<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....................................MARCH 31, 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 May 11, 2001: 18,409,298
(EXCLUDES 1,532,332 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..............................................................................9

     Item 3--Quantitative and Qualitative Disclosures about Market Risk.............................17

PART II--OTHER INFORMATION

     Item 1--Legal Proceedings......................................................................18

     Item 2--Changes in Securities..................................................................18

     Item 3--Defaults Upon Senior Securities........................................................18

     Item 4--Submission of Matters to Vote of Security Holders......................................18

     Item 5--Other Information......................................................................18

     Item 6--Exhibits and Reports on Form 8-K.......................................................18


SIGNATURES..........................................................................................19
</TABLE>

















                                       1
<PAGE>   3


                          PART I--FINANCIAL INFORMATION

ITEM 1--FINANCIAL STATEMENTS


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, 2001, and December 31, 2000
                                                                                    MARCH 31       DECEMBER 31
                                                                                      2001             2000
ASSETS                                                                            (UNAUDITED)
------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>              <C>
Cash and due from banks                                                              $45,299,318      $25,445,819
Interest-bearing deposits with banks                                                  76,435,568       13,054,493
Investment securities available for sale, at fair value                                  729,063          817,141
Mortgage-backed and related securities:
  Available for sale, at fair value                                                  307,225,075      331,236,909
  Held for investment, at cost (fair value of $72,557,371 and $76,456,829,
    respectively)                                                                     72,031,790       77,298,853
Loans held for sale                                                                   56,569,096       22,973,887
Loans held for investment, net                                                     1,739,663,673    1,772,476,651
Federal Home Loan Bank stock                                                          26,009,400       25,568,100
Accrued interest receivable, net                                                      19,015,198       19,701,004
Office properties and equipment                                                       27,240,388       26,781,010
Mortgage servicing rights, net                                                        25,659,691       23,280,472
Intangible assets                                                                     11,235,272       11,490,392
Other assets                                                                           3,031,265        2,600,835
------------------------------------------------------------------------------------------------------------------

  Total assets                                                                    $2,410,144,797   $2,352,725,566
==================================================================================================================


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

Deposit liabilities                                                               $1,778,024,141   $1,699,252,162
Federal funds purchased                                                                        -       20,000,000
Securities sold under agreements to repurchase                                       100,000,000      100,000,000
Federal Home Loan Bank advances                                                      348,660,000      368,205,000
Other borrowings                                                                       1,937,397        2,641,370
Advance payments by borrowers for taxes and insurance                                  4,628,408        1,023,712
Accrued interest payable                                                               3,929,594        4,047,875
Other liabilities                                                                     21,227,513       11,005,952
------------------------------------------------------------------------------------------------------------------
  Total liabilities                                                                2,258,407,053    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 1,611,632 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                                                                    126,595,175      122,921,606
Treasury stock, at cost                                                             (15,377,352)     (15,127,142)
Unearned restricted stock                                                              (128,333)        (142,083)
Accumulated non-owner adjustments to equity, net                                       4,114,027        2,362,887
------------------------------------------------------------------------------------------------------------------
  Total stockholders' equity                                                         151,737,744      146,549,495
------------------------------------------------------------------------------------------------------------------

  Total liabilities and stockholders' equity                                      $2,410,144,797   $2,352,725,566
==================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.



















                                       2
<PAGE>   4


CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2001 and 2000
<TABLE>
<CAPTION>
                                                                                  THREE MONTHS ENDED MARCH 31
                                                                             --------------------------------------
                                                                                    2001              2000
                                                                                (UNAUDITED)        (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                   <C>
Interest on loans                                                                   $35,880,486        $30,655,689
Interest on mortgage-backed and related securities                                    6,602,240          5,848,014
Interest and dividends on investments                                                   738,009            575,572
-------------------------------------------------------------------------------------------------------------------
  Total interest income                                                              43,220,735         37,079,275
-------------------------------------------------------------------------------------------------------------------
Interest on deposit liabilities                                                      21,440,368         15,655,771
Interest on FHLB advances and all other borrowings                                    7,218,714          6,685,389
-------------------------------------------------------------------------------------------------------------------
  Total interest expense                                                             28,659,082         22,341,160
-------------------------------------------------------------------------------------------------------------------
  Net interest income                                                                14,561,653         14,738,115
Provision for loan losses                                                               394,273            192,472
-------------------------------------------------------------------------------------------------------------------
  Net interest income after provision for loan losses                                14,167,380         14,545,643
-------------------------------------------------------------------------------------------------------------------
Retail banking fees and service charges                                               5,763,983          5,054,626
Premiums and commissions                                                                747,064            700,618
Loan servicing fees, net                                                                548,104          1,002,048
Gain on sales of loans                                                                3,005,139            289,555
Other income                                                                            626,182            498,380
-------------------------------------------------------------------------------------------------------------------
  Total non-interest income                                                          10,690,472          7,545,227
-------------------------------------------------------------------------------------------------------------------
Compensation and employee benefits                                                    9,535,907          8,410,905
Occupancy and equipment                                                               2,230,584          1,887,153
Communications, postage, and office supplies                                          1,224,594          1,053,025
ATM and debit card transaction costs                                                    740,323            706,889
Advertising and marketing                                                               476,220            542,977
Amortization of intangibles                                                             257,565            256,815
Other expenses                                                                        1,248,615          1,072,257
-------------------------------------------------------------------------------------------------------------------
  Total non-interest expense                                                         15,713,808         13,930,021
-------------------------------------------------------------------------------------------------------------------
  Income before income taxes                                                          9,144,044          8,160,849
Income tax expense                                                                    3,247,291          2,898,460
-------------------------------------------------------------------------------------------------------------------

  Net income                                                                         $5,896,753         $5,262,389
===================================================================================================================


PER SHARE INFORMATION
-------------------------------------------------------------------------------------------------------------------
Diluted earnings per share                                                                $0.32              $0.29
Basic earnings per share                                                                   0.32               0.29
Dividends paid per share                                                                   0.11               0.09
===================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.












                                       3
<PAGE>   5


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Months Ended March 31, 2001 and 2000
<TABLE>
<CAPTION>
                                        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                                          5,262,389                                                  5,262,389
Securities valuation adjustment,
  net of income taxes                                                                           (407,325)      (407,325)
                                                                                                           ---------------
Net income and non-owner
  adjustments to equity                                                                                        4,855,064
                                                                                                           ---------------
Dividends paid                                    (1,650,212)                                                (1,650,212)
Exercise of stock options                              55,116        160,650                                     215,766
Purchase of treasury stock                                        (1,708,663)                                 (1,708,663)
Amortization of restricted stock                     (17,850)                      230,646                       212,796
--------------------------------------------------------------------------------------------------------------------------

Balance at March 31, 2000          $36,534,227   $110,578,540   ($15,936,683)    ($360,537)  ($1,615,570)   $129,199,977
==========================================================================================================================


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                                          5,896,753                                                  5,896,753
Securities valuation adjustment,
  net of income taxes                                                                          1,751,140       1,751,140
                                                                                                          ----------------
Net income and non-owner
  Adjustments to equity                                                                                        7,647,893
                                                                                                          ----------------
Dividends paid                                    (2,021,800)                                                 (2,021,800)
Exercise of stock options                           (382,634)        409,165                                      26,531
Purchase of treasury stock                                          (659,375)                                   (659,375)
Amortization of restricted stock                      181,250                       13,750                       195,000
--------------------------------------------------------------------------------------------------------------------------

Balance at March 31, 2001          $36,534,227   $126,595,175   ($15,377,352)    ($128,333)   $4,114,027    $151,737,744
==========================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.





















                                       4
<PAGE>   6


CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2001 and 2000
<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED MARCH 31
                                                                                -------------------------------------
                                                                                      2001               2000
                                                                                   (UNAUDITED)       (UNAUDITED)
---------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                  <C>
Cash flows from operating activities:
  Net income                                                                           $5,896,753         $5,262,389
  Adjustments to reconcile net income to net cash provided (used) by
      operations:
      Provision for loan and real estate losses, net                                      362,264            191,979
      Net loan costs deferred                                                           (588,332)          (221,412)
      Amortization (including mortgage servicing rights)                                1,894,214          1,385,315
      Depreciation                                                                        652,218            619,250
      Gains on sales of loans                                                         (3,005,139)          (289,555)
      Decrease (increase) in accrued interest receivable                                  685,806        (1,351,180)
      Increase (decrease) in accrued interest payable                                   (118,281)            357,362
      Increase in current and deferred income taxes                                     2,818,766          2,244,013
      Other accruals and prepaids, net                                                    226,847          (462,054)
---------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations before loan originations and sales                8,825,116          7,736,107
  Loans originated for sale                                                         (184,145,619)       (18,960,124)
  Sales of loans originated for sale or transferred from held for investment          213,572,984         20,425,025
---------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations                                                  38,252,481          9,201,008
---------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Decrease (increase) in interest-bearing deposits with banks                        (63,381,075)          5,159,328
  Maturities of investment securities                                                     100,000            100,000
  Principal repayments on mortgage-backed and related securities available for         26,842,833         12,120,759
      sale
  Principal repayments on mortgage-backed and related securities held for               5,254,032          7,595,135
      investment
  Loans originated for investment                                                   (156,414,299)      (165,270,400)
  Loans purchased for investment                                                                -       (13,050,836)
  Loan principal repayments                                                           124,840,888         73,925,847
  Sales of real estate                                                                    587,059            239,774
  Purchases of office properties and equipment                                        (1,287,208)          (903,719)
  Purchases of mortgage servicing rights                                                (220,322)                  -
  Other, net                                                                            (336,593)          (274,753)
---------------------------------------------------------------------------------------------------------------------
    Net cash used by investing activities                                            (64,014,685)       (80,358,865)
---------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Increase in deposit liabilities                                                      78,771,979         43,848,308
  Long-term advances from Federal Home Loan Bank                                                -        100,000,000
  Repayment of long-term Federal Home Loan Bank advances                              (9,000,000)        (7,750,000)
  Decrease in short-term Federal Home Loan Bank borrowings                           (10,545,000)      (164,298,000)
  Increase in securities sold under agreements to repurchase                                    -         75,000,000
  Decrease in federal funds purchased                                                (20,000,000)                  -
  Increase (decrease) in other borrowings                                               (703,973)          3,452,777
  Increase (decrease) in advance payments by borrowers for taxes and insurance          3,604,696          (897,517)
  Purchase of treasury stock                                                            (659,375)        (1,708,663)
  Dividends paid                                                                      (2,021,800)        (1,650,212)
  Other, net                                                                            6,169,176          1,299,476
---------------------------------------------------------------------------------------------------------------------
    Net cash provided by financing activities                                          45,615,703         47,296,169
---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks                                     19,853,499       (23,861,688)
Cash and due from banks at beginning of period                                         25,445,819         65,566,021
---------------------------------------------------------------------------------------------------------------------
    Cash and due from banks at end of period                                          $45,299,318        $41,704,333
=====================================================================================================================
Supplemental disclosures of cash flow information:
  Interest and dividends received on loans and investments                            $43,906,540        $35,728,095
  Interest paid on deposits and borrowings                                             28,777,363         21,983,798
  Income taxes paid                                                                       428,525            654,448
  Transfer of loans from held for investment to held for sale                          63,264,439            320,001
=====================================================================================================================
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.
















                                       5
<PAGE>   7


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 month period
ended March 31, 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 the period. Diluted
earnings per share are 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 month periods ended March 31, 2001 and 2000, is as follows:
<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED MARCH 31
                                                --------------------------------------------------------------------
                                                               2001                               2000
                                                ---------------------------------  ---------------------------------
                                                          BASIC          DILUTED              BASIC         DILUTED
--------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                   <C>                <C>             <C>
Net income                                           $5,896,753       $5,896,753         $5,262,389      $5,262,389
====================================================================================================================
Average common shares issued, net
  of actual treasury shares                          18,359,513       18,359,513         18,329,986      18,329,986
Potential common shares issued under
  stock options (treasury stock method)                       -          144,984                  -          95,367
--------------------------------------------------------------------------------------------------------------------
Average common shares and
  potential common shares                            18,359,513       18,504,497         18,329,986      18,425,353
====================================================================================================================
Earnings per share                                        $0.32            $0.32              $0.29           $0.29
====================================================================================================================
</TABLE>

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

         DIVISIONS AND PROFIT CENTERS  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









                                       6
<PAGE>   8

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.

         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 table on
the following page summarizes the profit (loss) and average assets of each of
the Corporation's reportable segments for the three month periods ended March
31, 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 1.36% and 1.20% of
average deposit liabilities outstanding during the three months ended March 31,
2001 and 2000, respectively.






                                       7
<PAGE>   9

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED MARCH 31
                                                    -----------------------------------------------------------------
                                                                 2001                              2000
                                                    -------------------------------   -------------------------------
PROFIT CENTER                                         PROFIT (LOSS) AVERAGE ASSETS     PROFIT (LOSS)  AVERAGE ASSETS
---------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>             <C>               <C>             <C>
Mortgage banking                                        $1,232,487     $80,114,332          $335,287     $41,411,099
Residential loans                                        1,850,407     973,183,632         2,188,859     854,592,950
Commercial real estate lending                             988,558     501,451,055         1,260,065     425,816,320
Consumer lending                                           815,518     367,169,176           876,114     291,127,814
Education lending                                          662,729     215,083,849           787,434     208,842,589
Investment and mortgage-related securities                 211,862     246,087,022           615,181     286,986,534
Other segments                                            (92,287)         670,648         (169,611)         297,540
Non-GAAP adjustments                                       227,479     (6,726,389)         (630,940)    (11,970,502)
---------------------------------------------------------------------------------------------------------------------
  Net income/total average assets                       $5,896,753  $2,377,033,325        $5,262,389  $2,097,104,344
=====================================================================================================================
</TABLE>

NOTE 6--RECENT ACCOUNTING STANDARDS

         In 1998 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and for Hedging Activities" ("SFAS 133"). This standard established
new rules for the recognition and measurement of derivatives and hedging
activities and requires all derivatives to be recorded on the balance sheet at
fair value. SFAS 133 also established special accounting rules for derivatives
that meet the definition of a hedge. Changes in the fair value of derivatives
that do not meet this definition are required to be included in earnings in the
period of change. The Corporation adopted SFAS 133 on January 1, 2001, and the
adoption did not have a material impact on the Corporation's operations or
financial condition.

         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. The new
standard is effective for transactions occurring after March 31, 2001. The
Corporation adopted SFAS 140 on April 1, 2001. The Corporation does not expect
the adoption to have a material impact on its operations or financial condition,
although there can be no assurances.





















                                       8
<PAGE>   10


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

         OVERVIEW  The Corporation's net income for the three months ended March
31, 2001, was $5.9 million or $0.32 per diluted share compared to $5.3 million
and $0.29 in the same period last year. These amounts represented a return on
average assets of 0.99% and 1.00%, respectively, and a return on average equity
of 15.64% and 16.07%, respectively.

         The increase in net income from 2000 to 2001 was primarily attributable
to a $2.7 million increase in gain on sales of loans and a $709,000 increase in
retail banking fees. These developments were offset in part by a $1.8 increase
in total non-interest expense and a $454,000 decrease in loan servicing fees.
Also contributing was a $349,000 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
month periods ended March 31, 2001 and 2000.

         NET INTEREST INCOME  Net interest income decreased by $176,000 or 1.2%
during the three months ended March 31, 2001, as compared to the same period in
the previous year. This decline occurred in spite of the fact that the
Corporation's average interest-earning assets increased by $270.4 million or
13.6% between these periods. The principal source of this growth occurred in the
Corporation's commercial real estate and consumer loan portfolios. Contributing
to a lesser extent were increases in the Corporation's single-family residential
loan and mortgage-backed and related securities portfolios. This growth was
largely funded by increases in deposit liabilities, primarily certificates of
deposit. Refer to "Financial Condition" for additional discussion.

         The Corporation's interest rate spread declined from 2.55% during the
three months ended March 31, 2000, to 2.05% during the same period in 2001,
offsetting the increase in net interest income caused by growth in
interest-earning assets. 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. Lately, however, market interest rates have
declined dramatically, particularly on the short-end of the yield curve. Because
of the tendency of the Corporation's assets to price off a longer end of the
yield curve than its liabilities, management


                                       9
<PAGE>   11

expects the Corporation's interest rate spread to begin to improve in the second
quarter of 2001. However, management is not certain whether the Corporation's
average interest rate spread for the entire year will exceed the average level
experienced for all of 2000.

         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 month periods ended March
31, 2001 and 2000.
<TABLE>
<CAPTION>
Dollars in thousands                            THREE MONTHS ENDED MARCH 31, 2001        THREE MONTHS ENDED MARCH 31, 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                 $782,116     $14,724        7.53%        $723,081      $12,987       7.18%
  Commercial real estate loans                  476,462       9,650         8.10         403,423        7,929        7.86
  Consumer loans                                345,074       7,427         8.61         272,563        5,675        8.33
  Education loans                               204,903       4,080         7.96         198,980        4,064        8.17
--------------------------------------------------------------------------------------------------------------------------
    Total loans                               1,808,555      35,881         7.94       1,598,047       30,656        7.67
Mortgage-backed and related                     395,302       6,602         6.68         346,014        5,848        6.76
  securities
Investment securities                               748           9         4.79             856           11        5.14
Interest-bearing deposits with                   21,465         288         5.36          12,649          153        4.84
  banks
Other earning assets                             25,563         441         6.91          23,660          411        6.95
--------------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets             2,251,633      43,221         7.68       1,981,226       37,079        7.49
Non-interest-earning assets:
  Office properties and equipment                27,173                                   24,776
  Other assets                                   98,227                                   91,102
--------------------------------------------------------------------------------------------------------------------------
    Total assets                             $2,377,033                               $2,097,104
==========================================================================================================================
Interest-bearing liabilities:
  Regular savings accounts                     $104,089        $381        1.47%        $107,987         $399       1.48%
  Checking accounts                              74,371         152         0.82          73,274          135        0.74
  Money market accounts                         154,937       1,610         4.16         170,926        1,628        3.81
  Certificates of deposit                     1,215,011      19,297         6.35         987,587       13,493        5.47
--------------------------------------------------------------------------------------------------------------------------
    Total interest-bearing deposits           1,548,408      21,440         5.54       1,339,774       15,656        4.67
FHLB advances                                   369,893       5,376         5.81         412,331        5,833        5.66
Other borrowings                                118,599       1,843         6.21          56,635          853        6.02
--------------------------------------------------------------------------------------------------------------------------
    Total interest-bearing liabilities        2,036,900      28,659         5.63       1,808,740       22,341        4.94
Non-interest-bearing liabilities:
  Non-interest-bearing deposits                 165,296                                  141,370
  Other liabilities                              24,036                                   15,987
--------------------------------------------------------------------------------------------------------------------------
    Total liabilities                         2,226,232                                1,966,097
Stockholders' equity                            150,801                                  131,007
--------------------------------------------------------------------------------------------------------------------------
Total liabilities and
  stockholders' equity                       $2,377,033                               $2,097,104
==========================================================================================================================
Net interest income                                          $14,562                                   $14,738
==========================================================================================================================
Interest rate spread                                                       2.05%                                    2.55%
==========================================================================================================================
Net interest income as a percent of average
  earning assets                                                           2.59%                                    2.98%
==========================================================================================================================
Average interest-earning assets to average
  interest-bearing liabilities                                           110.54%                                  109.54%
==========================================================================================================================
</TABLE>

         PROVISION FOR LOAN LOSSES  Provision for loan losses was $394,000 and
$192,000 during the three months ended March 31, 2001 and 2000, respectively. In
general, provisions for loan losses recorded during the three month period ended
March 31, 2000, approximated the Corporation's actual net charge-off activity
during the period. However, in the most recent quarter, the Corporation recorded
$195,000 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 significant growth in the
Corporation's loans held for investment in recent periods, an increased mix of
higher-risk consumer and commercial real estate loans, and a modest increase in
non-performing and classified assets. On an annualized basis, net charge-offs
were 0.04% and 0.03% of average loans outstanding during these periods,
respectively.




                                       10
<PAGE>   12

         As of March 31, 2001 and December 31, 2000, the Corporation's allowance
for loan losses was $8.2 million and $8.0 million, respectively, or 0.47% and
0.45% of loans held for investment, respectively. The allowance for loan and
real estate losses was 166% and 188% of non-performing assets as of the same
dates, respectively. Although management believes that the Corporation's present
level of allowance for loan losses is adequate, there can be no assurance that
future 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
March 31, 2001 and 2000, was $10.7 million and $7.5 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 $709,000 or 14.0%
during the three months ended March 31, 2001, as compared to the same period in
the previous year. This improvement was due in part to an 8.5% increase in the
number of checking accounts serviced by the Corporation since March 31, 2000.
Also contributing to the growth in retail banking fees was a $156,000 or 23.9%
increase and a $97,000 or 11.4% increase in fees from customers' use of debit
cards and ATMs, respectively.

         Premiums and commissions on annuity and insurance sales increased by
$46,000 or 6.6% during the three months ended March 31, 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 primarily due to increased revenue
from the sales of credit life and disability insurance policies.

         Loan servicing fees decreased by $454,000 from $1.0 million during the
three months ended March 31, 2000, to $548,000 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 $447,000 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 first quarter of 2000.

         Excluding the effects of the aforementioned loss, but net of normal
periodic amortization of mortgage servicing rights, loan servicing fees
decreased by $7,000 or 0.7% during the three months ended March 31, 2001,
compared to the same period in the previous year. Because of generally higher
interest rates in 2000, customer demand for fixed-rate mortgage loans declined
substantially during such period. The Corporation generally sells such loans in
the secondary market, but retains the servicing. Accordingly, increases in loans
serviced for others caused by new loan sales were substantially offset in recent
periods by decreases caused by normal principal amortization, maturities, and
prepayments.

         Subsequent to March 31, 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 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 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.




                                       11
<PAGE>   13

         Gains on sales of mortgage loans increased by $2.7 million from
$290,000 during the three months ended March 31, 2000, to $3.0 million during
the same period in 2001. This increase was primarily attributable to a $193
million or over 940% increase in the Corporation's mortgage loan sales. This
increase was due in part to declining 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. Subsequent to March
31, 2001, interest rates have remained at relatively low levels. If this
environment continues, or if interest rates decline further, the Corporation is
likely to experience high levels of refinance activity, as well as increased
conversions by borrowers of their adjustable-rate loans into fixed-rate loans.
Such activity is expected to result in relatively high levels of gains on sales
of mortgage loans, although there can be no assurances. To a certain extent,
such gains are expected to be offset by declines in the carrying value of the
Corporation's mortgage servicing rights, as described in the previous paragraph.

         Other non-interest income increased by $128,000 or over 25% during the
three months ended March 31, 2001, as compared to the same period in the
previous year. This increase was principally due to increased 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 EXPENSE Non-interest expense for the three months ended
March 31, 2001 and 2000, was $15.7 million and $13.9 million, respectively,
which was 2.65% and 2.66% 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 $1.1 million or 13.4%
during the three months ended March 31, 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. During the remainder of 2001, the Corporation intends to increase
its net number of retail banking facilities by three or more, although there can
be no assurances. As of March 31, 2001, the Corporation had 921 full-time
equivalent employees. This compares to 897 and 819 as of December 31, 2000, and
March 31, 2000, respectively. Also contributing to the increase in compensation
and employee benefits was an increase in the cost of employee healthcare
benefits.

         Occupancy and equipment expense increased by $343,000 or 18.2% during
the three months ended March 31, 2001, as compared to the same period in the
previous year. In addition, communications, postage, and office supplies expense
increased by $172,000 or 16.3% over the same period. These increases were
primarily attributable to growth in the number of banking facilities operated by
the Corporation, as previously described, as well as increases in the number of
full-time equivalent employees and in the number of customers served by the
Corporation.

         Other non-interest expense increased by $176,000 or 16.4% during the
three months ended March 31, 2001, as compared to the same period in the
previous year. This increase was caused by a variety of factors, including
increased costs related to the operation and disposition of foreclosed real
estate, increased losses from forgery, fraud, and other irregularities
associated with customers' deposit accounts, and increased insurance costs.

         INCOME TAX EXPENSE  Income tax expense for the three months ended March
31, 2001 and 2000, was $3.2 million and $2.9 million, respectively, or 35.5% of
pretax income in both periods.

         SEGMENT INFORMATION  The following paragraphs contain a discussion of
the financial performance of each the Corporation's reportable segments
(hereafter referred to as "profit centers") for the three month periods ended
March 31, 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 increased by $897,000 or over 265% during the three months
ended March 31, 2001, as compared to the same period in the




                                       12
<PAGE>   14

previous year. Loan origination volumes and mortgage servicing fees are the
principal drivers of performance in this profit center. A lower interest rate
environment in the most recent period resulted in a significant increase in
originations of single-family residential loans. In the first quarter of 2001,
the Corporation's mortgage banking operation originated $238.7 million in
single-family residential loans compared to $85.5 million in the first quarter
of 2000. The favorable impact of increased originations was offset somewhat by
decreased earnings from mortgage servicing, as more fully described in "Results
of Operations--Non-Interest Income".

                  RESIDENTIAL LOANS  Profits from the Corporation's residential
loan portfolio decreased by $338,000 or 15.5% during the three months ended
March 31, 2001, as compared to the same period in the previous year. This
decline occurred despite a $118.6 million or 13.9% increase in average assets in
this profit center between the periods. The performance of this profit center
was negatively impacted 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 by a mix of deposit
liabilities and wholesale borrowings. The Corporation's average cost of
interest-bearing liabilities increased by 69 basis points between the first
quarter of 2000 and the same quarter in 2001. In contrast, the yield on its
single-family residential loans increased by only 35 basis points. In addition,
the yield on the mortgage-backed securities included in this profit center
declined by 18 basis points 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.

                  Also contributing to the decrease in earnings in this profit
center was a sharp decline in interest rates during the most recent quarter.
This decline resulted in increased conversions of the profit center's
adjustable-rate mortgage loans into fixed-rate loans (for reasons cited
elsewhere in this report). Such conversions resulted in accelerated charge-offs
of the internally-capitalized origination costs assigned to the loans in the
portfolio.

                  COMMERCIAL REAL ESTATE LENDING  Profits from commercial real
estate lending declined by $272,000 or approximately 22% during the three months
ended March 31, 2001, as compared to the same period in the previous year. This
decline occurred despite a $75.6 million or 17.8% increase in average assets in
this profit center between the periods. 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 87 basis points between the first quarter of 2000 and the same
quarter in 2001. The yield on commercial real estate loans, however, increased
by only 24 basis points between the same periods. Refer to "Results of
Operations--Net Interest Income" for additional discussion.

                  The earnings of this profit center were also negatively
impacted by a 16 basis point increase in the Corporation's net cost to acquire
and maintain deposit liabilities (refer to separate discussion, below).

                  CONSUMER LENDING Profits from consumer lending decreased by
$61,000 or 6.9% during the three months ended March 31, 2001, as compared to the
same period in the previous year. This decrease occurred despite a $76.0 million
or approximately 26% increase in average assets in this profit center between
the periods. The performance of the consumer lending profit center was
influenced 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 87 basis points between the first quarter of 2000 and the same
quarter in 2001. The yield on consumer loans, however, increased by only 28
basis points between the same periods. Refer to "Results of Operations--Net
Interest Income" for additional discussion.

                  The performance of the consumer lending profit center was also
adversely affected by a 16 basis point increase in the Corporation's net cost to
acquire and maintain deposit liabilities (refer to separate discussion, below).

                  EDUCATION LENDING Profits from education lending declined by
$125,000 or 15.8% during the three months ended March 31, 2001, as compared to
the same period in the previous year. Education loans consist



                                       13
<PAGE>   15

of floating-rate loans that reprice quarterly off of a three-month treasury or
three-month commercial paper index. The sharp decline in interest rates during
the most recent quarter, particularly on the short-end of the yield curve,
resulted in a 21 basis point decline in the yield on education loans between the
first quarter of 2000 and the first quarter of 2001. In addition, the cost of
the profit center's primary funding source, which consists of money market
deposit accounts, increased by 35 basis points between the periods (refer to
"Results of Operations--Net Interest Income"). Finally, the earnings of this
profit center were also affected negatively by a 16 basis point increase in the
Corporation's net cost to acquire and maintain deposit liabilities (refer to
separate discussion, below).

                  INVESTMENT AND MORTGAGE-RELATED SECURITIES  Profits from the
Corporation's investment securities portfolio decreased by $403,000 or over 65%
during the three months ended March 31, 2001, as compared to the same period in
the previous year. This decrease was due in part to a $40.9 million or 14.3%
decline in average assets in this profit center between the periods. 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 of primarily fixed-rate securities. In addition, no new
securities were purchased between March 2000 and March 2001. Finally, the
results of this profit center were also impacted by a 16 basis point increase in
the Corporation's net cost to acquire and maintain deposit liabilities (refer to
separate discussion, below).

                  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 of 2000, the proceeds of which were largely used
to repurchase the Corporation's stock.

                  NON-GAAP ADJUSTMENTS  Non-GAAP adjustments were $227,000 in
the first quarter of 2001 compared to $(631,000) in the first quarter of 2000.
This change was due in part to the fact that the mortgage banking profit center
originated fewer loans for the Corporation's residential lending profit center
in the most recent quarter than it did in the same quarter last year. As such,
the Corporation recorded a smaller internal adjustment to compensate the
mortgage banking profit center for its efforts related to such originations. In
addition, in the first quarter of 2001, the mortgage banking profit center
experienced a higher level of internal charge-offs related to its mortgage
servicing operations due to the lower interest rate environment. Finally, the
residential loan profit center experienced a higher level of charge-offs on
internally-capitalized origination costs due to the same low rate environment.

                  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
during the three months ended March 31, 2001 and 2000, was 1.36% and 1.20% of
average deposit liabilities outstanding, respectively. The increase between
periods was due primarily to the fact that the Corporation opened ten new retail
banking facilities between the first quarter of 2000 and the current period.

FINANCIAL CONDITION

         OVERVIEW  The Corporation's total assets increased by $57.4 million or
2.4% during the three months ended March 31, 2001. This increase was principally
funded by a $78.8 million or 4.6% growth in deposit liabilities, although a
portion of this growth was also used to reduce federal funds purchased and
Federal Home Loan Bank ("FHLB") advances by $39.5 million or 10.2% in the
aggregate. The increase in the Corporation's total assets was primarily the
result of a $63.4 million or almost 500% increase in overnight investments
caused by the temporary investment of proceeds from loan sales. Also
contributing was a $33.6 million or over 145% increase in residential






                                       14
<PAGE>   16

mortgage loans held for sale. These increases were offset by declines in loans
held for investment and mortgage-backed and related securities.

         OVERNIGHT INVESTMENTS  Interest-bearing deposits with banks, which
consist of overnight investments at the FHLB and short-term money market
accounts, increased by $63.4 million from $13.1 million at December 31, 2000, to
$76.4 million at March 31, 2001. The large amount of overnight investments at
March 31, 2001, was caused by the temporary investment of proceeds from loan
sales. These investments will be used to pay down borrowings as they mature or
will be reinvested in other interest-earning assets.

         LOANS HELD FOR SALE  The Corporation's loans held for sale increased by
$33.6 million or over 145% during the three months ended March 31, 2001. This
increase was due to an interest rate environment that increased consumer demand
for fixed-rate mortgage loans and resulted in increased conversions of
adjustable-rate loans into fixed-rate loans, as previously described. Both of
these categories of loans are classified as "held for sale" until the date of
the sale, which typically occurs within 30 to 60 days of origination and/or
conversion.

         LOANS HELD FOR INVESTMENT  The Corporation's portfolio of loans held
for investment decreased by $32.8 million or 1.9% during the three months ended
March 31, 2001. During this period, the current 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 in the most recent period. Some of this decline,
however, was offset by internal growth in commercial real estate, consumer, and
education loans.

         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 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
through the liquidation of overnight investments. 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
$78.8 million or 4.6% during the three months ended March 31, 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 $29.0 million or over
170% 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 quarter due to significant
increases in loan prepayment activity.

         FHLB ADVANCES AND FEDERAL FUNDS PURCHASED  The Corporation's FHLB
advances and federal funds purchased decreased by $39.5 million or 10.2% during
the three months ended March 31, 2001. This decrease was funded by proceeds from
the sale of loans held for investment, as well as growth 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 $5.1 million or
0.21% of total assets at March 31, 2001, compared to $4.4 million or 0.19% of
total assets at December 31, 2000. At March 31, 2001 and December 31, 2000,
non-performing assets included $1.4 million of 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.




                                       15
<PAGE>   17

The Corporation's allowance for loan and real estate losses was 166% and 188% of
non-performing assets as of the same dates, respectively.

         In addition to non-performing assets, at March 31, 2001, management was
closely monitoring $1.9 million in assets which it had classified as doubtful,
substandard, or special mention, but which were performing in accordance with
their terms. This compares to $2.8 million in such assets at December 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

         The Bank is required under applicable federal regulations to maintain
liquid assets (generally defined as cash and investment-grade short-term
securities, as well as certain mortgage-related securities and obligations of
the United States) equal to at least 4% of its "liquidity base" (generally
defined as short-term deposit liabilities and other borrowings). The Bank was in
full compliance with these regulations during the three months ended March 31,
2001.

         The Corporation's stockholders' equity ratio as of March 31, 2001, was
6.30% 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 March 31, 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 $2.0 million and $1.7 million
during the three months ended March 31, 2001 and 2000, respectively. These
amounts equated to dividend payout ratios of 34.3% and 31.4% 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 which include, but are not limited to, 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 April 24, 2001, the Corporation's Board of Directors declared a
regular quarterly dividend of $0.12 per share payable on June 7, 2001, to
shareholders of record on May 17, 2001.

         During the three months ended March 31, 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 March 31, 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 three months ended March 31, 2001, the Corporation reissued
34,700 shares of common stock out of its inventory of treasury stock with a cost
basis of $409,000. In general, these shares were issued upon the exercise of
stock options by employees and directors of the Corporation.





                                       16
<PAGE>   18

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 March 31, 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.











                                       17
<PAGE>   19


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

         The Corporation held its Annual Meeting of Shareholders on April 25,
2001. The following matters were voted upon at that meeting:

         1. The election of three nominees for the Board of Directors, who will
serve for a three-year term, was voted upon by the Corporation's shareholders.
The nominees, all of whom were elected, are set forth in the table below. The
Inspector of Election certified the following vote tabulations:
<TABLE>
<CAPTION>
                  Nominee                   Votes For                 Votes Withheld
                  -------                   ---------                 --------------
<S>                                         <C>                       <C>
                  Patrick J. Luby           15,412,171                    147,758
                  Don P. Rundle             15,419,252                    140,677
                  Jack C. Rusch             15,396,099                    163,830
</TABLE>
         2. Ratification of the appointment by the Board of Directors of Ernst
and Young LLP as the Corporation's independent auditors for the year ending
December 31, 2001:
<TABLE>
<CAPTION>
                  Votes For                 Votes Against                Abstain
                  ---------                 -------------                -------
<S>                                         <C>                          <C>
                  15,508,571                    19,980                    31,377
</TABLE>

ITEM 5--OTHER INFORMATION

None.

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

None.



















                                       18
<PAGE>   20


                                   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                                     May 11, 2001
Jack C. Rusch
President and Chief Executive Officer
(duly authorized officer)


/s/ Michael W. Dosland                                May 11, 2001
Michael W. Dosland
Senior Vice President and
Chief Financial Officer































                                       19