<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, 1999
                              -------------------------------------
[ ] 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                                                           54601
LA CROSSE, WISCONSIN                                                  (Zip code)
(Address of principal executive office)



       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 6, 1999: 18,906,790
(EXCLUDES 1,034,840 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............................................14


PART II--OTHER INFORMATION

     Item 1--Legal Proceedings................................................23

     Item 2--Changes in Securities............................................23

     Item 3--Defaults Upon Senior Securities..................................23

     Item 4--Submission of Matters to Vote of Security Holders................23

     Item 5--Other Information................................................23

     Item 6--Exhibits and Reports on Form 8-K.................................23


SIGNATURES....................................................................24
</TABLE>






                                       1


<PAGE>   3


                          PART I--FINANCIAL INFORMATION

ITEM 1--FINANCIAL STATEMENTS


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1999, and December 31, 1998

<TABLE>
<CAPTION>
                                                                                    JUNE 30           DECEMBER 31
                                                                                      1999               1998
ASSETS                                                                             (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------

<S>                                                                              <C>                <C>
Cash and due from banks                                                          $    28,074,422    $    43,642,705
Interest-bearing deposits with banks                                                   9,861,770         96,549,775
Investment securities available for sale, at fair value                                  937,885                  -
Mortgage-backed and related securities:
  Available for sale, at fair value                                                  259,215,514        204,108,879
  Held for investment, at cost (fair value of $121,440,118 and $102,908,423,
     respectively)                                                                   122,567,557        102,500,238
Loans held for sale                                                                   39,007,075         72,002,437
Loans held for investment, net                                                     1,320,844,992      1,177,525,727
Federal Home Loan Bank stock                                                          14,681,300         12,485,500
Accrued interest receivable, net                                                      15,435,569         13,888,538
Office properties and equipment                                                       24,613,432         25,082,582
Mortgage servicing rights, net                                                        22,468,518         21,103,459
Intangible assets                                                                     12,974,369         13,485,366
Other assets                                                                           4,062,114          4,128,510
-------------------------------------------------------------------------------------------------------------------

  Total assets                                                                   $ 1,874,744,517    $ 1,786,503,716
-------------------------------------------------------------------------------------------------------------------


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

Deposit liabilities                                                              $ 1,445,719,924    $ 1,460,135,660
Federal Home Loan Bank advances and other borrowings                                 280,135,340        189,777,984
Advance payments by borrowers for taxes and insurance                                  5,788,889          1,762,190
Accrued interest payable                                                               2,033,973          1,947,823
Other liabilities                                                                     12,683,732         10,195,412
-------------------------------------------------------------------------------------------------------------------
  Total liabilities                                                                1,746,361,858      1,663,819,069
-------------------------------------------------------------------------------------------------------------------
Preferred stock, $.10 par value, 5,000,000 shares authorized, none outstanding                 -                  -
Common stock, $.10 par value, 20,000,000 shares authorized, 19,941,630 shares          1,994,163          1,994,163
issued and outstanding, including 1,058,381 and 1,580,795 shares of treasury stock,
respectively
Additional paid-in capital                                                            34,540,065         34,540,065
Retained earnings                                                                     99,344,782         97,291,806
Treasury stock, at cost                                                               (7,074,678)       (12,722,834)
Unearned restricted stock                                                               (923,724)        (1,256,266)
Non-owner adjustments to equity, net                                                     502,051          2,837,713
-------------------------------------------------------------------------------------------------------------------
  Total stockholders' equity                                                         128,382,659        122,684,647
-------------------------------------------------------------------------------------------------------------------

  Total liabilities and stockholders' equity                                     $ 1,874,744,517    $ 1,786,503,716
-------------------------------------------------------------------------------------------------------------------
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.







                                       2
<PAGE>   4


CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>

                                                          THREE MONTHS ENDED JUNE 30
                                                          --------------------------
                                                             1999           1998
                                                          (UNAUDITED)    (UNAUDITED)
------------------------------------------------------------------------------------

<S>                                                       <C>           <C>
Interest on loans                                         $25,072,729   $ 23,251,584
Interest on mortgage-backed and related securities          6,068,609      3,846,266
Interest and dividends on investments                         439,256      1,586,874
------------------------------------------------------------------------------------
  Total interest income                                    31,580,594     28,684,724
------------------------------------------------------------------------------------
Interest on deposit liabilities                            14,696,783     14,472,820
Interest on FHLB advances and other borrowings              3,425,329      2,734,017
------------------------------------------------------------------------------------
  Total interest expense                                   18,122,112     17,206,837
------------------------------------------------------------------------------------
  Net interest income                                      13,458,482     11,477,887
Provision for loan losses                                      77,409         88,734
------------------------------------------------------------------------------------
  Net interest income after provision for loan losses      13,381,073     11,389,153
------------------------------------------------------------------------------------
Retail banking fees and service charges                     5,109,768      3,635,739
Loan servicing fees, net                                      968,317     (1,504,941)
Premiums and commissions on annuity and insurance sales       590,087        435,141
Gain on sales of loans                                      2,040,665      3,760,722
Other income                                                  680,144      1,165,252
------------------------------------------------------------------------------------
  Total non-interest income                                 9,388,981      7,491,913
------------------------------------------------------------------------------------
Compensation and employee benefits                          7,529,480      6,437,939
Occupancy and equipment                                     1,796,793      1,734,563
ATM and debit card expense                                    694,974        597,983
Advertising and marketing                                     567,819        556,566
Amortization of intangibles                                   257,943        123,191
Other expenses                                              2,337,114      1,897,258
------------------------------------------------------------------------------------
  Total non-interest expense                               13,184,123     11,347,500
------------------------------------------------------------------------------------
  Income before income taxes                                9,585,931      7,533,566
Income tax expense                                          3,419,849      2,835,715
------------------------------------------------------------------------------------

  Net income                                              $ 6,166,082   $  4,697,851
------------------------------------------------------------------------------------

PER SHARE INFORMATION
------------------------------------------------------------------------------------
Diluted earnings per share                                $      0.32   $       0.24
Basic earnings per share                                         0.34           0.25
Dividends paid per share                                         0.09           0.07
------------------------------------------------------------------------------------
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.


                                       3
<PAGE>   5


CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>
                                                            SIX MONTHS ENDED JUNE 30
                                                           -------------------------
                                                              1999          1998
                                                           (UNAUDITED)   (UNAUDITED)
------------------------------------------------------------------------------------

<S>                                                       <C>           <C>
Interest on loans                                         $48,989,080   $ 49,034,804
Interest on mortgage-backed and related securities         11,744,863      6,463,076
Interest and dividends on investments                       1,579,250      2,818,487
------------------------------------------------------------------------------------
  Total interest income                                    62,313,193     58,316,367
------------------------------------------------------------------------------------
Interest on deposit liabilities                            30,371,973     28,241,334
Interest on FHLB advances and other borrowings              6,253,578      6,683,717
------------------------------------------------------------------------------------
  Total interest expense                                   36,625,551     34,925,051
------------------------------------------------------------------------------------
  Net interest income                                      25,687,642     23,391,316
Provision for loan losses                                     232,928        141,922
------------------------------------------------------------------------------------
  Net interest income after provision for loan losses      25,454,714     23,249,394
------------------------------------------------------------------------------------
Retail banking fees and service charges                     9,265,552      6,888,079
Premiums and commissions on annuity and insurance sales     1,355,870        788,357
Loan servicing fees, net                                      959,357     (2,670,443)
Gain on sales of loans                                      5,630,878      7,580,745
Other income                                                1,246,166      1,720,868
------------------------------------------------------------------------------------
  Total non-interest income                                18,457,823     14,307,606
------------------------------------------------------------------------------------
Compensation and employee benefits                         15,137,148     12,127,437
Occupancy and equipment                                     3,754,558      3,438,681
ATM and debit card expense                                  1,329,713      1,111,175
Advertising and marketing                                   1,108,525      1,045,905
Amortization of intangibles                                   515,887        246,379
Other expenses                                              4,775,592      4,280,088
------------------------------------------------------------------------------------
  Total non-interest expense                               26,621,423     22,249,665
------------------------------------------------------------------------------------
  Income before income taxes                               17,291,114     15,307,335
Income tax expense                                          6,114,049      5,810,591
------------------------------------------------------------------------------------

  Net income                                              $11,177,065   $  9,496,744
------------------------------------------------------------------------------------

PER SHARE INFORMATION
------------------------------------------------------------------------------------
Diluted earnings per share                                $      0.58   $       0.48
Basic earnings per share                                         0.61           0.51
Dividends paid per share                                         0.16           0.13
------------------------------------------------------------------------------------
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.





                                       4
<PAGE>   6


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>

                                    COMMON
                                   STOCK AND
                                   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, 1998         $36,534,228   $88,100,961   ($9,745,333)   ($1,051,113)     ($522,022)  $113,316,721
                                                                                                        --------------
Net income                                        4,697,851                                                  4,697,851
Securities valuation
adjustment, net of income taxes                                                               2,676,815      2,676,815
                                                                                                        --------------
Net income and non-owner
  adjustments to equity                                                                                      7,374,666
                                                                                                        --------------
Dividends paid                                   (1,296,604)                                                (1,296,604)
Exercise of stock options                             4,964       823,663                                      828,627
Restricted stock award                              379,060       342,848       (721,908)                           -
Purchase of treasury stock                                     (1,576,249)                                  (1,576,249)
Amortization of restricted
  stock                                                                          172,681                       172,681
----------------------------------------------------------------------------------------------------------------------

Balance at June 30, 1998          $36,534,228   $91,886,232  ($10,155,071)   ($1,600,340)    $2,154,793   $118,819,842
----------------------------------------------------------------------------------------------------------------------


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

Balance at March 31, 1999         $36,534,228   $98,391,434  ($16,470,424)   ($1,090,145)    $2,162,220   $119,527,313
                                                                                                        --------------
Net income                                        6,166,082                                                  6,166,082
Securities valuation
adjustment, net of taxes                                                                     (1,660,169)    (1,660,169)
                                                                                                        --------------
Net income and non-owner
  adjustments to equity                                                                                      4,505,913
                                                                                                        --------------
Dividends paid                                   (1,632,500)                                                (1,632,500)
Exercise of stock options                        (3,580,234)    9,395,746                                    5,815,512
Amortization of restricted
  stock                                                                          166,421                       166,421
----------------------------------------------------------------------------------------------------------------------

Balance at June 30, 1999          $36,534,228   $99,344,782   ($7,074,678)     ($923,724)      $502,051   $128,382,659
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.


                                       5
<PAGE>   7


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>

                                       COMMON
                                    STOCK AND
                                   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, 1997      $36,534,228   $84,548,291  ($10,845,168)    ($211,006)    ($664,999)  $109,361,346
                                                                                                      --------------
Net income                                        9,496,744                                                9,496,744
Securities valuation
adjustment, net of income taxes                                                             2,819,792      2,819,792
                                                                                                      --------------
Net income and non-owner
  adjustments to equity                                                                                   12,316,536
                                                                                                      --------------
Dividends paid                                   (2,404,676)                                              (2,404,676)
Exercise of stock options                          (518,223)    1,457,034                                    938,811
Restricted stock award                              764,096       969,312    (1,733,408)                           -
Purchase of treasury stock                                     (1,736,249)                                (1,736,249)
Amortization of restricted
  stock                                                                         344,074                      344,074
--------------------------------------------------------------------------------------------------------------------

Balance at June 30, 1998          $36,534,228   $91,886,232  ($10,155,071)  ($1,600,340)   $2,154,793   $118,819,842
--------------------------------------------------------------------------------------------------------------------


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

Balance at December 31, 1998      $36,534,228   $97,291,806  ($12,722,834)  ($1,256,266)   $2,837,713   $122,684,647
                                                                                                      --------------
Net income                                       11,177,065                                               11,177,065
Securities valuation
adjustment, net of taxes                                                                   (2,335,662)    (2,335,662)
                                                                                                      --------------
Net income and non-owner
  adjustments to equity                                                                                    8,841,403
                                                                                                      --------------
Dividends paid                                   (2,902,687)                                              (2,902,687)
Exercise of stock options                        (6,221,402)   13,613,811                                  7,392,409
Purchase of treasury stock                                     (7,965,655)                                (7,965,655)
Amortization of restricted
  stock                                                                         332,542                      332,542
--------------------------------------------------------------------------------------------------------------------

Balance at June 30, 1999          $36,534,228   $99,344,782   ($7,074,678)    ($923,724)     $502,051   $128,382,659
--------------------------------------------------------------------------------------------------------------------
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.








                                       6
<PAGE>   8


CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>

                                                                                 THREE MONTHS ENDED JUNE 30
                                                                              -------------------------------
                                                                                   1999            1998
                                                                                (UNAUDITED)     (UNAUDITED)
-------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>              <C>
Cash flows from operating activities:
  Net income                                                                   $   6,166,082    $   4,697,851
  Adjustments to reconcile net income to net cash provided (used) by
operations:
    Provision for loan and real estate losses (recoveries), net                      (12,033)         103,899
    Net loan costs deferred                                                         (126,057)        (182,528)
    Amortization (including mortgage servicing rights)                             1,596,052        3,417,080
    Depreciation                                                                     620,974          620,200
    Gains on sales of loans and other investments                                 (2,040,665)      (3,760,721)
    Increase in accrued interest receivable                                         (483,491)      (1,568,813)
    Increase (decrease) in accrued interest payable                                   11,808         (597,286)
    Increase (decrease) in current and deferred income taxes                         764,476         (399,886)
    Other accruals and prepaids, net                                                 443,068          137,598
-------------------------------------------------------------------------------------------------------------
      Net cash provided by operations before loan originations and sales           6,940,214        2,467,394
  Loans originated for sale                                                     (106,403,677)    (152,088,439)
  Sales of loans originated for sale                                              99,395,772      191,259,750
-------------------------------------------------------------------------------------------------------------
      Net cash provided (used) by operations                                         (67,691)      41,638,705
-------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Decrease (increase) in interest-bearing deposits with banks                     23,996,017      (23,844,209)
  Maturities of investment securities                                                      -        4,578,484
  Purchases of mortgage-backed and related securities available for sale         (60,503,884)               -
  Principal payments on mortgage-backed and related securities available for      15,062,531        3,387,384
sale
  Principal payments on mortgage-backed and related securities held for           22,180,706       10,006,440
investment
  Loans originated for investment                                               (163,005,234)    (148,312,974)
  Loans purchased for investment                                                 (31,229,916)               -
  Loan principal repayments                                                      126,547,572      104,112,179
  Sales of loans originated for investment                                         4,089,886       13,495,563
  Sales of real estate                                                               629,545          739,571
  Additions to office properties and equipment                                      (109,480)        (715,066)
  Other, net                                                                      (2,544,054)       4,634,143
-------------------------------------------------------------------------------------------------------------
    Net cash used by investing activities                                        (64,886,311)     (31,918,485)
-------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Net increase in deposit liabilities                                             13,981,335       72,623,168
  Net increase (decrease) in short-term Federal Home Loan Bank borrowings         44,626,000      (75,000,000)
  Decrease in other borrowings                                                    (1,451,565)        (501,427)
  Increase in advance payments by borrowers for taxes and insurance                2,758,386          240,653
  Proceeds from sale of common stock                                               2,726,251           85,207
  Purchase of treasury stock                                                               -       (1,576,249)
  Dividends paid                                                                  (1,632,500)      (1,296,604)
  Other, net                                                                       1,775,095        1,231,643
-------------------------------------------------------------------------------------------------------------
    Net cash provided (used) by financing activities                              62,783,002       (4,193,609)
-------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks                                (2,171,000)       5,526,611
Cash and due from banks at beginning of period                                    30,245,422       28,126,691
-------------------------------------------------------------------------------------------------------------
    Cash and due from banks at end of period                                   $  28,074,422    $  33,653,302
-------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
  Interest and dividends received on loans and investments                     $  31,097,103    $  27,115,911
  Interest paid on deposits and borrowings                                        18,110,304       17,804,124
  Income taxes paid                                                                2,650,000        3,234,000
  Income taxes refunded                                                                    -          389,875
  Mortgage-backed security swaps                                                           -      222,259,814
-------------------------------------------------------------------------------------------------------------
</TABLE>

Refer to accompanying Notes to Consolidated Financial Statements.











                                       7
<PAGE>   9


CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1999 and 1998

<TABLE>
<CAPTION>

                                                                                       SIX MONTHS ENDED JUNE 30
                                                                                  ---------------------------------
                                                                                     1999               1998
                                                                                  (UNAUDITED)       (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                <C>
Cash flows from operating activities:
  Net income                                                                         $11,177,065         $9,496,744
  Adjustments to reconcile net income to net cash provided (used) by
operations:
    Provision for loan and real estate losses, net                                       141,053            356,340
    Net loan costs deferred                                                             (316,741)          (530,506)
    Amortization (including mortgage servicing rights)                                 3,964,772          6,219,427
    Depreciation                                                                       1,248,190          1,238,309
    Gains on sales of loans and other investments                                     (5,630,878)        (7,580,744)
    Increase in accrued interest receivable                                           (1,547,031)        (1,963,017)
    Increase (decrease) in accrued interest payable                                       86,150           (564,325)
    Increase in current and deferred income taxes                                      2,980,298          2,120,869
    Other accruals and prepaids, net                                                     748,623           (409,336)
-------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations before loan originations and sales              12,851,501          8,383,761
  Loans originated for sale                                                         (217,326,668)      (367,119,122)
  Sales of loans originated for sale                                                 249,258,136        365,852,539
-------------------------------------------------------------------------------------------------------------------
      Net cash provided by operations                                                 44,782,969          7,117,178
-------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Decrease (increase) in interest-bearing deposits with banks                         86,688,005        (75,838,836)
  Purchases of investment securities                                                   (941,688)                  -
  Maturities of investment securities                                                          -         15,442,923
  Purchases of mortgage-backed and related securities available for sale            (109,817,038)
  Purchases of mortgage-backed and related securities held for investment            (51,163,258)                 -
  Principal payments on mortgage-backed and related securities available for          51,294,971          6,522,100
sale
  Principal payments on mortgage-backed and related securities held for               31,061,775         16,601,385
investment
  Loans originated for investment                                                   (325,602,553)      (260,991,142)
  Loans purchased for investment                                                     (87,653,795)                 -
  Loan principal repayments                                                          250,531,894        209,520,184
  Sales of loans originated for investment                                            21,525,995         56,553,153
  Sales of real estate                                                                 1,084,545          3,764,554
  Additions to office properties and equipment                                          (844,547)        (1,689,585)
  Purchases of mortgage servicing rights                                                       -           (454,774)
  Other, net                                                                          (1,433,985)         2,520,693
-------------------------------------------------------------------------------------------------------------------
    Net cash used by investing activities                                           (135,269,679)       (28,049,345)
-------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Net increase (decrease) in deposit liabilities                                     (14,415,736)       133,054,429
  Long-term advances from Federal Home Loan Bank                                      42,000,000         75,000,000
  Repayment of long-term Federal Home Loan Bank advances                              (4,915,000)       (16,580,000)
  Net increase (decrease) in short-term Federal Home Loan Bank borrowings             49,026,000       (156,300,000)
  Increase (decrease) in other borrowings                                              4,246,356        (11,503,330)
  Increase in advance payments by borrowers for taxes and insurance                    4,026,699          1,600,880
  Proceeds from sale of common stock                                                   3,290,459            195,391
  Purchase of treasury stock                                                          (7,965,655)        (1,736,249)
  Dividends paid                                                                      (2,902,687)        (2,404,676)
  Other, net                                                                           2,527,991          3,319,541
-------------------------------------------------------------------------------------------------------------------
    Net cash provided by financing activities                                         74,918,427         24,645,986
-------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks                                   (15,568,283)         3,713,819
Cash and due from banks at beginning of period                                        43,642,705         29,939,484
-------------------------------------------------------------------------------------------------------------------
    Cash and due from banks at end of period                                         $28,074,422        $33,653,303
-------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
  Interest and dividends received on loans and investments                           $60,766,162        $56,353,350
  Interest paid on deposits and borrowings                                            36,539,401         35,489,376
  Income taxes paid                                                                    3,041,000          3,659,000
  Income taxes refunded                                                                        -            389,875
  Mortgage-backed security swaps                                                               -        222,259,814
-------------------------------------------------------------------------------------------------------------------
</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, 1999, may not necessarily be indicative of the results
which may be expected for the entire year ending December 31, 1999.

         Certain 1998 balances have been reclassified to conform to the 1999
presentation.

NOTE 3--CONTINGENCIES

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


NOTE 4--SEGMENT INFORMATION

     DIVISIONS AND PROFIT CENTERS The Bank has six operating divisions: (i)
executive, (ii) finance and administration, (iii) human resources, (iv)
residential lending, (v) commercial real estate lending, and (vi) retail
banking. Each division is headed by an executive officer that reports directly
to the president of the Bank. The last three divisions contain the Bank's profit
centers for segment reporting purposes. These divisions are primarily involved
in the delivery of financial products and services to the Bank's deposit and
loan customers. The remaining divisions consist principally of support
departments.

     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 Bank for investment purposes (loans held for sale are included in
the mortgage banking profit center). Commercial real estate lending is a single
profit center for segment reporting purposes. It consists of the Bank's
portfolio of multi-family and commercial mortgage loans, as well as functions
related to the origination and servicing of such loans. Retail banking is
divided into two profit centers for segment reporting purposes: (i) a consumer
lending portfolio, which consists of the Bank'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. The Bank's retail branch network, which delivers checking, savings, and
other deposit-related products and services to customers, is also part of retail
banking, but is considered a support department for segment reporting purposes,
as more fully described in a subsequent paragraph. Finally, the Bank's
investment and mortgage-related securities portfolio is considered a profit
center for segment reporting purposes. Personnel in finance and administration
manage this portfolio.




                                       9
<PAGE>   11

     MEASUREMENT OF SEGMENT PROFIT (LOSS) Management evaluates the after-tax
performance of the Bank'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 Bank's
accounting systems. Interest expense is allocated to each profit center
according to its use of the Bank's funding sources, which consist primarily of
deposit liabilities, Federal Home Loan Bank ("FHLB") advances, 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 Bank's support departments is allocated to
the Bank'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.

     The Bank'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 Bank's other support departments) to arrive at net cost
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 earnings, assets, and equity of the
Bank that, in management's judgement, more fairly reflect the performance and/or
financial condition of certain of the Bank's profit centers. Following is a
description of the more significant adjustments:

     INTEREST INCOME AND EXPENSE Interest income is credited to the mortgage
banking profit center for implied earnings on non-interest-bearing liabilities
such as custodial and escrow accounts. The offsetting interest expense is
charged to each profit center according to their use of these funding sources,
as previously described. Fee income from customers that make their monthly loan
payments late ("late charges") is reclassified from interest income to
non-interest income in the mortgage banking profit center.

     LOAN ORIGINATION FEES AND COSTS In accordance with GAAP, origination fees
earned on residential loans held for investment are deferred and amortized over
the expected life of the loans, as are the direct costs to originate the loans.
In general, these deferrals and their subsequent amortization are disregarded
for segment reporting purposes. As a result, the mortgage banking cost center
receives revenue for loans that it originates for the portfolio of residential
loans held for investment, as well as a full charge for the costs to originate
the loans. These fees and costs are in addition to the fees it receives and the
costs it incurs on loans originated for sale in the secondary market, which are
included in current earnings under GAAP.

     MORTGAGE SERVICING RIGHTS In accordance with GAAP, mortgage servicing
rights are not recorded on residential loans held for investment. However, for
segment reporting purposes, the mortgage banking profit center receives an
income allocation for the origination of such loans, which represents the
estimated value of the mortgage servicing rights. This allocation is in addition
to the gain from mortgage servicing rights that is recorded on loans sold in the
secondary market, as permitted under GAAP. The amortization of the mortgage
servicing rights created by this allocation is charged-back to the mortgage
banking profit center over the estimated life of the loans.

     LOAN SERVICING FEES In accordance with GAAP, loan servicing fee income is
not recorded on loans held for investment. However, for segment reporting
purposes, the mortgage banking profit center receives an income allocation for
the services it performs for the Bank's residential, commercial real estate, and
consumer loan portfolios. This allocation is in addition to the service fee
income that the profit center receives on loans serviced




                                       10
<PAGE>   12

for third-parties, as recorded in the Bank's Consolidated Statement of
Operations. The aforementioned loan portfolios are charged with the offsetting
servicing cost.

     PROVISION FOR LOAN AND REAL ESTATE LOSSES For segment reporting purposes,
the Bank disregards provisions for loan and real estate losses recorded under
GAAP. Rather, actual charge-off (recovery) activity is charged (credited) to
each profit center in the period it occurs.

     INTANGIBLE ASSETS The amortization of goodwill and certain other intangible
assets is disregarded for segment reporting purposes.

     INCOME TAXES In general, a standard income tax rate of approximately 41% is
used for segment reporting purposes. However, the income tax benefit associated
with assets held in Nevada by FCHI, the Bank's wholly-owned investment
subsidiary, is allocated to the profit centers that own such assets. This
results in a lower effective income tax rate, or even a negative rate, for such
profit centers. During the six months ended June 30, 1998, the investment and
mortgage-related securities profit center was the only segment that held assets
in Nevada. During the six months ended June 30, 1999, this segment, as well as
the residential loan portfolio, held assets in Nevada.

     NON-GAAP ADJUSTMENTS TO ASSETS AND EQUITY Allowances for losses on loans
and real estate and security valuation allowances are added to and/or excluded
from assets of the profit centers. In addition, an estimated value for mortgage
servicing rights not recorded under GAAP is estimated and added to the assets of
the mortgage banking profit center. For each of these adjustments, a
corresponding amount is added to or excluded from equity prior to the
proportionate allocation of equity to the profit centers, as previously
described. The amount added to or excluded from equity is net of the estimated
income tax effect.

     SEGMENT PROFIT (LOSS) STATEMENTS AND OTHER INFORMATION The following tables
contain profit (loss) statements for each of the Bank's reportable segments for
the three and six month periods ended June 30, 1999 and 1998. In addition to the
after-tax performance of profit centers, management of the Bank closely monitors
the net cost to acquire and maintain deposit liabilities (as defined elsewhere
in this footnote). The net cost to acquire and maintain deposit liabilities was
1.06% and 1.26% of average deposit liabilities outstanding during the three
months ended June 30, 1999 and 1998, respectively, and 1.19% and 1.29% during
the six months ended June 30, 1999 and 1998, respectively.







                                       11



<PAGE>   13

<TABLE>
<CAPTION>
                                                            LOANS HELD FOR INVESTMENT
                                               ----------------------------------------------------   INVESTMENT
SEGMENT PROFIT (LOSS) STATEMENTS      MORTGAGE                 COMMERCIAL                             & MORTGAGE
THREE MOS. ENDED JUNE 30, 1999         BANKING    RESIDENTIAL  REAL ESTATE   CONSUMER     EDUCATION   SECURITIES
----------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>          <C>          <C>          <C>
Interest income                      $  754,959   $9,086,117   $6,810,682   $4,764,795   $3,530,206   $6,494,682
Interest expense                        821,199    5,574,916    3,599,569    2,451,580    1,675,241    4,354,459
Net cost to acquire and maintain
  deposit liabilities                    90,563      939,487      864,872      589,602      454,549      776,876
----------------------------------------------------------------------------------------------------------------
Net interest income (expense)
  before charge-offs                   (156,803)   2,571,714    2,346,241    1,723,613    1,400,416    1,363,347
Net loan charge-offs (recoveries)             -      (89,741)           -       83,912       13,796            -
----------------------------------------------------------------------------------------------------------------
Net interest income (expense)          (156,803)   2,661,455    2,346,241    1,639,701    1,386,620    1,363,347
Non-interest income                   5,239,686            -       12,556      273,511      100,406            -
Non-interest expense                  3,045,053      412,262      274,001      544,082      233,502       42,699
----------------------------------------------------------------------------------------------------------------
Profit (loss) before taxes            2,037,830    2,249,193    2,084,796    1,369,130    1,253,524    1,320,648
Income tax expense (benefit)            826,137      748,631      845,176      555,046      508,179      204,907
----------------------------------------------------------------------------------------------------------------
Segment profit (loss)                $1,211,693   $1,500,562   $1,239,620     $814,084     $745,345   $1,115,741
----------------------------------------------------------------------------------------------------------------
BALANCE SHEET INFORMATION
Dollars in thousands
----------------------------------------------------------------------------------------------------------------
Average assets                          $77,123   $  546,265   $  362,808     $247,070     $191,830     $424,509
----------------------------------------------------------------------------------------------------------------
Total assets at end of period           $60,181   $  592,484   $  369,720     $253,479     $186,776     $419,791
----------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                                  SUPPORT
SEGMENT PROFIT (LOSS) STATEMENTS        OTHER    DEPARTMENT       NON-GAAP
THREE MOS. ENDED JUNE 30, 1999         SEGMENTS  ALLOCATIONS    ADJUSTMENTS      CONSOLIDATED
---------------------------------------------------------------------------------------------
<S>                                   <C>         <C>          <C>              <C>
Interest income                           -           -        $  139,153 (1)   $  31,580,594
Interest expense                      $ 139,314       -          (494,166)(1)      18,122,112
Net cost to acquire and maintain
  deposit liabilities                       930   (3,716,879)        -                   -
---------------------------------------------------------------------------------------------
Net interest income (expense)
  before charge-offs                   (140,244)   3,716,879      633,319          13,458,482
Net loan charge-offs (recoveries          -           -            69,442 (2)          77,409
---------------------------------------------------------------------------------------------
Net interest income (expense)          (140,244)   3,716,879      563,878          13,381,073
Non-interest income                     158,072    5,322,367   (1,717,617)(3)       9,388,981
Non-interest expense                    145,178    9,039,246     (551,900)(3)      13,184,123
---------------------------------------------------------------------------------------------
Profit (loss) before taxes             (127,350)      -          (601,840)          9,585,931
Income tax expense (benefit)             (9,174)      -          (259,053)          3,419,849
---------------------------------------------------------------------------------------------
Segment profit (loss)                 ($118,176)      -         ($342,787)      $   6,166,082
---------------------------------------------------------------------------------------------
BALANCE SHEET INFORMATION
Dollars in thousands
---------------------------------------------------------------------------------------------
Average assets                       $      385       -           ($8,040)(4)   $   1,841,950
---------------------------------------------------------------------------------------------
Total assets at end of period        $      422       -           ($8,108)(4)   $   1,874,745
---------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>

                                                           LOANS HELD FOR INVESTMENT
                                                ------------------------------------------------    INVESTMENT
SEGMENT PROFIT (LOSS) STATEMENTS     MORTGAGE               COMMERCIAL                              & MORTGAGE      OTHER
THREE MOS. ENDED JUNE 30, 1998       BANKING    RESIDENTIAL REAL ESTATE    CONSUMER    EDUCATION    SECURITIES     SEGMENTS
---------------------------------------------------------------------------------------------------------------------------
<S>                                <C>          <C>          <C>          <C>          <C>          <C>           <C>
Interest income                    $  839,648   $8,333,428   $6,145,292   $4,496,253   $3,301,767   $5,450,418        -
Interest expense                      967,118    5,017,274    3,381,825    2,434,130    1,799,083    4,197,720     $ 22,419
Net cost to acquire and maintain
 deposit liabilities                  110,960    1,045,351      841,165      605,374      485,235      701,197        2,042
---------------------------------------------------------------------------------------------------------------------------
Net interest income (expense)
  before charge-offs                 (238,430)   2,270,803    1,922,302    1,456,749    1,017,449      551,501      (24,461)
Net loan charge-offs (recoveries)       --            (833)          --       81,748        6,985         -            -
---------------------------------------------------------------------------------------------------------------------------
Net interest income (expense)        (238,430)   2,271,636    1,922,302    1,375,001    1,010,464      551,501      (24,461)
Non-interest income                 4,256,126         --         11,000      243,612          561         -          54,463
Non-interest expense                3,199,514      466,241      268,625      426,776      188,998       38,675      108,946
---------------------------------------------------------------------------------------------------------------------------
Profit (loss) before taxes            818,182    1,805,395    1,664,677    1,191,837      822,027      512,826      (78,944)
Income tax expense (benefit)          331,691      731,908      674,860      483,171      333,250        1,385      (17,954)
---------------------------------------------------------------------------------------------------------------------------
Segment profit (loss)              $  486,491   $1,073,487   $  989,817   $  708,666   $  488,777   $  511,441     ($60,990)
---------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET INFORMATION
Dollars in thousands
---------------------------------------------------------------------------------------------------------------------------
Average assets                     $   82,823   $  453,313   $  301,123   $  216,764   $  173,834   $  356,690     $    732
---------------------------------------------------------------------------------------------------------------------------
Total assets at end of period      $   63,881   $  337,184   $  311,180   $  220,405   $  174,575   $  483,593     $    743
---------------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                       SUPPORT
SEGMENT PROFIT (LOSS) STATEMENTS     DEPARTMENT          NON-GAAP
THREE MOS. ENDED JUNE 30, 1998      ALLOCATIONS       ADJUSTMENTS      CONSOLIDATED
-----------------------------------------------------------------------------------
<S>                                   <C>          <C>                 <C>
Interest income                          -         $     117,918 (1)   $ 28,684,724
Interest expense                         -              (612,732)(1)     17,206,837
Net cost to acquire and maintain
 deposit liabilities                 (3,791,324)            -                -
-----------------------------------------------------------------------------------
Net interest income (expense)
  before charge-offs                  3,791,324          730,650         11,477,887
Net loan charge-offs (recoveries)        -                   834 (2)         88,734
-----------------------------------------------------------------------------------
Net interest income (expense)         3,791,324          729,816         11,389,153
Non-interest income                   3,674,697         (748,546)(3)      7,491,913
Non-interest expense                  7,466,021         (816,296)(3)     11,347,500
-----------------------------------------------------------------------------------
Profit (loss) before taxes               -               797,566          7,533,566
Income tax expense (benefit)             -               297,404          2,835,715
-----------------------------------------------------------------------------------
Segment profit (loss)                    -         $     500,162       $  4,697,851
-----------------------------------------------------------------------------------
BALANCE SHEET INFORMATION
Dollars in thousands
-----------------------------------------------------------------------------------
Average assets                           -              ($11,896)(4)   $  1,573,383
-----------------------------------------------------------------------------------
Total assets at end of period            -               ($7,156)(4)   $  1,584,405
-----------------------------------------------------------------------------------
</TABLE>

(1)  Consists principally of interest income and expense adjustments related to
     late charges and implied earnings on custodial and escrow accounts.
(2)  In general, the Corporation records actual loan and real estate charge-off
     (recovery) activity against each profit center for segment reporting
     purposes.
(3)  Consists principally of non-GAAP adjustments related to loan origination
     fees and costs, mortgage servicing rights, and loan servicing fees. The
     offsets for the adjustments described in (1), above, are also include in
     non-interest income.
(4)  Consists of allowances for loss on loans and real estate and security
     valuation allowances that are disregarded for segment reporting purposes.
     Also includes mortgage servicing rights that are not recorded under GAAP,
     but are recorded for segment reporting purposes.



                                       12

<PAGE>   14

<TABLE>
<CAPTION>

                                                            LOANS HELD FOR INVESTMENT
                                                    -------------------------------------------------------        INVESTMENT
SEGMENT PROFIT (LOSS) STATEMENTS       MORTGAGE                     COMMERCIAL                                     & MORTGAGE
SIX MOS. ENDED JUNE 30, 1999           BANKING      RESIDENTIAL     REAL ESTATE      CONSUMER      EDUCATION       SECURITIES
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>             <C>             <C>            <C>            <C>
Interest income                      $1,621,539     $17,081,990     $13,543,369     $9,356,513     $7,120,331     $13,297,187
Interest expense                      1,740,919      10,640,473       7,301,965      4,961,935      3,505,326       9,173,692
Net cost to acquire and maintain
  deposit liabilities                   256,973       1,897,295       1,907,041      1,296,402      1,036,030       1,944,524
--------------------------------------------------------------------------------------------------------------------------------
  Net interest income (expense)
    before charge-offs                 (376,353)      4,544,222       4,334,363      3,098,176      2,578,975       2,178,971
Net loan charge-offs (recoveries)          -            (63,033)          -            197,227         21,859           -
--------------------------------------------------------------------------------------------------------------------------------
Net interest income (expense)          (376,353)      4,607,255       4,334,363      2,900,949      2,557,116       2,178,971
Non-interest income                   9,714,022           -              60,430        484,777        103,502           -
 Non-interest expense                 6,228,524         798,803         528,973        986,930        436,618          90,102
--------------------------------------------------------------------------------------------------------------------------------
 Profit (loss) before taxes           3,109,145       3,808,452       3,865,820      2,398,796      2,224,000       2,088,869
Income tax expense (benefit)          1,260,448       1,255,677       1,567,203        972,473        901,610         206,498
--------------------------------------------------------------------------------------------------------------------------------
 Segment profit (loss)               $1,848,697     $ 2,552,775     $ 2,298,617     $1,426,323     $1,322,390     $ 1,882,371
--------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET INFORMATION
Dollars in thousands
--------------------------------------------------------------------------------------------------------------------------------
Average assets                       $   80,713     $   512,921     $   357,370     $  242,845     $  194,071     $   437,580
--------------------------------------------------------------------------------------------------------------------------------
Total assets at end of period        $   60,181     $   592,484     $   369,720     $  253,479     $  186,776     $   419,791
--------------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                       SUPPORT
SEGMENT PROFIT (LOSS) STATEMENTS       OTHER        DEPARTMENT       NON-GAAP
SIX MOS. ENDED JUNE 30, 1999           SEGMENTS     ALLOCATIONS     ADJUSTMENTS       CONSOLIDATED
--------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>                <C>
Interest income                           -             -          $   292,264 (1)    $62,313,193
Interest expense                     $  200,208         -             (898,967)(1)     36,625,551
Net cost to acquire and maintain
  deposit liabilities                     1,719     (8,339,984)         -                  -
--------------------------------------------------------------------------------------------------
  Net interest income (expense)
    before charge-offs                 (201,927)     8,339,984       1,191,231         25,687,642
Net loan charge-offs (recoveries)        -               -              76,875 (2         232,928
--------------------------------------------------------------------------------------------------
Net interest income (expense)          (201,927)     8,339,984       1,114,356         25,454,714
Non-interest income                     169,140     10,018,128      (2,092,176)(3)     18,457,823
 Non-interest expense                   239,857     18,358,112      (1,046,496)(3)     26,621,423
--------------------------------------------------------------------------------------------------
 Profit (loss) before taxes            (272,644)        -               68,676         17,291,114
Income tax expense (benefit)            (51,824)        -                1,964          6,114,049
--------------------------------------------------------------------------------------------------
 Segment profit (loss)                ($220,820)        -          $    66,712        $11,177,065
--------------------------------------------------------------------------------------------------
BALANCE SHEET INFORMATION
Dollars in thousands
--------------------------------------------------------------------------------------------------
Average assets                       $     321          -              ($7,405)(4)    $ 1,818,416
--------------------------------------------------------------------------------------------------
Total assets at end of period        $     422          -              ($8,108)(4)    $ 1,874,745
--------------------------------------------------------------------------------------------------
<CAPTION>
                                                            LOANS HELD FOR INVESTMENT
                                                    --------------------------------------------------------       INVESTMENT
SEGMENT PROFIT (LOSS) STATEMENTS       MORTGAGE                     COMMERCIAL                                     & MORTGAGE
SIX MOS. ENDED JUNE 30, 1998           BANKING      RESIDENTIAL     REAL ESTATE      CONSUMER      EDUCATION       SECURITIES
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>             <C>             <C>            <C>            <C>
Interest income                      $2,192,685     $18,816,323     $12,211,602     $8,920,589     $6,603,124     $ 9,317,055
Interest expense                      2,266,097      11,303,634       6,611,147      4,840,020      3,620,353       7,377,032
 Net cost to acquire and maintain
   deposit liabilities                  227,777       2,304,425       1,687,054      1,236,008        999,596       1,133,565
--------------------------------------------------------------------------------------------------------------------------------
 Net interest income (expense)
   before charge-offs                  (301,189)      5,208,264       3,913,401      2,844,561      1,983,175         806,458
Net loan charge-offs (recoveries)         -             (11,826)        203,379        149,933         12,854           -
--------------------------------------------------------------------------------------------------------------------------------
 Net interest income (expense)         (301,189)      5,220,090       3,710,022      2,694,628      1,970,321         806,458
Non-interest income                   9,034,757           -              24,586        435,209          5,923           -
Non-interest expense                  6,111,084       1,089,640         770,441        867,753        382,515          77,463
--------------------------------------------------------------------------------------------------------------------------------
 Profit (loss) before taxes           2,622,484       4,130,450       2,964,167      2,262,084      1,593,729         728,995
Income tax expense (benefit)          1,063,155       1,674,485       1,201,673        917,049        646,098         (46,265)
--------------------------------------------------------------------------------------------------------------------------------
 Segment profit (loss)               $1,559,329     $ 2,455,965     $ 1,762,494     $1,345,035     $  947,631     $   775,260
--------------------------------------------------------------------------------------------------------------------------------
Balance Sheet Information
Dollars in thousands
--------------------------------------------------------------------------------------------------------------------------------
Average assets                       $   95,951     $   504,965     $   293,674     $  215,007     $  173,883     $   310,227
--------------------------------------------------------------------------------------------------------------------------------
Total assets at end of period        $   63,881     $   337,184     $   311,180     $  220,405     $  174,575     $   483,593
--------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                     SUPPORT
SEGMENT PROFIT (LOSS) STATEMENTS       OTHER        DEPARTMENT         NON-GAAP
SIX MOS. ENDED JUNE 30, 1998           SEGMENTS     ALLOCATIONS       ADJUSTMENTS     CONSOLIDATED
--------------------------------------------------------------------------------------------------
<S>                                  <C>           <C>              <C>               <C>
Interest income                           -             -           $  254,989 (1)    $58,316,367
Interest expense                     $  56,216          -           (1,149,448)(1)     34,925,051
 Net cost to acquire and maintain
   deposit liabilities                   4,194     (7,592,619)           -                 -
--------------------------------------------------------------------------------------------------
 Net interest income (expense)
   before charge-offs                  (60,410)     7,592,619        1,404,437         23,391,316
Net loan charge-offs (recoveries)        -               -            (212,418)(2)        141,922
--------------------------------------------------------------------------------------------------
 Net interest income (expense)         (60,410)     7,592,619        1,616,855         23,249,394
Non-interest income                    (26,655)     6,840,304       (2,006,518)(3)     14,307,606
Non-interest expense                   177,213     14,432,923       (1,659,367)(3)     22,249,665
--------------------------------------------------------------------------------------------------
 Profit (loss) before taxes           (264,278)         -            1,269,704         15,307,335
Income tax expense (benefit)           (89,477)         -              443,873          5,810,591
--------------------------------------------------------------------------------------------------
 Segment profit (loss)               ($174,801)         -           $  825,831        $ 9,496,744
--------------------------------------------------------------------------------------------------
Balance Sheet Information
Dollars in thousands
--------------------------------------------------------------------------------------------------
Average assets                       $     730          -             ($12,764)(4)    $ 1,581,673
--------------------------------------------------------------------------------------------------
Total assets at end of period        $     743          -              ($7,156)(4)    $ 1,584,405
--------------------------------------------------------------------------------------------------
</TABLE>


(1)  Consists principally of interest income and expense adjustments related to
     late charges and implied earnings on custodial and escrow accounts.
(2)  In general, the Corporation records actual loan and real estate charge-off
     (recovery) activity against each profit center for segment reporting
     purposes.
(3)  Consists principally of non-GAAP adjustments related to loan origination
     fees and costs, mortgage servicing rights, and loan servicing fees. The
     offsets for the adjustments described in (1), above, are also include in
     non-interest income.
(4)  Consists of allowances for loss on loans and real estate and security
     valuation allowances that are disregarded for segment reporting purposes.
     Also includes mortgage servicing rights that are not recorded under GAAP,
     but are recorded for segment reporting purposes.


                                       13
<PAGE>   15


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


FORWARD-LOOKING STATEMENTS

     The discussion in this report includes certain forward-looking statements
based on current management's 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.

RESULTS OF OPERATIONS

     QUARTER OVERVIEW The Corporation's net income for the three months ended
June 30, 1999 and 1998, was $6.2 million or $0.32 per diluted share and $4.7
million or $0.24 per diluted share, respectively. These amounts represented a
return on average assets of 1.34% and 1.19%, respectively, and a return on
average equity of 20.04% and 16.50%, respectively.

     The increase in net income from 1998 to 1999 was primarily attributable to
a $2.5 million improvement in loan servicing fees, a $2.0 million increase in
net interest income, and a $1.5 million increase in retail banking fees. These
developments were offset in part by a $1.7 million decline in gain on sales of
loans, a $1.1 million increase in compensation and employee benefits, a $485,000
decline in other non-interest income, and a $440,000 increase in other
non-interest expense.

     SIX MONTH OVERVIEW The Corporation's net income for the six months ended
June 30, 1999 and 1998, was $11.2 million or $0.58 per diluted share and $9.5
million or $0.48 per diluted share, respectively. These amounts represented a
return on average assets of 1.23% and 1.20%, respectively, and a return on
average equity of 18.31% and 16.82%, respectively.

     The increase in net income from 1998 to 1999 was due principally to a $3.6
million improvement in loan servicing fees, a $2.4 million increase in retail
banking fees, and a $2.3 million increase in net interest income. These
developments were partially offset by a $3.0 million increase in compensation
and employee benefits, a $1.9 million decline in gain on sales of loans, and a
$495,000 increase in other non-interest expense.

     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, 1999 and 1998.

     NET INTEREST INCOME Net interest income increased by $2.0 million or 17.3%
and $2.3 million or 9.8% during the three and six month periods ended June 30,
1999, as compared to the same periods in the previous year. Net interest income
was favorably impacted by a $252.5 million or 17.1% increase and a $217.6
million or 14.6% increase in the Corporation's average interest-earning assets
between periods, respectively. The principal source of growth during these
periods was in the Corporation's single-family residential loans, consumer
loans, and commercial real estate loans. Although mortgage-backed and related
securities also increased substantially, this increase was largely the result of
the Corporation's securitization of adjustable-rate residential mortgage loans
into mortgage-backed securities ("MBSs") during the second quarter of 1998. The
Corporation's growth was primarily funded by increases in deposit liabilities,
including non-interest-bearing deposits, and to a lesser degree, by an increase
in FHLB advances and a decline in overnight investments. Refer to "Financial
Condition" for additional discussion.


                                       14
<PAGE>   16

     The Corporation's interest rate spread increased from 2.59% during the
three months ended June 30, 1998, to 2.64% during the same period in 1999.
Between these periods, a 47 basis point decline in the Corporation's average
yield on interest-earning assets was more than offset by a 52 basis point
decline in its average cost of interest-bearing liabilities. These declines were
attributable to a generally lower interest rate environment in 1999 as compared
to 1998. More recently, the Corporation's average cost of interest-bearing
liabilities declined from 4.86% during the first quarter of 1999 to 4.65% in the
quarter just ended. This decline contributed significantly to an 18 basis point
improvement in the Corporation's interest rate spread during the most recent
quarter. During the first two quarters of this year, a significant portion of
the Corporation's certificates of deposits matured and were replaced by
certificates carrying a lower rate of interest. In addition, during this period
the Corporation reduced the rate it pays on its interest-bearing checking
accounts, money market savings accounts, and regular savings accounts.

     The Corporation's interest rate spread decreased from 2.62% during the six
months ended June 30, 1998, to 2.54% during the same period in 1999. Management
attributes this decrease to a generally flatter yield curve environment in 1999
as compared to 1998. This type of interest rate environment has an unfavorable
impact on the Corporation's interest rate spread because of the tendency of the
Corporation's assets to price off a longer end of the yield curve than its
liabilities.

     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,
1999 and 1998.

<TABLE>
<CAPTION>

Dollars in thousands                     THREE MONTHS ENDED JUNE 30, 1999         THREE MONTHS ENDED JUNE 30, 1998
---------------------------------------------------------------------------------------------------------------------
                                        AVERAGE                      YIELD/      AVERAGE                       YIELD/
                                        BALANCE       INTEREST        COST       BALANCE       INTEREST         COST
---------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>             <C>       <C>            <C>           <C>
Interest-earning assets:
  Single-family mortgage loans         $  561,192     $ 9,933         7.08%     $  476,995     $ 9,265         7.77%
  Commercial real estate loans            343,805       6,816         7.93         286,421       6,148         8.59
  Consumer loans                          413,990       8,324         8.04         370,601       7,839         8.46
---------------------------------------------------------------------------------------------------------------------
  Total loans                           1,318,987      25,073         7.60       1,134,017      23,252         8.20
Mortgage-backed and related               379,797       6,069         6.39         230,965       3,846         6.66
securities
Investment securities                       1,039          11         4.12           7,390         112         6.06
Interest-bearing deposits with             18,348         210         4.58          93,501       1,258         5.38
banks
Other earning assets                       13,462         218         6.48          13,215         217         6.57
---------------------------------------------------------------------------------------------------------------------
  Total interest-earning assets         1,731,633      31,581         7.29       1,479,088      28,685         7.76
Non-interest-earning assets:
  Office properties and equipment          24,971                                   24,677
  Other assets                             85,346                                   69,618
---------------------------------------------------------------------------------------------------------------------
  Total assets                         $1,841,950                               $1,573,383
Interest-bearing liabilities:
  Regular savings accounts             $  112,165     $   416         1.48%     $   94,537     $   420         1.78%
  Checking accounts                        70,525         129         0.73          57,290         142         0.99
  Money market accounts                   180,327       1,664         3.69         147,025       1,512         4.11
  Certificates of deposit                 930,901      12,488         5.37         822,392      12,399         6.03
---------------------------------------------------------------------------------------------------------------------
  Total deposits                        1,293,918      14,697         4.54       1,121,244      14,473         5.16
FHLB advances                             253,217       3,277         5.18         202,251       2,691         5.32
Other borrowings                           11,608         148         5.10           7,632          43         2.25
---------------------------------------------------------------------------------------------------------------------
  Total interest-bearing liabilities    1,558,743      18,122         4.65       1,331,127      17,207         5.17
Non-interest-bearing liabilities:
  Non-interest-bearing deposits           142,082                                  115,066
  Other liabilities                        18,040                                   13,270
---------------------------------------------------------------------------------------------------------------------
  Total liabilities                     1,718,865                                1,459,463
Stockholders' equity                      123,085                                  113,920
---------------------------------------------------------------------------------------------------------------------
  Total liabilities                    $1,841,950                               $1,573,383
  and stockholders' equity
---------------------------------------------------------------------------------------------------------------------
Net interest income                                   $13,458                                  $11,478
---------------------------------------------------------------------------------------------------------------------
Interest rate spread                                                  2.64%                                    2.59%
---------------------------------------------------------------------------------------------------------------------
Net interest income as a percent of
  average earning assets                                              3.11%                                    3.10%
---------------------------------------------------------------------------------------------------------------------
Average interest-earning assets to
  average interest-bearing liabilities                              111.09%                                  111.12%
---------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       15
<PAGE>   17

<TABLE>
<CAPTION>



Dollars in thousands                     SIX MONTHS ENDED JUNE 30, 1999           SIX MONTHS ENDED JUNE 30, 1998
--------------------------------------------------------------------------------------------------------------------
                                        AVERAGE                      YIELD/      AVERAGE                       YIELD/
                                        BALANCE       INTEREST        COST       BALANCE       INTEREST         COST
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>           <C>         <C>             <C>          <C>
Interest-earning assets:
  Single-family mortgage loans         $  533,008     $18,904         7.09%     $  542,184      $21,212        7.82%
  Commercial real estate loans            338,623      13,552         8.00         279,651       12,219        8.74
  Consumer loans                          412,170      16,533         8.02         369,464       15,604        8.45
--------------------------------------------------------------------------------------------------------------------
    Total loans                         1,283,801      48,989         7.63       1,191,299       49,035        8.23
Mortgage-backed and related               361,763      11,745         6.49         199,957        6,463        6.46
securities
Investment securities                       1,023          22         4.39          10,325          310        6.00
Interest-bearing deposits with             49,589       1,146         4.62          75,426        2,030        5.38
banks
Other earning assets                       12,974         411         6.34          14,592          478        6.55
--------------------------------------------------------------------------------------------------------------------
    Total interest-earning assets       1,709,150      62,313         7.29       1,491,599       58,316        7.82
Non-interest-earning assets:
  Office properties and equipment          25,030                                   24,532
  Other assets                             84,236                                   65,542
--------------------------------------------------------------------------------------------------------------------
    Total assets                       $1,818,416                               $1,581,673
--------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
  Regular savings accounts             $  109,022     $   920         1.69%     $   91,995      $   865        1.88%
  Checking accounts                        69,155         292         0.84          55,548          272        0.98
  Money market accounts                   175,966       3,307         3.76         145,436        3,063        4.21
  Certificates of deposit                 943,124      25,853         5.48         800,935       24,041        6.00
--------------------------------------------------------------------------------------------------------------------
    Total deposits                      1,297,267      30,372         4.68       1,093,914       28,241        5.16
FHLB advances                             234,189       6,033         5.15         243,140        6,568        5.40
Other borrowings                            9,111         220         4.83           7,677          116        3.02
--------------------------------------------------------------------------------------------------------------------
    Total interest-bearing              1,540,567      36,626         4.75       1,344,731       34,925        5.19
liabilities
Non-interest-bearing liabilities:
  Non-interest-bearing deposits           137,198                                  110,569
  Other liabilities                        18,561                                   13,443
--------------------------------------------------------------------------------------------------------------------
    Total liabilities                   1,696,326                                1,468,743
Stockholders' equity                      122,090                                  112,930
--------------------------------------------------------------------------------------------------------------------
    Total liabilities and              $1,818,416                               $1,581,673
stockholders' equity
--------------------------------------------------------------------------------------------------------------------
Net interest income                                   $25,688                                   $23,391
--------------------------------------------------------------------------------------------------------------------
Interest rate spread                                                  2.54%                                    2.62%
--------------------------------------------------------------------------------------------------------------------
Net interest income as a percent of
average earning assets                                                3.01%                                    3.14%
--------------------------------------------------------------------------------------------------------------------
Average interest-earning assets to
average interest-bearing liabilities                                110.94%                                  110.92%
--------------------------------------------------------------------------------------------------------------------
</TABLE>

         PROVISION FOR LOAN LOSSES In general, provisions for loan losses
recorded during the three and six month periods ended June 30, 1999 and 1998,
approximated the Corporation's actual charge-off activity during such periods.
Management of the Corporation expects the provision for the remainder of 1999 to
also approximate actual charge-off activity, although there can be no
assurances.

         As of June 30, 1999 and December 31, 1998, the Corporation's allowance
for loan losses was $7.6 million or 0.58% and 0.66% of loans held for
investment, 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 June
30, 1999 and 1998, was $9.4 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 1998 to 1999.

         Retail banking fees and service charges increased by $1.5 million or
approximately 40% during the three months ended June 30, 1999, as compared to
the same period in the previous year. This increase was due in part to 26.9% in
growth since December 31, 1997, in the number of checking accounts serviced by
the Corporation. Approximately 50% of this growth came from retail banking
offices opened or acquired since that date (refer to


                                       16
<PAGE>   18

"Results of Operations--Non-Interest Expense" for additional discussion). Also
contributing to the increase in retail banking fees was an increase during the
most recent period in the per-item charge for overdrafts on checking accounts.

         Loan servicing fees improved by $2.5 million from $(1.5) million during
the three months ended June 30, 1998, to $968,000 during the same period in
1999. The improvement in 1999 was the result of an increase in interest rates,
which reduced the impact of loan prepayments on the Corporation's mortgage
servicing rights. During the second quarter of 1998, the Corporation recorded
$2.4 million in losses on its mortgage servicing rights over-and-above that
which management considered to be "normal" periodic amortization. This compared
to no such losses during the most recent quarter.

         Excluding the effects of the aforementioned losses, but net of "normal"
periodic amortization of mortgage servicing rights, loan servicing fees would
have increased by $73,000 or 8.2% during the three months ended June 30, 1999,
compared to the same period in the previous year. This increase was attributable
to a $116.2 million or 6.5% increase in mortgage loans serviced for others since
June 30, 1998. This growth was due to an interest rate environment during most
of 1998 and early 1999 that resulted in significant originations and sales of
fixed-rate loans and which encouraged borrowers to convert single-family
adjustable-rate mortgage loans, which the Corporation generally retains in
portfolio, to fixed-rate mortgage loans. Upon conversion, these loans were also
sold and the Corporation retained the servicing.

         Premiums and commissions on annuity and insurance sales increased by
$155,000 or approximately 35% during the three months ended June 30, 1999, as
compared to the same period in the previous year. The Corporation's current
sources of premium and commission revenues are from sales of tax-deferred
annuity contracts and credit life and disability insurance policies on consumer
and mortgage loans. Most of the increase in the most recent quarter was
attributable to increased sales of tax deferred annuity contracts.

         Gain on sales of mortgage loans decreased by $1.7 million from $3.8
million during the three months ended June 30, 1998, to $2.0 million during the
same period in 1999. This decrease was primarily attributable to a $101.3
million or approximately 50% decrease in the Corporation's mortgage loan sales.
This decrease was due to rising interest rates during most of 1999 that slowed
loan originations and sales relative to the same quarter in the previous year.

         Other non-interest income decreased by $485,000 or approximately 40%
during the three months ended June 30, 1999, as compared to the same period in
the previous year. Most of this decrease was attributable to the fact that last
year's results included a $390,000 state income tax refund for the Corporation's
1987-89 tax years. Also contributing was a decrease in fees received on loans
originated as agent for the Wisconsin State Veteran's Administration ("State
VA") and the Wisconsin Housing and Economic Development Authority ("WHEDA"), as
well as a lower fee income from customers that converted their adjustable-rate
mortgage loans to fixed-rate loans. These last two developments were
attributable to rising interest rates during most of 1999, as previously
described.

         Non-interest income for the six months ended June 30, 1999 and 1998,
was $18.5 million and $14.3 million, respectively. Most of this increase was the
result of a $3.6 million improvement in loan servicing fees from $(2.7) million
in 1998 to $959,000 in 1999. Also contributing, however, was a $2.4 million or
approximately 35% increase in retail banking fees and a $568,000 or
approximately 70% increase in premiums and commissions on annuity and insurance
sales. These developments were partially offset by a $1.9 million or 25.7%
decrease in gain on sales of loans and a $475,000 or 27.6% decrease in other
non-interest income. The explanations for these changes are substantially the
same as those given in previous paragraphs for the three months ended June 30,
1999 and 1998.

         NON-INTEREST EXPENSE Non-interest expense for the three months ended
June 30, 1999 and 1998, was $13.1 million and $11.3 million, respectively.
Non-interest expense as a percent of average assets was 2.88% for both of these
periods. The following paragraphs discuss the principal components of
non-interest expense and the primary reasons for their changes from 1998 to
1999.



                                       17
<PAGE>   19

         Compensation and employee benefits increased by $1.1 million or 17.0%
during the three months ended June 30, 1999, as compared to the same period in
the previous year. In general, this increase was due to normal annual merit
increases and to general growth in the number of banking facilities operated by
the Corporation. Since December 31, 1997, the Corporation has opened or acquired
eleven retail banking facilities and one loan production office. During the
remainder of 1999, the Corporation intends to open three additional retail
banking facilities, although there can be no assurances.

         As of June 30, 1999, the Corporation had 822 full-time equivalent
employees. This compares to 808 and 750 as of December 31, 1998, and June 30,
1998, respectively.

         ATM and debit card transaction costs increased by $97,000 or 16.2%
during the three months ended June 30, 1999, as compared to the same period in
the previous year. This increase corresponds to an increase in the number of
checking accounts serviced by the Corporation, as previously described, as well
as an increase the number of ATMs operated by the Corporation.

         Amortization of intangible assets increased by $135,000 or
approximately 110% during the three months ended June 30, 1999, as compared to
the same period in the previous year. This increase was due to the Corporation's
acquisition of $76.9 million in deposit liabilities from another financial
institution during the fourth quarter of 1998. The Corporation paid a premium of
$8.0 million for the deposits and certain other assets.

         Other non-interest expense increased by $440,000 or 23.2% during the
three months ended June 30, 1999, as compared to the same period in the previous
year. This increase was caused by a variety of factors, the most significant of
which was the Corporation's payment of $152,000 in sales and use taxes to the
State of Wisconsin for prior years, as well as an increase in professional fees
as a result of negotiations connected with the issue. Also contributing were
increased communication and office supply costs, increased fraud, forgery, and
other losses associated with customer accounts, and costs associated with the
purchase of the aforementioned deposit liabilities. The Corporation has also
experienced an increase in federal deposit insurance expense because of such
purchase, as well as other sources of growth in its deposit liabilities.

         Non-interest expense for the six months ended June 30, 1999 and 1998,
was $26.6 million and $22.2 million, respectively. Non-interest expense as a
percent of average assets during these periods was 2.94% and 2.79%,
respectively. This increase was primarily the result of a $3.0 million or 24.8%
increase in compensation and employee benefits. Also contributing was a $496,000
or 11.6% increase in other non-interest expense, a $316,000 or 9.2% increase in
occupancy and equipment expense, a $270,000 or approximately 110% increase in
amortization of intangible assets, and a $219,000 or 19.7% increase in ATM and
debit card expense. Except for occupancy and equipment expense, the explanations
for these changes are substantially the same as those given in previous
paragraphs for the three months ended June 30, 1999 and 1998. The increase in
occupancy and equipment expense was 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.

         INCOME TAX EXPENSE Income tax expense for the three months ended June
30, 1999 and 1998, was $3.4 million and $2.8 million, respectively, or 35.7% and
37.6% of pretax income, respectively. Income tax expense for the six months
ended June 30, 1999 and 1998, was $6.1 million and $5.8 million, respectively,
or 35.4% and 38.0% of pretax income, respectively. The Corporation's effective
tax rate declined in 1999 because a greater share of its taxable earnings were
in the State of Nevada during the 1999 periods as compared to the same periods
in 1998 (the State of Nevada currently imposes no corporate income tax). During
the second and fourth quarters of 1998 and the first and second quarters of
1999, the Corporation substantially increased its investment in its wholly-owned
Nevada subsidiary, First Cap Holdings, Inc. ("FCHI"), which resulted in a lower
effective income tax rate for the Corporation as-a-whole.

         Although the taxable income of FCHI is not subject to taxation in the
State of Wisconsin, legislation was introduced in Wisconsin early in 1999 which
would have required consolidated or "combined" state income tax returns for
taxable years beginning after December 31, 1999. This legislation would have
resulted in the taxable



                                       18
<PAGE>   20

income of FCHI being subject to taxation in the State of Wisconsin. If the
Corporation were required to file a combined state income tax return in
Wisconsin for the 1999 tax year, the Corporation's consolidated income tax
expense for the three and six months ended June 30, 1999, would have been
approximately $500,000 and $1,000,000 higher, which would have reduced diluted
earnings per share by $0.03 and $0.05 per share, respectively. As of the filing
of this report, however, the "combined reporting" proposal had been removed from
the State of Wisconsin's proposed legislation. However, there can be no
assurances that such proposal will not be reinstated at a future date.

FINANCIAL CONDITION

         OVERVIEW The Corporation's total assets increased by $88.2 million or
4.9% during the six months ended June 30, 1999. This increase was primarily the
result of a $143.3 million or 12.2% increase in loans held for investment and a
$75.2 million or 24.8% aggregate increase in mortgage-backed and related
securities. These increases were funded by the proceeds from an $86.7 million or
approximately 90% decrease in overnight investments, a $33.0 million or
approximately 45% decrease in loans held for sale, and a $90.4 million or
approximately 50% increase in FHLB advances and other borrowings. Proceeds from
these sources were also used to cover a $14.4 million or 1.0% decrease in
deposit liabilities.

         OVERNIGHT INVESTMENTS Interest-bearing deposits with banks, which
consist of overnight investments at the FHLB and fed funds sold, decreased by
$86.7 million from $96.5 million at December 31, 1998, to $9.9 million at June
30, 1999. The large amount of overnight investments at December 31, 1998, was
caused by the temporary investment of proceeds from loan sales. In general,
these proceeds were reinvested in loans held for investment and mortgage-backed
and related securities during the six months ended June 30, 1999.

         MORTGAGE-BACKED AND RELATED SECURITIES The Corporation's aggregate
investment in its mortgage-backed and related securities portfolios increased by
$75.2 million or 24.8% during the six months ended June 30, 1999. This increase
was the result of the Corporation's purchase of $161.0 million in collateralized
mortgage obligations during the period. This development was offset in part by
the repayment of $82.4 million in mortgage-backed and related securities.

         LOANS HELD FOR SALE The Corporation's loans held for sale decreased by
$33.0 million or approximately 45% during the six months ended June 30, 1999.
This decrease was caused by a higher interest rate environment during the first
six months of 1999, which slowed consumer demand for fixed-rate mortgage loans
and reduced the number of conversions by borrowers of adjustable-rate loans into
fixed-rate loans. Both of these categories of loans are classified as "held for
sale" until the date of sale, which typically occurs within 30 to 60 days of
origination and/or conversion.

         LOANS HELD FOR INVESTMENT The Corporation's loans held for investment
increased by $143.3 million or 12.2% during the six months ended June 30, 1999.
During this period, the Corporation purchased $87.7 million in adjustable-rate
mortgage loans originated by third-party financial institutions. These loans
were purchased to maintain growth in the Corporation's level of earning assets.
A flat yield curve environment during most of 1998 and early 1999 had a
significant impact on the ability of the Corporation to maintain its
internally-originated portfolio of loans held for investment. Such environment
tended to increase customer preference for fixed-rate mortgage loans, as opposed
to adjustable-rate loans. In addition, this environment encouraged borrowers to
refinance their existing adjustable-rate residential mortgage 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
substantially. Although some of this decline was offset by internal growth in
commercial real estate, consumer, and education loans, the Corporation elected
to purchase adjustable-rate mortgage loans from third-party financial
institutions in an effort to maintain growth in its earning assets. These loans
were subjected to substantially the same underwriting process as the
Corporation's own loans. The 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
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



                                       19
<PAGE>   21

years before their first adjustment date. The loans have been purchased by FCHI,
the Corporation's wholly-owned investment subsidiary in Nevada.

         DEPOSIT LIABILITIES The Corporation's deposit liabilities declined by
$14.4 million or 1.0% during the six months ended June 30, 1999. Most of this
decline occurred in the Corporation's certificates of deposit, a significant
portion of which matured during the most recent quarter. These maturities,
combined with a decline in the rates offered by the Corporation on virtually all
of its deposit products (as previously described), resulted in a modest decline
in deposit liabilities during the period.

         FHLB ADVANCES AND OTHER BORROWINGS The Corporation's FHLB advances and
other borrowings increased by $90.4 million or approximately 50% during the six
months ended June 30, 1999. Additional advances were drawn during the period to
fund growth in the Corporation's loans held for investment and mortgage-backed
and related securities, as well as to cover the aforementioned decline in
deposit liabilities.

         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 $1.8 million or
0.10% of total assets at June 30, 1999, compared to $2.4 million or 0.13% of
total assets at December 31, 1998.

         In addition to non-performing assets, at June 30, 1999, management was
closely monitoring $6.6 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 $6.4 million in such assets at December 31, 1998.

LIQUIDITY AND CAPITAL RESOURCES

         The Bank is required under applicable federal regulations to maintain
specified levels of qualifying types of U.S government, federal agency, and
other mortgage-related and investment securities of not less than 4% of net
withdrawable accounts and short-term borrowings. The Bank was in full compliance
with these regulations during the six months ended June 30, 1999.

         The Corporation's stockholder's equity ratio as of June 30, 1999, was
6.85% of total assets. The Corporation's objective is to maintain its
stockholders' equity ratio in a range of approximately 6.5% to 7.0%, which is
consistent with return on asset and return on equity goals of at least 1% and
15%, 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, 1999, the Bank's regulatory capital
exceeded all regulatory minimum requirements as well as the minimum amount
required to be classified as a "well capitalized" institution.

         The Corporation paid cash dividends of $2.9 million and $2.4 million
during the six months ended June 30, 1999 and 1998, respectively. These amounts
equated to dividend payout ratios of 26.0% and 25.3% 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 27, 1999, the Corporation's Board of Directors declared a
regular quarterly dividend of $0.09 per share payable on September 9, 1999, to
shareholders of record on August 19, 1999.

         During the six months ended June 30, 1999, the Corporation repurchased
519,152 shares of common stock at a cost of $8.0 million under its 1997 stock
repurchase plan (the "1997 Plan"). On April 20, 1999, the Corporation's Board of
Directors approved a new plan to repurchase up to 905,248 of the Corporation's
outstanding common stock (the "1999 Plan"). The shares may be repurchased from
time to time in open-market transactions



                                       20
<PAGE>   22

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, 1999, the Corporation reissued
1,041,566 shares of common stock out of its inventory of treasury stock with a
cost basis of $13.6 million. In general, these shares were issued upon the
exercise of stock options by employees and directors of the Corporation.

ASSET/LIABILITY MANAGEMENT

         The Corporation manages the exposure of its operations to changes in
interest rates ("interest rate 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
"funding gaps"). Management has sought to control the Corporation's funding
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 multi-family residential and 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 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 and FHLB advances 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 funding gap in a range between 0% and -25% and its three-year funding
gap in a range between +5% and -5%. 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
funding 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.

         As of June 30, 1999, the Corporation was in compliance with its
internal 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, 1998.

YEAR 2000 COMPLIANCE

         Potential software and hardware failures arising from calculations that
use the year 2000 represent a significant risk exposure to the Corporation. If
not corrected, software and hardware failures caused by the year 2000 could
result in a major system failure and/or miscalculations, which could result in a
material loss to the Corporation--the probability or amount of which cannot be
estimated at this time. Accordingly, management has implemented an on-going
program designed to ensure that the Corporation's information systems will not
be adversely impacted by the year 2000.

         The Corporation's program to resolve the year 2000 issue involved the
following four phases: assessment, remediation, testing, and implementation. The
Corporation completed the assessment phase in 1998 and found that the year 2000
issue affected all of its significant information systems. With respect to
remediation, the Corporation was substantially completed as of June 30, 1999.
For all practical purposes, the testing and implementation of most



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software programs occurred simultaneously; the Corporation was substantially
completed with this phase as of June 30, 1999. These efforts included systems
purchased from and maintained by third-party software and hardware vendors.

         The Corporation's information systems interface directly with those of
certain third-party transaction processors, to include the Federal Reserve Bank
of Minneapolis. With respect to the year 2000 issue, the Corporation's
information systems are highly dependent on the state of readiness of these
third-party transaction processors, as well as the communication systems over
which the data is exchanged. The Corporation has substantially completed the
testing and implementation phases that relate to interface programs with
third-party transaction processors as of June 30, 1999. The Corporation is
unable, however, to provide any assurances with respect to year 2000 readiness
on the part of public providers of communication services and other utilities.

         The Corporation has developed contingency plans to deal with
communication and other utility failures that may occur as a result of the year
2000 issue. It has also developed plans to temporarily accumulate data related
to customer transactions should its own information systems or those of third
parties fail. A portion of such contingency plans includes the manual processing
of certain types of customer transactions. In addition, it includes plans to
temporarily honor certain obligations of reputable third parties, such as
recurring deposits from the federal government, that could be disrupted by the
year 2000 and which could have a significant impact on the Corporation's
customers if not honored. However, there can be no assurances that the
Corporation will honor the obligations of third parties. The Corporation's
current contingency plans were approved by its Board of Directors on March 23,
1999.

         The Corporation has been using in-house personnel to identify and
correct year 2000 issues, as well as cooperating with third-party software and
hardware vendors. As of June 30, 1999, the Corporation estimates that it has
spent approximately $360,000 in direct, incremental costs related to the year
2000 issue. This amount includes additional compensation costs to retain
essential personnel, hire additional personnel, and purchase new software--it
does not include opportunity costs. The Corporation is unable to estimate
additional future costs of the year 2000 issue at this time, but does not
believe such will be material to its financial condition or results of
operations.

         Although management does not believe that the arrival of the year 2000
will pose significant operational problems to the Corporation, there can be no
assurances that it will be successful in preventing failures caused by this
issue. There can also be no assurances that such failures will not result in a
material loss to the Corporation. Such losses may include loss of customer
goodwill, waivers of customer transaction fees and interest, errors in honoring
obligations of third parties, fraudulent transactions, or other sources of loss
not know at this time. As previously mentioned, the Corporation is unable to
estimate the probability or the amount of future loss at this time, if any.


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                           PART II--OTHER INFORMATION

ITEM 1--LEGAL PROCEEDINGS

Refer to Note 3 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

None.



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                                   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/ Thomas W. Schini                        August 6, 1999
Thomas W. Schini
President, Chairman of the
Board and Chief Executive Officer
 (duly authorized officer)


/s/ Jack C. Rusch                           August 6, 1999
Jack C. Rusch
Executive Vice President and
Chief Financial Officer


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