdiction of                                    (IRS employer
incorporation or organization)                                   identification)


605 STATE STREET
LA CROSSE, WISCONSIN                                                       54601
(Address of principal executive office)                               (Zip code)


       Registrant's telephone number, including area code: (608) 784-8000


                                 NOT APPLICABLE
              (Former name, former address, and former fiscal year,
                          if changed since last report)


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 such shorter period as the Registrant has
been subject to such requirements), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Class: COMMON STOCK--$.10 PAR VALUE. Outstanding as of August 13, 2001:
18,422,542 (EXCLUDES 1,519,088 SHARES HELD AS TREASURY STOCK).


<PAGE>   2


                           FORM 10-Q TABLE OF CONTENTS


<TABLE>
<CAPTION>
PART I--FINANCIAL INFORMATION                                                                        Page
<S>                                                                                                  <C>
             Item 1--Financial Statements .............................................................2

             Item 2--Management's Discussion and Analysis of Financial Condition and Results of
                     Operations.......................................................................12

             Item 3--Quantitative and Qualitative Disclosures about Market Risk.......................23

PART II--OTHER INFORMATION

             Item 1--Legal Proceedings................................................................24

             Item 2--Changes in Securities............................................................24

             Item 3--Defaults Upon Senior Securities..................................................24

             Item 4--Submission of Matters to Vote of Security Holders................................24

             Item 5--Other Information................................................................24

             Item 6--Exhibits and Reports on Form 8-K.................................................24


SIGNATURES............................................................................................25
</TABLE>




                                       1
<PAGE>   3


                          PART I--FINANCIAL INFORMATION

ITEM 1--FINANCIAL STATEMENTS


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 2001, and December 31, 2000

<TABLE>
<CAPTION>
                                                                                               JUNE 30          DECEMBER 31
                                                                                                2001               2000
ASSETS                                                                                       (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>               <C>
Cash and due from banks                                                                        $48,147,157       $25,445,819
Interest-bearing deposits with banks                                                            20,908,201        13,054,493
Investment securities available for sale, at fair value                                            720,859           817,141
Mortgage-backed and related securities:
  Available for sale, at fair value                                                            252,447,224       331,236,909
  Held for investment, at cost (fair value of $63,233,834 and $76,456,829,
   respectively)                                                                                62,595,620        77,298,853
Loans held for sale                                                                             32,888,039        22,973,887
Loans held for investment, net                                                               1,904,515,065     1,772,476,651
Federal Home Loan Bank stock                                                                    26,430,800        25,568,100
Accrued interest receivable, net                                                                20,100,823        19,701,004
Office properties and equipment                                                                 28,604,658        26,781,010
Mortgage servicing rights, net                                                                  27,026,994        23,280,472
Intangible assets                                                                               10,980,151        11,490,392
Other assets                                                                                    11,884,798         2,600,835
-----------------------------------------------------------------------------------------------------------------------------

  Total assets                                                                              $2,447,250,389    $2,352,725,566
=============================================================================================================================


LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------------------

Deposit liabilities                                                                         $1,807,999,799    $1,699,252,162
Federal funds purchased                                                                         20,000,000        20,000,000
Securities sold under agreements to repurchase                                                           -       100,000,000
Federal Home Loan Bank advances                                                                435,740,000       368,205,000
Other borrowings                                                                                    35,525         2,641,370
Advance payments by borrowers for taxes and insurance                                            8,240,537         1,023,712
Accrued interest payable                                                                         2,456,075         4,047,875
Other liabilities                                                                               17,255,890        11,005,952
-----------------------------------------------------------------------------------------------------------------------------
  Total liabilities                                                                          2,291,727,826     2,206,176,071
-----------------------------------------------------------------------------------------------------------------------------
Preferred stock, $.10 par value, 5,000,000 shares authorized, none outstanding                           -                 -
Common stock, $.10 par value, 100,000,000 shares authorized, 19,941,630 shares issued
  and outstanding, including 1,522,808 and 1,596,332 shares of treasury stock,
  respectively                                                                                   1,994,163         1,994,163
Additional paid-in capital                                                                      34,540,064        34,540,064
Retained earnings                                                                              129,874,986       122,921,606
Treasury stock, at cost                                                                        (14,186,223)      (15,127,142)
Unearned restricted stock                                                                         (114,583)         (142,083)
Accumulated non-owner adjustments to equity, net                                                 3,414,156         2,362,887
-----------------------------------------------------------------------------------------------------------------------------
  Total stockholders' equity                                                                   155,522,563       146,549,495
-----------------------------------------------------------------------------------------------------------------------------

  Total liabilities and stockholders' equity                                                $2,447,250,389    $2,352,725,566
=============================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.

                                       2
<PAGE>   4


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, 2001 and 2000
                                                                                  THREE MONTHS ENDED JUNE 30
                                                                             --------------------------------------
                                                                                    2001               2000
                                                                                 (UNAUDITED)       (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                  <C>
Interest on loans                                                                    $35,740,975       $33,134,873
Interest on mortgage-backed and related securities                                     6,005,028         5,547,808
Interest and dividends on investments                                                    851,252           556,243
-------------------------------------------------------------------------------------------------------------------
  Total interest income                                                               42,597,255        39,238,924
-------------------------------------------------------------------------------------------------------------------
Interest on deposit liabilities                                                       21,146,683        17,313,220
Interest on FHLB advances and all other borrowings                                     5,873,821         6,926,436
-------------------------------------------------------------------------------------------------------------------
  Total interest expense                                                              27,020,504        24,239,656
-------------------------------------------------------------------------------------------------------------------
  Net interest income                                                                 15,576,751        14,999,268
Provision for loan losses                                                                436,626           111,775
-------------------------------------------------------------------------------------------------------------------
  Net interest income after provision for loan losses                                 15,140,125        14,887,493
-------------------------------------------------------------------------------------------------------------------
Retail banking fees and service charges                                                6,362,560         5,563,606
Premiums and commissions                                                                 893,804           649,674
Loan servicing fees, net                                                              (1,931,021)          997,259
Gain on sales of loans                                                                 5,264,641           506,031
Other income                                                                             892,086           750,170
-------------------------------------------------------------------------------------------------------------------
  Total non-interest income                                                           11,482,070         8,466,740
-------------------------------------------------------------------------------------------------------------------
Compensation and employee benefits                                                     9,706,024         8,941,739
Occupancy and equipment                                                                2,477,359         2,018,739
Communications, postage, and office supplies                                           1,348,147           990,257
ATM and debit card transaction costs                                                     840,419           722,820
Advertising and marketing                                                                650,479           569,188
Amortization of intangibles                                                              255,935           256,815
Other expenses                                                                         1,489,125         1,065,133
-------------------------------------------------------------------------------------------------------------------
  Total non-interest expense                                                          16,767,488        14,564,691
-------------------------------------------------------------------------------------------------------------------
  Income before income taxes                                                           9,854,707         8,789,542
Income tax expense                                                                     3,487,348         3,124,173
-------------------------------------------------------------------------------------------------------------------

  Net income                                                                          $6,367,359        $5,665,369
===================================================================================================================


PER SHARE INFORMATION
-------------------------------------------------------------------------------------------------------------------
Diluted earnings per share                                                                 $0.34             $0.30
Basic earnings per share                                                                    0.35              0.31
Dividends paid per share                                                                    0.12              0.11
===================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.

                                       3
<PAGE>   5


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30, 2001 and 2000
                                                                                   SIX MONTHS ENDED JUNE 30
                                                                            ---------------------------------------
                                                                                   2001               2000
                                                                                (UNAUDITED)        (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                  <C>
Interest on loans                                                                   $71,621,461        $63,790,561
Interest on mortgage-backed and related securities                                   12,607,268         11,395,822
Interest and dividends on investments                                                 1,589,260          1,131,816
-------------------------------------------------------------------------------------------------------------------
  Total interest income                                                              85,817,989         76,318,199
-------------------------------------------------------------------------------------------------------------------
Interest on deposit liabilities                                                      42,587,051         32,968,992
Interest on FHLB advances and all other borrowings                                   13,092,535         13,611,825
-------------------------------------------------------------------------------------------------------------------
  Total interest expense                                                             55,679,586         46,580,817
-------------------------------------------------------------------------------------------------------------------
  Net interest income                                                                30,138,403         29,737,382
Provision for loan losses                                                               830,899            304,246
-------------------------------------------------------------------------------------------------------------------
  Net interest income after provision for loan losses                                29,307,504         29,433,136
-------------------------------------------------------------------------------------------------------------------
Retail banking fees and service charges                                              12,126,543         10,618,233
Premiums and commissions                                                              1,640,869          1,350,292
Loan servicing fees, net                                                             (1,382,917)         1,999,307
Gain on sales of loans                                                                8,269,780            795,585
Other income                                                                          1,518,268          1,248,550
-------------------------------------------------------------------------------------------------------------------
  Total non-interest income                                                          22,172,543         16,011,967
-------------------------------------------------------------------------------------------------------------------
Compensation and employee benefits                                                   19,241,932         17,352,643
Occupancy and equipment                                                               4,707,943          3,905,892
Communications, postage, and office supplies                                          2,572,741          2,043,282
ATM and debit card transaction costs                                                  1,580,742          1,429,709
Advertising and marketing                                                             1,126,698          1,112,165
Amortization of intangibles                                                             513,500            513,630
Other expenses                                                                        2,737,740          2,137,391
-------------------------------------------------------------------------------------------------------------------
  Total non-interest expense                                                         32,481,296         28,494,712
-------------------------------------------------------------------------------------------------------------------
  Income before income taxes                                                         18,998,751         16,950,391
Income tax expense                                                                    6,734,639          6,022,633
-------------------------------------------------------------------------------------------------------------------

  Net income                                                                        $12,264,112        $10,927,758
===================================================================================================================

PER SHARE INFORMATION
-------------------------------------------------------------------------------------------------------------------
Diluted earnings per share                                                                $0.66              $0.59
Basic earnings per share                                                                   0.67               0.60
Dividends paid per share                                                                   0.23               0.20
===================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.

                                       4
<PAGE>   6


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Months Ended June 30, 2001 and 2000

                                      COMMON
                                   STOCK AND                                             ACCUMULATED
                                  ADDITIONAL                                  UNEARNED     NON-OWNER
                                     PAID-IN      RETAINED      TREASURY    RESTRICTED   ADJUSTMENTS
UNAUDITED                            CAPITAL      EARNINGS         STOCK         STOCK     TO EQUITY         TOTAL
-------------------------------------------------------------------------------------------------------------------
<S>                              <C>          <C>           <C>             <C>          <C>          <C>
Balance at March 31, 2000        $36,534,227  $110,578,540  ($15,936,683)    ($360,537)  ($1,615,570)  $129,199,977
                                                                                                      --------------
Net income                                       5,665,369                                                5,665,369
Securities valuation
  adjustment, net of income
  taxes                                                                                     (120,754)      (120,754)
                                                                                                      --------------
Net income and non-owner
  adjustments to equity                                                                                   5,544,615
                                                                                                      --------------
Dividends paid                                  (2,015,225)                                              (2,015,225)
Exercise of stock options                         (187,163)      273,985                                     86,822
Amortization of restricted
  stock                                            134,725                     129,779                      264,504
--------------------------------------------------------------------------------------------------------------------

Balance at June 30, 2000         $36,534,227  $114,176,246  ($15,662,698)    ($230,758)  ($1,736,324)  $133,080,693
====================================================================================================================


UNAUDITED
--------------------------------------------------------------------------------------------------------------------

Balance at March 31, 2001        $36,534,227  $126,595,175  ($15,377,352)    ($128,333)   $4,114,027   $151,737,744
                                                                                                      --------------
Net income                                       6,367,359                                                6,367,359
Securities valuation
  adjustment, net of income
  taxes                                                                                     (699,871)      (699,871)
                                                                                                      --------------
Net income and non-owner
  adjustments to equity                                                                                   5,667,488
                                                                                                      --------------
Dividends paid                                  (2,209,946)                                              (2,209,946)
Exercise of stock options                       (1,068,952)    1,191,129                                    122,177
Amortization of restricted
  stock                                            191,350                      13,750                      205,100
--------------------------------------------------------------------------------------------------------------------

Balance at June 30, 2001         $36,534,227  $129,874,986  ($14,186,223)    ($114,583)   $3,414,156   $155,522,563
====================================================================================================================
</TABLE>


Refer to accompanying Notes to Consolidated Financial Statements.

                                        5

<PAGE>   7


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 2001 and 2000

                                      COMMON
                                   STOCK AND                                             ACCUMULATED
                                  ADDITIONAL                                  UNEARNED     NON-OWNER
                                     PAID-IN      RETAINED      TREASURY    RESTRICTED   ADJUSTMENTS
UNAUDITED                            CAPITAL      EARNINGS         STOCK         STOCK     TO EQUITY         TOTAL
-------------------------------------------------------------------------------------------------------------------
<S>                              <C>          <C>           <C>              <C>         <C>          <C>
Balance at December 31, 1999     $36,534,227  $106,929,097  ($14,388,670)    ($591,183)  ($1,208,245)  $127,275,226
                                                                                                      --------------
Net income                                      10,927,758                                               10,927,758
Securities valuation
  adjustment, net of income
  taxes                                                                                     (528,079)      (528,079)
                                                                                                      --------------
Net income and non-owner
  adjustments to equity                                                                                  10,399,679
                                                                                                      --------------
Dividends paid                                  (3,665,437)                                              (3,665,437)
Exercise of stock options                         (132,047)      434,635                                    302,588
Purchase of treasury stock                                    (1,708,663)                                (1,708,663)
Amortization of restricted
  stock                                            116,875                     360,425                      477,300
--------------------------------------------------------------------------------------------------------------------

Balance at June 30, 2000         $36,534,227  $114,176,246  ($15,662,698)    ($230,758)  ($1,736,324)  $133,080,693
====================================================================================================================


UNAUDITED
--------------------------------------------------------------------------------------------------------------------

Balance at December 31, 2000     $36,534,227  $122,921,606  ($15,127,142)    ($142,083)   $2,362,887   $146,549,495
                                                                                                      --------------
Net income                                      12,264,112                                               12,264,112
Securities valuation
adjustment,
  net of income taxes                                                                      1,051,269      1,051,269
                                                                                                      --------------
Net income and non-owner
  adjustments to equity                                                                                  13,315,381
                                                                                                      --------------
Dividends paid                                  (4,231,746)                                              (4,231,746)
Exercise of stock options                       (1,451,586)    1,600,294                                    148,708
Purchase of treasury stock                                      (659,375)                                  (659,375)
Amortization of restricted
  stock                                            372,600                      27,500                      400,100
--------------------------------------------------------------------------------------------------------------------

Balance at June 30, 2001         $36,534,227  $129,874,986  ($14,186,223)    ($114,583)   $3,414,156   $155,522,563
====================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.


                                       6
<PAGE>   8


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30, 2001 and 2000
                                                                                  THREE MONTHS ENDED JUNE 30
                                                                            ---------------------------------------
                                                                                   2001               2000
                                                                                (UNAUDITED)        (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                  <C>
Cash flows from operating activities:
  Net income                                                                         $6,367,359         $5,665,369
  Adjustments to reconcile net income to net cash provided (used) by
    operations:
    Provision for loan and real estate losses, net                                      449,244            151,613
    Net loan costs deferred                                                            (676,503)          (332,550)
    Amortization (including mortgage servicing rights)                                4,133,742          1,236,160
    Depreciation                                                                        618,285            640,314
    Gains on sales of loans                                                          (5,264,641)          (506,031)
    Increase in accrued interest receivable                                          (1,085,625)        (1,057,152)
    Increase (decrease) in accrued interest payable                                  (1,473,519)           155,855
    Decrease in current and deferred income taxes                                    (1,201,153)        (2,273,327)
    Other accruals and prepaids, net                                                    750,098            424,886
-------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations before loan originations and sales              2,617,287          4,105,137
  Loans originated for sale                                                        (256,632,290)       (27,806,503)
  Sales of loans originated for sale or transferred from held for investment        304,494,967         29,006,960
-------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations                                                50,479,964          5,305,594
-------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Decrease in interest-bearing deposits with banks                                   55,527,367          7,461,872
  Principal repayments on mortgage-backed and related securities available
     for sale                                                                        54,293,761         12,245,741
  Principal repayments on mortgage-backed and related securities held for
     investment                                                                       9,421,507          6,753,221
  Loans originated for investment                                                  (181,354,305)      (211,414,011)
  Loans purchased for investment                                                   (178,134,515)        (3,075,000)
  Loan principal repayments                                                         168,331,280         96,440,744
  Sales of education loans                                                            1,384,322                  -
  Sales of real estate                                                                  848,174            653,572
  Purchases of office properties and equipment                                       (2,305,327)        (1,288,306)
  Purchases of mortgage servicing rights                                               (879,875)        (1,865,307)
  Other, net                                                                         (8,214,197)        (1,575,936)
-------------------------------------------------------------------------------------------------------------------
    Net cash used by investing activities                                           (81,081,808)       (95,663,410)
-------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Increase in deposit liabilities                                                    29,975,658        105,599,243
  Repayment of long-term Federal Home Loan Bank advances                                      -        (12,500,000)
  Increase in short-term Federal Home Loan Bank borrowings                           87,080,000          8,850,000
  Decrease in securities sold under agreements to repurchase                       (100,000,000)                 -
  Increase in federal funds purchased                                                20,000,000                  -
  Decrease in other borrowings                                                       (1,901,872)        (1,401,711)
  Increase in advance payments by borrowers for taxes and insurance                   3,612,129          4,390,659
  Dividends paid                                                                     (2,209,946)        (2,015,225)
  Other, net                                                                         (3,106,286)           136,300
-------------------------------------------------------------------------------------------------------------------
    Net cash provided by financing activities                                        33,449,683        103,059,266
-------------------------------------------------------------------------------------------------------------------
Net increase in cash and due from banks                                               2,847,839         12,701,450
Cash and due from banks at beginning of period                                       45,299,318         41,704,333
-------------------------------------------------------------------------------------------------------------------
    Cash and due from banks at end of period                                        $48,147,157        $54,405,783
===================================================================================================================
Supplemental disclosures of cash flow information:
  Interest and dividends received on loans and investments                          $41,511,630        $38,181,772
  Interest paid on deposits and borrowings                                           28,494,023         24,083,801
  Income taxes paid                                                                   4,688,500          5,377,500
  Transfer of loans from held for investment to held for sale                        22,740,791          2,466,587
===================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.

                                       7
<PAGE>   9


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2001 and 2000
                                                                                   SIX MONTHS ENDED JUNE 30
                                                                            ---------------------------------------
                                                                                   2001               2000
                                                                                (UNAUDITED)        (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                  <C>
Cash flows from operating activities:
  Net income                                                                        $12,264,112        $10,927,758
  Adjustments to reconcile net income to net cash provided (used) by
    operations:
    Provision for loan and real estate losses, net                                      811,508            343,592
    Net loan costs deferred                                                          (1,264,835)          (553,962)
    Amortization (including mortgage servicing rights)                                6,027,956          2,621,475
    Depreciation                                                                      1,270,503          1,259,564
    Gains on sales of loans                                                          (8,269,780)          (795,585)
    Increase in accrued interest receivable                                            (399,819)        (2,408,332)
    Increase (decrease) in accrued interest payable                                  (1,591,800)           513,217
    Increase (decrease) in current and deferred income taxes                          1,617,613            (29,314)
    Other accruals and prepaids, net                                                    976,945            (37,169)
------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations before loan originations and sales             11,442,403         11,841,244
  Loans originated for sale                                                        (440,777,909)       (46,766,627)
  Sales of loans originated for sale or transferred from held for investment        518,067,951         49,431,985
------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations                                                88,732,445         14,506,602
------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Decrease (increase) in interest-bearing deposits with banks                        (7,853,708)        12,621,200
  Maturities of investment securities                                                   100,000            100,000
  Principal repayments on mortgage-backed and related securities available
    for sale                                                                         81,136,594         24,366,500
  Principal repayments on mortgage-backed and related securities held for
    investment                                                                       14,675,539         14,348,356
  Loans originated for investment                                                  (337,768,604)      (376,684,411)
  Loans purchased for investment                                                   (178,134,515)       (16,125,836)
  Loan principal repayments                                                         293,172,168        170,366,591
  Sales of education loans                                                            1,384,322                  -
  Sales of real estate                                                                1,435,233            893,346
  Purchases of office properties and equipment                                       (3,592,535)        (2,192,025)
  Purchases of mortgage servicing rights                                             (1,100,197)        (1,865,307)
  Other, net                                                                         (8,550,790)        (1,850,689)
------------------------------------------------------------------------------------------------------------------
    Net cash used by investing activities                                          (145,096,493)      (176,022,275)
------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Increase in deposit liabilities                                                   108,747,637        149,447,552
  Long-term advances from Federal Home Loan Bank                                              -        100,000,000
  Repayment of long-term Federal Home Loan Bank advances                             (9,000,000)       (20,250,000)
  Increase (decrease) in short-term Federal Home Loan Bank borrowings                76,535,000       (155,448,000)
  Increase (decrease) in securities sold under agreements to repurchase            (100,000,000)        75,000,000
  Increase (decrease) in other borrowings                                            (2,605,845)         2,051,066
  Increase in advance payments by borrowers for taxes and insurance                   7,216,825          3,493,142
  Purchase of treasury stock                                                           (659,375)        (1,708,663)
  Dividends paid                                                                     (4,231,746)        (3,665,437)
  Other, net                                                                          3,062,890          1,435,775
------------------------------------------------------------------------------------------------------------------
    Net cash provided by financing activities                                        79,065,386        150,355,435
------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks                                   22,701,338        (11,160,238)
Cash and due from banks at beginning of period                                       25,445,819         65,566,021
------------------------------------------------------------------------------------------------------------------
    Cash and due from banks at end of period                                        $48,147,157        $54,405,783
==================================================================================================================
Supplemental disclosures of cash flow information:
  Interest and dividends received on loans and investments                          $85,418,170        $73,909,867
  Interest paid on deposits and borrowings                                           57,271,386         46,067,599
  Income taxes paid                                                                   5,117,025          6,031,948
  Transfer of loans from held for investment to held for sale                        86,005,230          2,786,588
==================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.

                                       8
<PAGE>   10


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1--PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts and balances
of First Federal Capital Corp (the "Corporation"), First Federal Savings Bank La
Crosse-Madison (the "Bank"), and the Bank's wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.


NOTE 2--BASIS OF PRESENTATION

         The accompanying interim consolidated financial statements are
unaudited and do not include information or footnotes necessary for a complete
presentation of financial condition, results of operations, or cash flows in
accordance with generally accepted accounting principles ("GAAP"). However, in
the opinion of management, all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
statements have been included. Operating results for the three and six month
periods ended June 30, 2001, may not necessarily be indicative of the results
that may be expected for the entire year ending December 31, 2001.

         Certain 2000 balances have been reclassified to conform to the 2001
presentation.

NOTE 3--EARNINGS PER SHARE

         Basic and diluted earnings per share data are based on the
weighted-average number of common shares outstanding during each period. Diluted
earnings per share is further adjusted for potential common shares that were
dilutive and outstanding during the period. Potential common shares generally
consist of stock options outstanding under the Corporation's stock incentive
plans. The dilutive effect of potential common shares is computed using the
treasury stock method. All stock options are assumed to be 100% vested for
purposes of the earnings per share computations. The computation of earnings per
share for the three and six month periods ended June 30, 2001, and June 30,
2000, is as follows:

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED JUNE 30
                                                --------------------------------------------------------------------
                                                               2001                               2000
                                                ---------------------------------  ---------------------------------
                                                          BASIC          DILUTED              BASIC         DILUTED
--------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                <C>             <C>                <C>
Net income                                           $6,367,359       $6,367,359         $5,665,369      $5,665,369
====================================================================================================================
Average common shares issued, net
  of actual treasury shares                          18,401,003       18,401,003         18,289,157      18,289,157
Potential common shares issued under
  stock options (treasury stock method)                       -          157,723                  -         168,361
====================================================================================================================
Average common shares and
  potential common shares                            18,401,003       18,558,726         18,289,157      18,457,518
====================================================================================================================
Earnings per share                                        $0.35            $0.34              $0.31           $0.30
====================================================================================================================

<CAPTION>
                                                                      SIX MONTHS ENDED JUNE 30
                                                --------------------------------------------------------------------
                                                               2001                               2000
                                                ---------------------------------  ---------------------------------
                                                          BASIC          DILUTED              BASIC         DILUTED
--------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                <C>             <C>                <C>
Net income                                          $12,264,112      $12,264,112        $10,927,758     $10,927,758
====================================================================================================================
Average common shares issued, net
  of actual treasury shares                          18,380,372       18,380,372         18,309,571      18,309,571
Potential common shares issued under
  stock options (treasury stock method)                       -          163,638                  -         180,029
--------------------------------------------------------------------------------------------------------------------
Average common shares and
  potential common shares                            18,380,372       18,544,010         18,309,571      18,489,600
====================================================================================================================
Earnings per share                                        $0.67            $0.66              $0.60           $0.59
====================================================================================================================
</TABLE>



                                       9
<PAGE>   11


NOTE 4--CONTINGENCIES

         The Corporation and its subsidiaries are engaged in various routine
legal proceedings occurring in the ordinary course of business, which considered
together are believed by management to be immaterial to the consolidated
financial condition of the Corporation.


NOTE 5--SEGMENT INFORMATION

         REPORTABLE SEGMENTS The Corporation tracks profitability in four major
areas: (i) residential lending, (ii) commercial real estate lending, (iii)
consumer lending, and (iv) investment and mortgage-related securities.
Residential lending is divided into two profit centers for segment reporting
purposes: (i) a mortgage banking profit center that is responsible for loan
origination, sales of loans in the secondary market, and servicing of
residential loans, and (ii) a residential loan portfolio that consists of loans
held by the Corporation for investment purposes (loans held for sale are
included in the mortgage banking profit center). This profit center also
includes mortgage-backed securities that are collateralized by loans that were
originated by the Corporation. Commercial real estate lending consists of the
Corporation's portfolio of multi-family and non-residential mortgage loans, as
well as functions related to the origination and servicing of such loans.
Consumer lending is divided into two profit centers for segment reporting
purposes: (i) a consumer lending portfolio, which consists of the Corporation's
second mortgage, automobile, and other consumer installment loans, as well as
functions related to the origination and servicing of such loans, and (ii) an
education loan portfolio, which also includes functions related to the
origination and servicing of the loans. Finally, the Corporation's investment
and mortgage-related securities portfolio is considered a profit center for
segment reporting purposes. As previously noted, however, mortgage-backed
securities collateralized by loans originated by the Corporation are included in
the residential loan profit center, rather than the investment and
mortgage-related securities portfolio.

         The Corporation's retail branch network, which delivers checking,
savings, certificates of deposit and other financial products and services to
customers, is considered a support department for segment reporting purposes, as
more fully described in a subsequent paragraph.

         MEASUREMENT OF SEGMENT PROFIT (LOSS) Management evaluates the after-tax
performance of the Corporation's profit centers as if each center were a
separate entity--each with its own earning assets, actual and/or allocated
non-earning assets, and allocated funding resources. Each profit center has its
own interest income, non-interest income, and non-interest expense as captured
by the Corporation's accounting systems. Interest expense is allocated to each
profit center according to its use of the Corporation's funding sources, which
consist primarily of deposit liabilities, wholesale borrowings, and equity. In
general, all funding sources are allocated proportionately to each profit
center. However, in certain instances specific liabilities may be matched
against specific assets of profit centers.

         The net cost of operating the Corporation's support departments is
allocated to the Corporation's profit centers and to the retail banking network
using a variety of methods deemed appropriate by management. In general, these
net costs are included in the non-interest expense of each profit center, to
include the retail banking network. In addition, certain allocations of revenues
and expenses are made between profit centers when they perform services for each
other. Such amounts, however, are not generally material in nature.

         The Corporation's retail branch network is considered a support
department center for segment reporting purposes. Retail banking fees and
revenues are deducted from the non-interest expense of operating the network (to
include an allocation of net costs from the Corporation's other support
departments) to arrive at net costs for the branch network. This net cost is
then allocated to each profit center based on its use of deposit liabilities to
fund its operations. This amount is reported as "net cost to acquire and
maintain deposit liabilities" and is included as an adjustment to the net
interest income of each profit center.



                                       10
<PAGE>   12

         For segment reporting purposes, management makes certain non-GAAP
adjustments and reclassifications to the results of operations and financial
condition of the Corporation that, in management's judgement, more fairly
reflect the performance and/or financial condition of certain of the
Corporation's profit centers.

         SEGMENT PROFIT (LOSS) STATEMENTS AND OTHER INFORMATION The following
table summarizes the profit (loss) and average assets of each of the
Corporation's reportable segments for the three and six month periods ended June
30, 2001 and 2000. In addition to the after-tax performance of profit centers,
management of the Corporation closely monitors the net cost to acquire and
maintain deposit liabilities, which consists principally of the net costs to
operate the Corporation's retail branch network, as previously described. The
net cost to acquire and maintain deposit liabilities was 1.22% and 1.14% of
average deposit liabilities outstanding during the three months ended June 30,
2001 and 2000, respectively. The net cost for the six month periods ending as of
the same dates was 1.28% and 1.16%, respectively.

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED JUNE 30
                                                      ----------------------------------------------------------------
                                                                   2001                             2000
                                                      -------------------------------  -------------------------------
PROFIT CENTER                                          PROFIT (LOSS)  AVERAGE ASSETS     PROFIT (LOSS) AVERAGE ASSETS
----------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>              <C>             <C>
Mortgage banking                                             $80,734     $83,194,706        $1,249,171    $41,108,438
Residential loans                                          1,645,883     940,907,622         2,109,350    905,716,990
Commercial real estate lending                             1,122,752     510,914,349         1,200,412    447,541,473
Consumer lending                                             990,489     377,833,592           882,591    316,890,583
Education lending                                            931,651     212,056,647         1,046,741    207,368,442
Investment and mortgage-related securities                   188,402     248,687,033           487,982    269,111,697
Other segments                                               (99,741)        632,900          (168,392)       300,874
Non-GAAP adjustments                                       1,507,189      (4,076,194)       (1,142,486)   (12,514,152)
----------------------------------------------------------------------------------------------------------------------
  Net income/total average assets                         $6,367,359  $2,370,150,655        $5,665,369 $2,175,524,345
======================================================================================================================
<CAPTION>
                                                                         SIX MONTHS ENDED JUNE 30
                                                      ----------------------------------------------------------------
                                                                   2001                             2000
                                                      -------------------------------  -------------------------------
PROFIT CENTER                                          PROFIT (LOSS)  AVERAGE ASSETS     PROFIT (LOSS) AVERAGE ASSETS
----------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>              <C>             <C>
Mortgage banking                                          $1,313,847     $81,655,104        $1,584,458    $41,259,769
Residential loans                                          3,509,144     957,049,370         4,298,209    880,154,970
Commercial real estate lending                             2,123,720     506,180,362         2,460,477    436,678,897
Consumer lending                                           1,770,528     372,499,615         1,758,705    304,009,199
Education lending                                          1,599,726     213,569,250         1,834,175    208,105,514
Investment and mortgage-related securities                   404,504     247,387,812         1,103,163    278,049,116
Other segments                                              (192,010)        651,771          (338,003)       299,207
Non-GAAP adjustments                                       1,734,653      (5,392,826)       (1,773,426)   (12,241,271)
----------------------------------------------------------------------------------------------------------------------
  Net income/total average assets                        $12,264,112  $2,373,600,458       $10,927,758 $2,136,315,401
======================================================================================================================
</TABLE>


NOTE 6--RECENT ACCOUNTING STANDARDS

         In 2000 the FASB issued Statement of Financial Accounting Standards No.
140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities" ("SFAS 140"). This standard established new rules
for companies that engage in securitization transactions. In particular, the
standard establishes rules for when a transfer qualifies as a sale. On April 1,
2001, the Corporation adopted the requirements of SFAS 140 for various transfers
of receivables and other financial assets. The adoption did not have a material
impact on the Corporation's operations or financial condition.

         In June 2001 the FASB issued Statements of Financial Accounting
Standards No. 141, "Business Combinations" ("SFAS 141"), and No. 142, "Goodwill
and Other Intangible Assets" ("SFAS 142"). Under the new rules, goodwill and
intangible assets deemed to have indefinite lives will no longer be amortized
but will be subject to annual impairment tests in accordance with the new
statements. Other identifiable intangible assets will continue to be amortized
over their useful lives, which includes deposit-based intangibles. The new
standards are effective for fiscal years beginning after December 15, 2001. The
Corporation has not completed the complex analysis necessary to determine the
impact SFAS 141 and SFAS 142 will have on its statements of financial condition
or operations. However, such impact is not expected to be material, although
there can be no assurances.

                                       11
<PAGE>   13


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


FORWARD-LOOKING STATEMENTS

         This report includes certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
include words and phrases such as "will likely result", "are expected to", "will
continue", "is anticipated", "is estimated", "is projected", "intends to", or
similar expressions. Forward-looking statements are based on management's
current expectations. Examples of factors which could cause future results to
differ from management's expectations include, but are not limited to, the
following: general economic and competitive conditions; legislative and
regulatory initiatives; monetary and fiscal policies of the federal government;
general market rates of interest; interest rates on competing investments;
interest rates on funding sources; consumer demand for deposit and loan products
and services; consumer demand for other financial services; changes in
accounting policies or guidelines; and changes in the quality or composition of
the Corporation's loan and investment portfolios. Readers are cautioned that
forward-looking statements are not guarantees of future performance and that
actual results may differ materially from management's current expectations.

         Management of the Corporation does not undertake and specifically
disclaims any obligation to update any forward-looking statements to reflect the
occurrence of anticipated or unanticipated events or circumstances after the
date of such statements.


RESULTS OF OPERATIONS

         QUARTER OVERVIEW The Corporation's net income for the three months
ended June 30, 2001, was $6.4 million or $0.34 per diluted share compared to
$5.7 million and $0.30 in the same period last year. These amounts represented a
return on average assets of 1.07% and 1.04%, respectively, and a return on
average equity of 16.26% and 17.05%, respectively.

         The increase in net income from 2000 to 2001 was primarily attributable
to a $4.8 million increase in gain on sales of loans, a $799,000 increase in
retail banking fees, and a $577,000 increase in net interest income. These
developments were partially offset by a $2.9 million decrease in loan servicing
fees and a $2.2 million increase in non-interest expense. Also contributing was
a $363,000 increase in income tax expense, due to higher pre-tax earnings.

         SIX MONTH OVERVIEW The Corporation's net income for the six months
ended June 30, 2001, was $12.3 million or $0.66 per diluted share compared to
$10.9 million and $0.59 in the same period last year. These amounts represented
a return on average assets of 1.03% and 1.02%, respectively, and a return on
average equity of 15.95% and 16.56%, respectively.

         The increase in net income from 2000 to 2001 was primarily attributable
to a $7.5 million increase in gain on sales of loans, a $1.5 million increase in
retail banking fees, and a $401,000 increase in net interest income. These
developments were offset in part by a $4.0 million increase in total
non-interest expense and a $3.4 million decrease in loan servicing fees. Also
contributing was a $712,000 increase in income tax expense, due to higher
pre-tax earnings.

         The following paragraphs discuss the aforementioned changes in more
detail along with other changes in the components of net income during the three
and six month periods ended June 30, 2001 and 2000.

         NET INTEREST INCOME Net interest income increased by $577,000 or 3.9%
and $401,000 or 1.3% during the three and six month periods ended June 30, 2001,
respectively, as compared to the same periods in the previous year. Net interest
income was favorably impacted in both periods by an increase in the amount of
average interest-earning assets outstanding. Average interest-earning assets
increased by $179.4 million or 8.7% during the three



                                       12
<PAGE>   14

months ended June 30, 2001, and by $224.9 million or 11.1% during the six months
ended June 30, 2001, as compared to the same periods in 2000. The principal
source of this growth occurred in the Corporation's commercial real estate and
consumer loan portfolios. Asset growth in both periods was largely funded by
increases in deposit liabilities, primarily certificates of deposit. Refer to
"Financial Condition" for additional discussion.

         Also contributing to the increase in net interest income during both
periods was an increase in average non-interest-bearing deposit liabilities,
which was the principal reason the Corporation's ratio of average
interest-earning assets to average interest-bearing liabilities improved. This
ratio improved from 110.19% during the three months ended June 30, 2000, to
112.45% during the same period in 2001, and from 109.87% during the six months
ended June 30, 2000, to 111.49% during the same period in 2001. The increase in
non-interest-bearing deposit liabilities was due in part to an increase in
custodial deposit accounts. The Corporation maintains borrowers' principal and
interest payments in these accounts on a temporary basis pending their
remittance to the third-party owners of the loans. Balances in these accounts
increased significantly because of increased loan prepayment activity, which was
brought about by a lower interest rate environment.

         The Corporation's interest rate spread decreased during both the three
and six month periods ended June 30, 2001, as compared to the same periods in
the previous year, which offset somewhat the increases in net interest income
caused by growth in average interest-earning assets and average
non-interest-bearing deposit liabilities. The Corporation's average interest
spread was 2.44% and 2.49% during the three and six month periods ended June 30,
2000, respectively. This compares to 2.18% and 2.12% during the same periods in
2001, respectively. Beginning in 1999 and continuing into 2000, market interest
rates began to increase significantly, led generally by short-term interest
rates. The yield curve also flattened substantially, and was even inverted at
times during 2000. Although higher interest rates resulted in an increase in the
average yield on the Corporation's earning assets, the cost of the Corporation's
interest-bearing liabilities increased by a greater amount, which has resulted
in an overall decline in the Corporation's average interest rate spread in
recent periods.

         Also contributing to the increase in net interest income during both
the three and six month periods ended June 30, 2001, the Corporation's interest
income from mortgage-backed and related securities benefited from a $481,000
recapture of discount on adjustable-rate mortgage-backed securities, due to
faster than anticipated prepayment activity on the underlying loans.

         The Corporation's net interest margin improved by 20 basis points in
the most recent quarter compared to the first quarter of the year. A little over
half of this increase was attributable to a declining rate environment in 2001
and the fact that the Corporation's cost of interest-bearing liabilities
declined faster than the yield on its earning assets. Also contributing was an
increase in average non-interest-bearing deposit liabilities, as previously
described. Management is uncertain, however, whether the Corporation's net
interest margin will improve in the third quarter relative to the second
quarter. First, only 10% of the Corporation's certificates of deposits are
scheduled to mature in the third quarter (compared to 30% in the fourth
quarter). Second, a little less than half of the improvement in the
Corporation's net interest margin between quarters came from the aforementioned
recapture of purchase discounts. Finally, the yield on the Corporation's
education loan portfolio is expected to decline sharply in the third quarter.
These loans carry a floating rate of interest based on various three-month
market indices, subject to a floor that is reset in July of each year. The sharp
decline in rates since last year will result in a much lower floor rate on these
loans beginning in the third quarter. As such, management expects the yield on
education loans to decline by 150 to 200 basis points in the third quarter.

         The following tables set forth information regarding the average
balances of the Corporation's assets, liabilities, and equity, as well as the
interest earned or paid and the average yield or cost of each. The information
is based on daily average balances during the three and six month periods ended
June 30, 2001 and 2000.

                                       13
<PAGE>   15



<TABLE>
<CAPTION>
Dollars in thousands                      THREE MONTHS ENDED JUNE 30, 2001        THREE MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------------------------------------------
                                          AVERAGE                   YIELD/         AVERAGE                   YIELD/
                                          BALANCE    INTEREST         COST         BALANCE     INTEREST        COST
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>            <C>          <C>           <C>           <C>
Interest-earning assets:
  Single-family mortgage loans           $780,515     $14,298        7.33%        $777,986      $14,177       7.29%
  Commercial real estate loans            484,900       9,729         8.03         424,225        8,402        7.92
  Consumer loans                          354,608       7,678         8.66         296,991        6,261        8.43
  Education loans                         201,806       4,036         8.00         197,346        4,295        8.71
--------------------------------------------------------------------------------------------------------------------
    Total loans                         1,821,829      35,741         7.85       1,696,548       33,135        7.81
Mortgage-backed and related                                           6.89                                     6.78
securities                                348,853       6,005                      327,521        5,548
Investment securities                         728           9         4.69             780           10        5.00
Interest-bearing deposits with                            421         4.35                          111        5.79
banks                                      38,701                                    7,667
Other earning assets                       26,000         421         6.48          24,148          435        7.21
--------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets       2,236,111      42,597         7.62       2,056,665       39,239        7.63
Non-interest-earning assets:
  Office properties and equipment          27,920                                   25,168
  Other assets                            106,120                                   93,691
--------------------------------------------------------------------------------------------------------------------
    Total assets                       $2,370,151                               $2,175,524
====================================================================================================================
Interest-bearing liabilities:
  Regular savings accounts               $113,161        $419        1.48%        $112,740         $417       1.48%
  Checking accounts                        76,276         153         0.80          75,584          136        0.72
  Money market accounts                   164,814       1,538         3.73         162,417        1,618        3.98
  Certificates of deposit               1,212,110      19,037         6.28       1,038,728       15,143        5.83
--------------------------------------------------------------------------------------------------------------------
    Total interest-bearing deposits     1,566,361      21,147         5.40       1,389,469       17,314        4.98
FHLB advances                             368,038       5,174         5.62         379,113        5,457        5.76
Other borrowings                           54,117         700         5.17          97,933        1,469        6.00
--------------------------------------------------------------------------------------------------------------------
    Total interest-bearing              1,988,516      27,021         5.44       1,866,515       24,240        5.19
liabilities
Non-interest-bearing liabilities:
  Non-interest-bearing deposits           198,044                                  158,881
  Other liabilities                        26,927                                   17,201
--------------------------------------------------------------------------------------------------------------------
    Total liabilities                   2,213,487                                2,042,597
Stockholders' equity                      156,664                                  132,927
--------------------------------------------------------------------------------------------------------------------
    Total liabilities and
      stockholders' equity             $2,370,151                               $2,175,524
====================================================================================================================
Net interest income                                   $15,577                                   $14,999
====================================================================================================================
Interest rate spread                                                 2.18%                                    2.44%
====================================================================================================================
Net interest income as a percent of
  average earning assets                                             2.79%                                    2.92%
====================================================================================================================
Average interest-earning assets to
average
  interest-bearing liabilities                                     112.45%                                  110.19%
====================================================================================================================
</TABLE>



                                       14


<PAGE>   16


<TABLE>
<CAPTION>
Dollars in thousands                       SIX MONTHS ENDED JUNE 30, 2001           SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------------------------------------------
                                          AVERAGE                   YIELD/         AVERAGE                   YIELD/
                                          BALANCE    INTEREST         COST         BALANCE     INTEREST        COST
--------------------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>           <C>           <C>          <C>          <C>
Interest-earning assets:
  Single-family mortgage loans           $781,315     $29,021        7.43%        $750,534      $27,165       7.24%
  Commercial real estate loans            480,681      19,379         8.06         413,824       16,330        7.89
  Consumer loans                          349,841      15,105         8.64         284,777       11,936        8.38
  Education loans                         203,355       8,116         7.98         198,163        8,359        8.44
--------------------------------------------------------------------------------------------------------------------
    Total loans                         1,815,192      71,621         7.89       1,647,298       63,791        7.74
Mortgage-backed and related                                                        336,767       11,396        6.77
securities                                372,078      12,607         6.78
Investment securities                         738          17         4.74             818           21        5.06
Interest-bearing deposits with                                                      10,158          264        5.21
banks                                      30,083         709         4.71
Other earning assets                       25,781         864         6.69          23,904          846        7.08
--------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets       2,243,872      85,818         7.65       2,018,945       76,318        7.56
Non-interest-earning assets:
  Office properties and equipment          27,546                                   24,972
  Other assets                            102,182                                   92,398
--------------------------------------------------------------------------------------------------------------------
    Total assets                       $2,373,600                               $2,136,315
====================================================================================================================
Interest-bearing liabilities:
  Regular savings accounts               $108,625        $801        1.47%        $110,364         $815       1.48%
  Checking accounts                        75,323         305         0.81          74,429          272        0.73
  Money market accounts                   160,055       3,147         3.93         166,967        3,246        3.89
  Certificates of deposit               1,213,561      38,334         6.32       1,013,157       28,636        5.65
--------------------------------------------------------------------------------------------------------------------
    Total interest-bearing deposits     1,557,564      42,587         5.47       1,364,917       32,969        4.83
FHLB advances                             368,966      10,550         5.72         395,722       11,290        5.71
Other borrowings                           86,113       2,543         5.90          77,018        2,322        6.03
--------------------------------------------------------------------------------------------------------------------
    Total interest-bearing              2,012,643      55,680         5.53       1,837,657       46,581        5.07
liabilities
Non-interest-bearing liabilities:
  Non-interest-bearing deposits           181,668                                  150,119
  Other liabilities                        25,475                                   16,597
--------------------------------------------------------------------------------------------------------------------
    Total liabilities                   2,219,786                                2,004,373
Stockholders' equity                      153,814                                  131,942
--------------------------------------------------------------------------------------------------------------------
    Total liabilities and
stockholders' equity                   $2,373,600                               $2,136,315
====================================================================================================================
Net interest income                                   $30,138                                   $29,737
====================================================================================================================
Interest rate spread                                                 2.12%                                    2.49%
====================================================================================================================
Net interest income as a percent of
  average earning assets                                             2.69%                                    2.95%
====================================================================================================================
Average interest-earning assets to
  average interest-bearing liabilities                             111.49%                                  109.87%
====================================================================================================================
</TABLE>


         PROVISION FOR LOAN LOSSES Provision for loan losses was $437,000 and
$112,000 during the three months ended June 30, 2001 and 2000, respectively. It
was $831,000 and $304,000 during the six month periods ended as of the same
dates respectively. In general, provisions for loan losses recorded during the
three and six month periods ended June 30 2000, approximated the Corporation's
actual net charge-off activity during the period. However, beginning in the
third quarter of 2000, the Corporation recorded approximately $200,000 per
quarter in provision for loan losses over-and-above its actual net charge-off
activity. This additional provision was recorded to maintain the Corporation's
allowance for loan losses at a level deemed appropriate by management. This
addition was considered prudent in light of anticipated growth in the
Corporation's loans held for investment, an increased mix of higher-risk
consumer and commercial real estate loans, and modest increases in
non-performing and classified assets. On an annualized basis, net charge-offs
were 0.06% and 0.05% of average loans outstanding during the 2001 periods,
respectively. These amounts compared to 0.03% for both the three and six month
periods in 2000, respectively.

         As of June 30, 2001 and December 31, 2000, the Corporation's allowance
for loan losses was $8.4 million and $8.0 million, respectively, or 0.44% of
loans held for investment. The allowance for loan and real estate losses was
158% and 188% of non-performing assets as of the same dates. Although management
believes that the Corporation's present level of allowance for loan losses is
adequate, there can be no assurance that future

                                       15


<PAGE>   17

adjustments to the allowance will not be necessary, which could adversely affect
the Corporation's results of operations. For additional discussion, refer to
"Financial Condition--Non-Performing Assets".

         NON-INTEREST INCOME Non-interest income for the three months ended June
30, 2001 and 2000, was $11.5 million and $8.5 million, respectively. The
following paragraphs discuss the principal components of non-interest income and
the primary reasons for their changes from 2000 to 2001.

         Retail banking fees and service charges increased by $799,000 or 14.4%
during the three months ended June 30, 2001, as compared to the same period in
the previous year. Most of this improvement can be attributed to 12.9% in growth
in the number of checking accounts serviced by the Corporation since December
31, 1999. Also contributing to the growth in retail banking fees was a $201,000
or 28.1% increase and a $163,000 or 18.0% increase in fees from customers' use
of debit cards and ATMs, respectively.

         Premiums and commissions on annuity and insurance sales increased by
$244,000 or 37.6% during the three months ended June 30, 2001, as compared to
the same period in the previous year. The Corporation's principal sources of
premium and commission revenues are from sales of tax-deferred annuity
contracts, credit life and disability insurance policies, mortgage loan
insurance policies, and retail brokerage services. The increase was principally
the result of a $121,000 or 54.4% increase in commissions from the sales of
credit life and disability insurance policies and a $70,000 increase in premiums
and commissions from retail brokerage services. In the fourth quarter of 2000,
the Corporation expanded the services it offers customers by making available to
them the purchase of mutual funds, variable-annuities, and other equity and debt
securities.

         Loan servicing fees decreased by $2.9 million from $997,000 during the
three months ended June 30, 2000, to $(1.9) million during the same period in
2001. As interest rates declined in 2001, actual loan prepayment activity was
much higher than that which had originally been estimated for the Corporation's
mortgage servicing rights. Because of such prepayment activity, the Corporation
recorded $2.9 million in losses in the most recent quarter on its mortgage
servicing rights over-and-above that which management considered to be normal
periodic amortization. This compared to no such losses in the second quarter of
2000.

         Excluding the effects of the aforementioned loss, but net of normal
periodic amortization of mortgage servicing rights, loan servicing fees were
essentially unchanged during the three months ended June 30, 2001, as compared
to the same period in the previous year. Increases in loans serviced for others
caused by new loan sales were substantially offset by decreases caused by normal
principal amortization, maturities, and prepayments.

         Subsequent to June 30, 2001, interest rates have remained at low
levels, particularly on the short-end of the yield curve. If this interest rate
environment persists, or if interest rates decline further, the Corporation will
most likely record additional large losses on its mortgage servicing rights
related to faster than anticipated prepayment activity. Such losses, however,
would most likely continue to be offset by relatively high levels of gains on
sales of mortgage loans, as described in the following paragraph. It should be
noted, however, that further declines in interest rates or increases in market
expectations for future prepayments may also expose the Corporation to
unfavorable mark-to-market adjustments against its portfolio of mortgage
servicing rights. Although management believes that most of the Corporation's
loans that prepay are replaced by a new loan to the same customer or even a
different customer (thus preserving the future servicing cash flow), GAAP
requires mark-to-market losses resulting from increases in market expectations
for future prepayments to be recorded in the current period. However, the
offsetting gain on the sale of the new loan, if any, cannot be recorded until
the customer actually prepays the old loan and the new loan is sold in the
secondary market. Management will continue to closely monitor the carrying value
of its mortgage servicing rights and will record mark-to-market adjustments as
appropriate.

         Gains on sales of loans increased by $4.8 million from $506,000 during
the three months ended June 30, 2000, to $5.3 million during the same period in
2001. This increase was primarily attributable to a $274 million or over 950%
increase in the Corporation's mortgage loan sales. This increase was due in part
to low interest rates during the most recent quarter that resulted in increased
originations of fixed-rate mortgage loans, as well as increased conversions of
adjustable-rate loans into fixed-rate loans, both of which are generally sold in
the secondary market. Interest rates have stabilized in recent months, but
remain at relatively low levels. If this


                                       16

<PAGE>   18

environment continues, or if interest rates decline further, the Corporation is
likely to experience relatively high levels of refinance activity, as well as
conversions by borrowers of their adjustable-rate loans into fixed-rate loans.
However, because rates have stabilized in recent months, management does not
expect such activity to be as great in the third quarter as it was in the most
recent quarter, although there can be no assurances.

         Other non-interest income increased by $142,000 or 18.9% during the
three months ended June 30, 2001, as compared to the same period in the previous
year. This increase was due in part to the receipt of a large capital
distribution from a motel joint venture owned by First Enterprises, Inc., the
Corporation's wholly-owned subsidiary. Also contributing was an increase in fees
from customers' conversions of adjustable-rate mortgage loans into fixed-rate
mortgage loans due to the low interest rate environment, as previously
described.

         Non-interest income for the six months ended June 30, 2001 and 2000,
was $22.2 million and $16.0 million, respectively. Most of the increase in 2001
was the result of a $7.5 million increase in gains on sales of loans from
$796,000 in 2000 to $8.3 million in 2001. Also contributing was a $1.5 million
or 14.2% increase in retail banking fees and a $291,000 or 21.5% increase in
premiums and commissions on annuity and insurance sales. These developments were
offset in part by a $3.4 million or over 160% decrease in loan servicing fees.
The explanations for these changes are substantially the same as those given in
previous paragraphs.

         NON-INTEREST EXPENSE Non-interest expense for the three months ended
June 30, 2001 and 2000, was $16.8 million and $14.6 million, respectively, which
was 2.83% and 2.67% of average assets during such periods, respectively. The
following paragraphs discuss the principal components of non-interest expense
and the primary reasons for their changes from 2000 to 2001.

         Compensation and employee benefits increased by $764,000 or 8.5% during
the three months ended June 30, 2001, as compared to the same period in the
previous year. In general, this increase was due to normal annual merit
increases and to growth in the number of banking facilities operated by the
Corporation. Since December 31, 1999, the Corporation has opened eleven banking
facilities and closed one. During the remainder of 2001, the Corporation intends
to open up to four more banking facilities, although there can be no assurances.
As of June 30, 2001, the Corporation had 952 full-time equivalent employees.
This compares to 897 and 852 as of December 31, 2000, and June 30, 2000,
respectively.

         Also contributing to the increase in compensation and employee benefits
was an increase in commissions paid, due primarily to increased originations of
mortgage loans, as previously described.

         Occupancy and equipment expenses increased by $459,000 or 22.7% during
the three months ended June 30, 2001, as compared to the same period in the
previous year. In addition, communications, postage, and office supplies expense
increased by $358,000 or over 35% over the same period. These increases were
primarily attributable to general growth in the number of banking facilities
operated by the Corporation, as well as increases in the number of full-time
equivalent employees and in the number of customers served by the Corporation.

         Also contributing to the increase in occupancy and equipment expense
was the installation of new teller software and hardware in the retail branch
network. In addition, the Corporation closed a limited-service facility and
relocated two supermarket offices. These actions resulted in a $336,000
charge-off of obsolete teller equipment and leasehold improvements.

         ATM and debit card transaction costs increased by $118,000 or 16.3%
during the three months ended June 30, 2001, as compared to the same period in
the previous year. This increase can be attributed to increased use by the
Corporation's customers of ATM and debit card networks, as well as an increase
in the number of ATMs operated by the Corporation.

         Advertising and marketing costs increased by $81,000 or 14.3% during
the three months ended June 30, 2001, as compared to the same period in the
previous year. This increase can be attributed to growth in the number of
banking facilities operated by the Corporation, as previously described, as well
as an increase in the number of market areas serviced by the Corporation.




                                       17


<PAGE>   19

         Other non-interest expense increased by $424,000 or approximately 40%
during the three months ended June 30, 2001, as compared to the same period in
the previous year. This increase was caused by a variety of factors, including
increased losses from forgery, fraud, and other irregularities associated with
customers' deposit accounts, and increased costs related to servicing of loans
for the Federal National Mortgage Association (FNMA) and the Federal Home Loan
Bank (FHLB). Under the terms of the servicing agreements with these agencies,
the Corporation is required to pay a full month's interest when certain loans
are repaid, regardless of the actual date of the loan payoff. A declining
interest rate environment and increased prepayment activity in 2001 resulted in
increased payment of loan pay-off interest to FNMA and FHLB.

         Non-interest expense for the six months ended June 30, 2001 and 2000,
was $32.5 million and $28.5 million, respectively, which was 2.74% and 2.66% of
average assets during such periods, respectively. This increase was primarily
the result of a $1.9 million or 10.9% increase in compensation and employee
benefits. Also contributing was an $802,000 or 20.5% increase in occupancy and
equipment expense, a $600,000 or 28.1% increase in other non-interest expense,
and a $529,000 or 25.9% increase in communications, postage, and office
supplies. Contributing to a lesser degree was a $151,000 or 10.6% increase in
ATM and debit card transaction costs and a $15,000 or 1.3% increase in
advertising and marketing. The explanations for these changes are substantially
the same as those given in previous paragraphs for the three month periods.

         INCOME TAX EXPENSE Income tax expense for the three months ended June
30, 2001 and 2000, was $3.5 million and $3.1 million, respectively, or 35.4% and
35.5% of pretax income, respectively. Income tax expense for the six months
ended June 30, 2001 and 2000, was $6.7 million and $6.0 million, respectively,
or 35.4% and 35.5% of pretax income, respectively.

         SEGMENT INFORMATION The following paragraphs contain a discussion of
the financial performance of each of the Corporation's reportable segments
(hereafter referred to as "profit centers") for the three and six month periods
ended June 30, 2001 and 2000. Refer to the table in Note 5 of the Corporation's
Unaudited Consolidated Financial Statements, included herein under Part I, Item
I, "Financial Statements", for a summary of the after-tax profit (loss) of each
of the Corporation's profit centers.

                  MORTGAGE BANKING Profits from the Corporation's mortgage
banking activities during the most recent quarter were down $1.2 million or over
93% compared to the same period in the previous year. On a year-to-date basis,
profits were down $271,000 or 17.1%. Loan origination volumes and mortgage
servicing fees are the principal drivers of performance in this profit center.
In the first six months of 2001, the Corporation's mortgage banking operation
originated $583.4 million in single-family residential loans compared to $253.0
million during the same period in 2000. However, due to the low interest rate
environment in 2001, most of this increase was caused by an increase in
refinance activity, as described elsewhere in this report. In such environments,
a substantial portion of the internal revenue allocated to the mortgage banking
profit center for loan originations is offset by an increase in internal charges
for lost servicing value. This methodology for measuring results in the mortgage
banking profit center recognizes that during periods of high refinance activity
the Corporation incurs significant costs related to the preservation of existing
mortgage customer relationships, rather than the creation of new customer
relationships. As a result, periods of high refinance activity generally result
in lower earnings in the mortgage banking profit center, despite a substantial
increase in loan origination volumes. Refer to "Non-GAAP Adjustments", below,
for additional discussion.

                  RESIDENTIAL LOANS Profits from the Corporation's residential
loan portfolio declined by $463,000 or 22.0% and $789,000 or 18.4% during the
three and six month periods ended June 30, 2001, respectively, as compared to
the same periods in the previous year. These declines occurred despite a 3.9%
and 8.7% increase in the average assets assigned to this profit center during
the three and six month periods, respectively, as compared to the same periods
in 2000. In 2001, the performance of this profit center was impacted by a
significant increase in charge-offs of the internally-capitalized origination
costs assigned to the loans in the portfolio. These charge-offs were $1.0
million and $1.5 million during the three and six month periods ended June 30,
2001, compared to only $95,000 and $106,000 during the same periods in the
previous year, respectively (refer to "Non-GAAP



                                       18

<PAGE>   20

Adjustments", below, for additional information). These increases resulted from
increased conversions of the profit center's adjustable-rate mortgage loans into
fixed-rate loans, as discussed elsewhere in this report.

                  The performance of this profit center also continues to be
impacted by a higher interest rate environment in the previous year, which
resulted in a larger increase in the cost of the profit center's funding sources
than it did its yield on earning assets. This profit center is funded by a mix
of deposit liabilities and wholesale borrowings. The Corporation's average cost
of interest-bearing liabilities increased by 25 basis points between the second
quarter of 2000 and the same quarter in 2001. The increase was 46 basis points
between the six month periods. In contrast, the yield on the profit center's
single-family residential loans increased by only 4 and 19 basis points between
the three and six month periods, respectively. In addition, the yield on the
mortgage-backed securities included in this profit center declined between the
periods. This decline occurred because the adjustable-rate mortgage loans the
Corporation swapped into mortgage-backed securities ("MBSs") in the third
quarter of 2000 carried a lower rate of interest than the securities that were
already in the MBS portfolio.

                  The performance of this profit center benefited during the
most recent quarter from the $481,000 recapture of discount on adjustable-rate
mortgage-backed securities, as described elsewhere in this report.

                  COMMERCIAL REAL ESTATE LENDING Profits from commercial real
estate lending decreased by $78,000 or 6.5% and $337,000 or 13.7% during the
three and six month periods ended June 30, 2001, respectively, as compared to
the same periods in 2000. These declines occurred despite a 14.2% and 15.9%
increase in the average assets assigned to this profit center during the three
and six month periods, respectively, as compared to the same periods in the
previous year. The performance of this profit center was adversely affected by
higher interest rates in 2000, which resulted in a larger increase in the cost
of the profit center's funding sources than it did in its yield on earning
assets. This profit center is funded almost entirely by deposit liabilities. The
Corporation's average cost of interest-bearing deposits increased by 42 basis
points between the second quarter of 2000 and the same quarter in 2001. The
increase was 64 basis points between the six month periods. The yield on
commercial real estate loans, however, increased by only 11 basis points and 17
basis points between the same three and six month periods, respectively.

                  CONSUMER LENDING Profits from the Corporation's consumer
lending activities increased by $108,000 or 12.2% and $12,000 or 0.7% during the
three and six month periods ended June 30, 2001, respectively, as compared to
the same periods in the previous year. These improvements were principally the
result of a substantial increase in the profit center's average assets, which
increased by $60.9 million or 19.2% and $68.5 million or 22.5% during the three
and six months ended June 30, 2001, respectively, as compared to the same
periods in 2000. The improvement caused by increased volume was partially offset
in the second quarter by a narrower interest rate margin in the profit center.
This development was caused by a higher interest rate environment in the
previous year, which resulted in a larger increase in the profit center's cost
of funds than it did in the gross yield on its assets. This profit center is
funded almost entirely by deposit liabilities. The Corporation's average cost of
interest-bearing deposits increased by 42 basis points between the second
quarter of 2000 and the same quarter in 2001. The increase was 64 basis points
between the six month periods. The yield on consumer loans, however, increased
by only 23 basis points and 26 basis points between the same three and six month
periods, respectively.

                  EDUCATION LENDING Profits from education lending decreased by
$115,000 or 11.0% and $234,000 or 12.8% during the three and six month periods
ended June 30, 2001, respectively, as compared to the same periods in the
previous year. These decreases were principally the result of a sharp decline in
market rates of interest in the first and second quarter of 2001, which resulted
in a 71 basis point and 46 basis point decline in the yield on education loans
during the three and six month periods ended June 30, 2001, respectively, as
compared to the same periods in 2000. In contrast, the cost of the Corporation's
money market accounts, which are the primary funding source for education loans,
declined by only 25 basis points during the most recent quarter compared to the
same quarter in 2000. On a year-to-date basis, the cost of the Corporation's
money market accounts increased by four basis points in 2001 compared to the
same period in the previous year.


                                       19

<PAGE>   21

                  The earnings of the education lending profit center are
expected to decline further in the third quarter of 2001. As previously noted,
education loans carry a floating rate of interest based on various three-month
market indices. This rate, however, is subject to a floor that is reset in July
of each year. The sharp decline in market rates since last year will result in a
much lower floor rate on these loans beginning in the third quarter. As such,
management expects the yield on education loans to decline by 150 to 200 basis
points in the third quarter.

                  INVESTMENT AND MORTGAGE-RELATED SECURITIES Profits from the
Corporation's investment securities portfolio declined by $300,000 or over 61%
and $699,000 or over 63% during the three and six month periods ended June 30,
2001, as compared to the same periods in 2000. These decreases were due in part
to a $20.4 million or 7.6% and $30.7 million or 11.0% decline in average assets
assigned to this profit center during the three and six month periods in 2001,
respectively, as compared to the same periods in the previous year. Also
contributing were higher interest rates in 2000, which resulted in a significant
increase in the cost of the profit center's funding sources. However, the yield
on the profit center's assets did not benefit from higher rates in 2000 because
such assets consist primarily of fixed-rate securities. In addition, no new
securities were purchased between June 2000 and June 2001.

                  OTHER SEGMENTS This segment consists primarily of the parent
holding company, as well as some of the Bank's wholly-owned subsidiaries. The
reduced loss from this segment was principally the result of lower interest
expense in the holding company. This change was caused by a higher level of
borrowings in the first quarter and second quarters of 2000, the proceeds of
which were largely used to repurchase the Corporation's stock.

                  NON-GAAP ADJUSTMENTS Non-GAAP adjustments were $1.5 million in
the second quarter of 2001 compared to $(1.1) million in the second quarter of
2000. Year-to-date, non-GAAP adjustments in 2001 were $1.7 million compared to
$(1.8) million in 2000. The changes between these periods were due primarily to
the fact that in 2001 a substantial portion of the efforts of the mortgage
banking profit center were devoted to the refinance of existing loans rather
than the origination of new loans. As such, the Corporation recorded
significantly higher levels of internal charge-offs related to its mortgage
servicing operations. In addition, the residential loan profit center
experienced a substantially higher level of charge-offs related to
internally-capitalized origination costs.

                  NET COST TO ACQUIRE AND MAINTAIN DEPOSIT LIABILITIES In
addition to the after-tax performance of the aforementioned profit centers,
management of the Corporation closely monitors the net cost to acquire and
maintain deposit liabilities. The Corporation's profit centers are allocated a
share of the net cost to acquire and maintain deposit liabilities according to
their proportionate use of such deposits as a funding source. As such, changes
in the net cost to acquire and maintain deposit liabilities will impact most of
the Corporation's profit centers.

                  The net cost to acquire and maintain deposit liabilities was
1.22% and 1.14% of average deposit liabilities outstanding during the three
months ended June 30, 2001 and 2000, respectively. The net cost for the six
month periods ending as of the same dates was 1.28% and 1.16%, respectively. The
increases between these periods was due primarily to the fact that the
Corporation opened seven new retail banking facilities between June 30, 2000,
and June 30, 2001.

FINANCIAL CONDITION

         OVERVIEW The Corporation's total assets increased by $94.5 million or
4.0% during the six months ended June 30, 2001. This increase was the result of
a $132.0 million or 7.4% increase in loans held for investment that was funded
in part by a $108.7 million or 6.4% increase in deposit liabilities. Also
funding growth in the loan portfolio was a $93.5 million or 22.9% decrease in
mortgage-backed and related securities. Proceeds from these sources were also
used to cover a $35.1 million or 7.1% decline in FHLB advances and other
wholesale borrowings.

         MORTGAGE-BACKED AND RELATED SECURITIES The Corporation's aggregate
investment in its mortgage-backed and related securities portfolios declined by
$93.5 million or 22.9% during the six months ended June 30, 2001. This decline
was the result of faster prepayment activity on the underlying loans due to the
lower interest rate



                                       20

<PAGE>   22

environment. The proceeds from such amortization were generally reinvested in
the Corporation's portfolio of loans held for investment, as previously
described.

         LOANS HELD FOR INVESTMENT The Corporation's portfolio of loans held for
investment increased by $132.0 million or 7.4% during the six months ended June
30, 2001. This increase was caused by the Corporation's purchase of $177.0
million in adjustable-rate residential mortgage loans originated by third-party
financial institutions. During this period, the interest rate environment had a
significant impact on the ability of the Corporation to maintain its
internally-originated portfolio of loans held for investment. This situation
developed because low interest rates tend to increase customer preference for
fixed-rate mortgage loans, as opposed to adjustable-rate loans. In addition, a
low interest rate environment encourages borrowers to refinance their existing
adjustable-rate residential loans into fixed-rate loans to "lock-in" a lower
long-term rate. Given the Corporation's policy of selling these types of loans
in the secondary market, its internally-originated portfolio of adjustable-rate
residential loans declined significantly in the most recent period. Although the
Corporation was able to maintain internal growth in commercial real estate,
consumer, and education loans, the Corporation purchased adjustable-rate
mortgage loans from three third-party financial institutions in an effort to
maintain growth in its level of earning assets. These loans were subjected to
substantially the same underwriting process as the Corporation's own loans.
These loans are located throughout the U.S., with no single state making up a
significant portion of the overall principal. The loans have adjustable-rates
that reset annually at an average margin of approximately 200 to 250 basis
points above the one-year U.S. Treasury bill. Most of the loans have fixed
interest rates for terms of three to seven years before their first adjustment
date. The loans were purchased by First Capital Holdings, Inc., the
Corporation's wholly-owned investment subsidiary in Nevada.

         The Corporation will continue to explore alternatives to maintain
growth in its interest-earning assets in the near term. These alternatives
include, but are not limited to, the purchase of additional adjustable-rate
residential mortgage loans from third-party financial institutions, the purchase
of mortgage-backed and related securities, and the retention of certain
fixed-rate loans that are currently sold by the Corporation in the secondary
market. It is anticipated that such assets would be funded by growth in deposit
liabilities or FHLB advances and other wholesale borrowings. However, there are
many considerations involved in such decisions and there can be no assurances
that the Corporation will elect to continue any of these strategies to increase
its interest-earning assets.

         DEPOSIT LIABILITIES The Corporation's deposit liabilities increased by
$108.7 million or 6.4% during the six months ended June 30, 2001. Management
attributes this growth to recent volatility in other financial markets, which
has made traditional bank financial offerings more attractive to consumers. The
Corporation's deposit liabilities were also impacted by a $40.8 million or over
240% increase in custodial deposit accounts. The Corporation maintains
borrowers' principal and interest payments in such accounts on a temporary basis
pending their remittance to the third-party owners of the loans. Balances in
these accounts were at a high level during the recent period due to significant
increases in loan prepayment activity.

         FHLB ADVANCES AND ALL OTHER BORROWINGS The Corporation's FHLB advances
and all other borrowings declined by $35.1 million or 7.1% during the six months
ended June 30, 2001. This decrease was primarily funded by an increase in
deposit liabilities, as previously described.

         NON-PERFORMING ASSETS The Corporation's non-performing assets
(consisting of non-accrual loans, real estate acquired through foreclosure or
deed-in-lieu thereof, and real estate in judgement) amounted to $5.4 million or
0.22% of total assets at June 30, 2001, compared to $4.4 million or 0.19% of
total assets at December 31, 2000. At June 30, 2001 and December 31, 2000,
non-performing assets included $1.2 million and $1.4 million, respectively, of
real estate in judgement and delinquent loans to three independent builders that
were experiencing problems with a number of small single-family projects.
Although foreclosure on some or all of these loans is likely, management does
not expect to incur significant losses. The Corporation's allowance for loan and
real estate losses was 158% and 188% of non-performing assets as of the same
dates, respectively.

         In addition to non-performing assets, at June 30, 2001 and December 31,
2000, management was closely monitoring $2.8 million in assets which it had
classified as doubtful, substandard, or special mention, but which were
performing in accordance with their terms.


                                       21

<PAGE>   23

LIQUIDITY AND CAPITAL RESOURCES

         The Bank is required under applicable federal regulations to maintain
sufficient liquidity to ensure safe and sound operation. The Bank's objective is
to maintain liquid assets (generally defined as cash and due from banks,
interest-bearing deposits with banks, investment securities, and mortgage-backed
and related securities) equal to at least 4% of its liquidity base (generally
defined as short-term deposit liabilities and other borrowings). At June 30,
2001, the Bank's was in compliance with its management policies with respect to
liquidity.

         The Corporation's stockholders' equity ratio as of June 30, 2001, was
6.35% of total assets. The Corporation's long-term objective is to maintain its
stockholders' equity ratio in a range of approximately 6.0% to 6.5%, which is
consistent with return on asset and return on equity goals of at least 1.00% and
16.5%, respectively.

         The Bank is also required to maintain specified amounts of capital
pursuant to regulations promulgated by the OTS and the FDIC. The Bank's
objective is to maintain its regulatory capital in an amount sufficient to be
classified in the highest regulatory capital category (i.e., as a "well
capitalized" institution). At June 30, 2001, the Bank's regulatory capital
exceeded all regulatory minimum requirements as well as the amount required to
be classified as a "well capitalized" institution.

         The Corporation paid cash dividends of $4.2 million and $3.7 million
during the six months ended June 30, 2001 and 2000, respectively. These amounts
equated to dividend payout ratios of 34.5% and 33.5% of the net income in such
periods, respectively. It is the Corporation's objective to maintain its
dividend payout ratio in a range of 25% to 35% of net income. However, the
Corporation's dividend policy and/or dividend payout ratio will be impacted by
considerations such as the level of stockholders' equity in relation to the
Corporation's stated goal, as previously described, regulatory capital
requirements for the Bank, as previously described, and certain dividend
restrictions in effect for the Bank. Furthermore, unanticipated or non-recurring
fluctuations in earnings may impact the Corporation's ability to pay dividends
and/or maintain a given dividend payout ratio.

         On July 24, 2001, the Corporation's Board of Directors declared a
regular quarterly dividend of $0.12 per share payable on September 6, 2001, to
shareholders of record on August 16, 2001.

         During the six months ended June 30, 2001, the Corporation repurchased
50,000 shares of common stock at a cost of $659,000 under its 1999 stock
repurchase plan (the "1999 Plan"). As of June 30, 2001, 169,506 shares remain to
be purchased under the 1999 Plan, while 913,554 shares remain to be purchased
under the 2000 stock repurchase plan (the "2000 Plan"). On April 24, 2001, the
Corporation's Board of Directors extended the 1999 and 2000 Plans for another
twelve months. The shares may be repurchased from time to time in open-market
transactions during the next twelve months as, in the opinion of management,
market conditions warrant. The repurchased shares will be held as treasury stock
and will be available for general corporate purposes.

         During the six months ended June 30, 2001, the Corporation reissued
123,524 shares of common stock out of its inventory of treasury stock with a
cost basis of $1.6 million. In general, these shares were issued upon the
exercise of stock options by, or the issuance of restricted stock to, employees
and directors of the Corporation.

OTHER MATTERS

         On May 23, 2001, the Corporation entered into a definitive agreement to
acquire American Community Bankshares, Inc. ("ACB"), the parent company of
American Community Bank, headquartered in Wausau, Wisconsin. According to the
terms of the agreement, ACB will merge into the Corporation, with ACB
shareholders exchanging each share of ACB common stock for 4.5 shares of the
Corporation's common stock. The transaction will be accounted for using the
purchase method of accounting. The amount of goodwill recorded in connection
with this transaction will depend on the estimated fair value that will be
assigned to the identifiable tangible and intangible assets and liabilities of
ACB, including a deposit-based intangible asset. Management has not completed a
deposit portfolio valuation analysis as of the date of this report or estimated
the fair value of ACB's tangible assets


                                       22

<PAGE>   24

and liabilities. As such, management is not able to estimate the value of the
deposit-based intangible or goodwill at this time. The transaction is expected
to be tax-free to ACB shareholders receiving the Corporation's stock.

         The acquisition, which has been approved by the boards of directors of
each company, is expected to close during the fourth quarter of 2001, subject to
ACB shareholder approval, regulatory approvals, and various other conditions of
closing.


ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Corporation manages the exposure of its operations to changes in
interest rates ("interest rate risk" or "market risk") by monitoring its ratios
of interest-earning assets to interest-bearing liabilities within one- and
three-year maturities and/or repricing dates (i.e., its one- and three-year
"gaps"). Management has sought to control the Corporation's one- and three-year
gaps, thereby limiting the affects of changes in interest rates on its future
earnings, by selling substantially all of its long-term, fixed-rate,
single-family mortgage loan production, investing in adjustable-rate
single-family mortgage loans, investing in consumer and education loans, which
generally have shorter terms to maturity and/or floating rates of interest, and
investing in commercial real estate loans, which also tend to have shorter terms
to maturity and/or floating rates of interest. The Corporation also invests from
time-to-time in adjustable-rate and short- and medium-term fixed-rate CMOs and
MBSs. As a result of this strategy, the Corporation's exposure to interest rate
risk is significantly impacted by its funding of the aforementioned asset groups
with deposit liabilities, FHLB advances, and other borrowing sources that tend
to have average terms to maturity of less than one year or carry floating rates
of interest.

         In general, it is management's goal to maintain the Corporation's
one-year gap in a range between 0% and -30% and its three-year gap in a range
between 0% and -10%. Management believes this strategy takes advantage of the
fact that market yield curves tend to be upward sloping, which increases the
spread between the Corporation's earning assets and interest-bearing
liabilities. Furthermore, management of the Corporation does not believe that
this strategy exposes the Corporation to unacceptable levels of interest rate
risk as evidenced by the fact that the Corporation's three-year gap is generally
maintained in a narrow band around zero, which implies that the Corporation is
exposed to little interest rate risk over a three-year horizon.

         Although management believes that its asset/liability management
strategies reduce the potential effects of changes in interest rates on the
Corporation's operations, material and prolonged increases in interest rates may
adversely affect the Corporation's operations because the Corporation's
interest-bearing liabilities which mature or reprice within one year are greater
than the Corporation's interest-earning assets which mature or reprice within
the same period. Alternatively, material and prolonged decreases in interest
rates may benefit the Corporation's operations.

         The Bank is also required by the OTS to estimate the sensitivity of its
net portfolio value of equity ("NPV") to immediate and sustained changes in
interest rates and to measure such sensitivity on at least a quarterly basis.
NPV is defined as the estimated net present value of an institution's existing
assets, liabilities, and off-balance sheet instruments at a given level of
market interest rates. In general, it is management's goal to limit estimated
changes in the Bank's NPV under specified interest rate scenarios such that the
Bank will continue to be classified by the OTS as an institution with minimal
exposure to interest rate risk.

         As of June 30, 2001, the Corporation was in compliance with its
management polices with respect to exposure to interest rate risk. Furthermore,
there was no material change in its interest rate risk exposure since December
31, 2000.


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<PAGE>   25


PART II--OTHER INFORMATION

ITEM 1--LEGAL PROCEEDINGS

Refer to Note 4 of the Corporation's Consolidated Financial Statements.

ITEM 2--CHANGES IN SECURITIES

None.

ITEM 3--DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4--SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None.

ITEM 5--OTHER INFORMATION

None.

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

During the three months ended June 30, 2001, First Federal Capital Corp filed
the following report on Form 8-K:

         Report filed May 23, 2001. The report included a press release
announcing that First Federal Capital Corp entered into an Agreement and Plan of
Merger with American Community Bankshares, Inc. Other items included: Agreement
and Plan of Merger dated May 23, 2001.



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<PAGE>   26


                                   SIGNATURES

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



                                                   FIRST FEDERAL CAPITAL CORP


/s/ Jack C. Rusch                                  August 13, 2001
Jack C. Rusch
President and Chief Executive Officer
(duly authorized officer)


/s/ Michael W. Dosland                             August 13, 2001
Michael W. Dosland
Senior Vice President and
Chief Financial Officer









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