UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                   FORM 10-QSB

[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

                                       OR

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

     For the transition period from __________________ to __________________

                         Commission File Number 0-20620


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


         Delaware                                        42-1390587
-------------------------------                     ----------------------
(State or other jurisdiction of                         (IRS Employer
incorporation or organization)                      Identification Number)

3225 Division Street, Burlington, Iowa                        52601
----------------------------------------                   -----------
(Address of principal executive offices)                   (Zip Code)


Registrant's telephone number, including area code:   (319) 754-6526
                                                      --------------

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

     Transitional Small Business Format:       Yes [  ]         No [X]

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

              Common Stock                                   1,105,348
            -----------------                             ------------------
                 Class                                    Shares Outstanding
                                                         as of August 4, 1999



<PAGE>


                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES

                                      INDEX

                                                                           Page
                                                                         -------
Part I.  Financial Information

Item 1   Financial Statements
           Consolidated balance sheets June 30, 1999 and
            December 31, 1998                                                  1

           Consolidated statements of operations, for the three
            and six months ended June 30, 1999 and 1998                        2

           Consolidated statements of comprehensive income, for
            the three and six months ended June 30, 1999 and 1998              3

           Consolidated statements of cash flows, for the six
            months ended June 30, 1999 and 1998                                4

           Notes to consolidated financial statements                          5

Item 2   Management's discussion and analysis of financial
          condition and results of operations                       6 through 11


Part II.    Other Information                                                 12

Signatures                                                                    13

Exhibit 27  Financial Data Schedule



<PAGE>


                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES

                           Consolidated Balance Sheets
                                   (Unaudited)
                  (Dollars in thousands, except per share data)


                                                         June 30,   December 31,
                                                            1999        1998
                                                         --------   ------------

Assets
   Cash and cash equivalents                             $  2,071    $  4,088
   Securities available for sale                           36,485      33,843
   Securities held to maturity (estimated
     fair value of $21,743 and $22,116)                    21,601      21,827
   Loans receivable, net                                   98,794      96,348
   Real estate acquired through foreclosure                     -         192
   Federal Home Loan Bank stock, at cost                    2,200       2,200
   Office property and equipment, net                       2,394       2,444
   Accrued interest receivable                              1,386       1,237
   Other assets                                               335         139
                                                         --------    --------
Total assets                                             $165,266    $162,318
                                                         ========    ========
Liabilities
   Deposits                                              $107,895    $105,982
   Advances from Federal Home Loan Bank                    44,000      43,000
   Advances from borrowers for taxes and
     insurance                                                432         413
   Accrued interest payable                                    91          66
   Accrued expenses and other liabilities                     540         822
                                                         --------    --------
Total liabilities                                         152,958     150,283
                                                         --------    --------
Stockholders' equity
   Serial preferred stock, $.01 par value;
     authorized 500,000 shares; none issued                     -           -
   Common stock, $.01 par value; 2,000,000
    shares authorized;
      1,105,348 shares issued and outstanding in
      1999 and 1,077,738 shares issued and
      outstanding in 1998                                      11          11
   Additional paid-in capital                               1,886       1,772
   Retained earnings, substantially restricted             10,375       9,832
   Accumulated other comprehensive income                       -
      unrealized gains on securities available
      for sale, net of taxes on income of $20
      in 1999 and $250 in 1998                                 36         420
                                                         --------    --------
Total stockholders' equity                                 12,308      12,035
                                                         --------    --------
Total liabilities and stockholders' equity               $165,266    $162,318
                                                         ========    ========

See accompanying notes to consolidated financial statements.

                                       1
<PAGE>

                   MIDWEST BANCSHARES, INC. and SUBSIDIARIES

                      Consolidated Statements of Operations

                                   (Unaudited)
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                   Three Months                     Six Months
                                                   Ended June 30,                  Ended June 30,
                                               ----------------------          ----------------------
                                                 1999           1998             1999           1998
                                               --------       -------          --------       -------
<S>                                            <C>            <C>              <C>           <C>

Interest income:
   Loans receivable                            $ 1,865        $ 1,892          $ 3,772        $ 3,740
   Securities available for sale                   528            615            1,040          1,244
   Securities held to maturity                     354            299              708            579
   Deposits in other financial institutions         27             20               77             41
   Other interest-earning assets                    34             35               68             68
                                               -------        -------          -------        -------
      Total interest income                      2,808          2,861            5,665          5,672
                                               -------        -------          -------        -------

Interest expense:
   Deposits                                      1,187          1,233            2,378          2,463
   Advances from FHLB and other borrowings         600            576            1,192          1,117
                                               -------        -------          -------        -------
      Total interest expense                     1,787          1,809            3,570          3,580
                                               -------        -------          -------        -------

      Net interest income                        1,021          1,052            2,095          2,092
      Provision for losses on loans                 12             12               24             24
                                               -------        -------          -------        -------

Net interest income after provision
     for losses on loans                         1,009          1,040            2,071          2,068
                                               -------        -------          -------        -------
Non-interest income:
   Fees and service charges                        104             90              203            171
   Gain on sale of securities
    available for sale                               4             61                7             97
   Other                                             9            133               13            140
                                               -------        -------          -------        -------
      Total non-interest income                    117            284              223            408
                                               -------        -------          -------        -------
Non-interest expense:
   Compensation and benefits                       316            378              651            704
   Office property and equipment                   107            105              205            207
   Deposit insurance premiums                       16             16               32             33
   Data processing                                  48             42               98             84
   Other                                           189            190              405            395
                                               -------        -------          -------        -------
      Total non-interest expense                   676            731            1,391          1,423
                                               -------        -------          -------        -------

Earnings before taxes on income                    450            593              903          1,053
Taxes on income                                    118            184              236            333
                                               -------        -------          -------        -------

Net earnings                                   $   332        $   409          $   667         $  720
                                               =======        =======          =======         ======

Earnings per share - basic                     $  0.30        $  0.39          $  0.61         $ 0.70
                                               =======        =======          =======         ======
Earnings per share - diluted                   $  0.30        $  0.37          $  0.60         $ 0.65
                                               =======        =======          =======         ======

</TABLE>

See accompanying notes to consolidated financial statements.


                                       2


<PAGE>



                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES


                 Consolidated Statements of Comprehensive Income

                                   (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                        Three Months     Six Months
                                                                       Ended June 30,   Ended June 30,
                                                                       --------------   --------------
                                                                        1999    1998     1999    1998
                                                                       ------  ------   ------  ------
<S>                                                                    <C>     <C>      <C>     <C>
Net earnings                                                           $ 332    $ 409   $ 667    $ 720
Other comprehensive income:
   Unrealized gains (losses) on securities available for sale:

       Unrealized holding gains (losses) arising during the
            period, net of (tax benefits) taxes on income
            of ($180) and ($228) in 1999 and $26 and $39 in 1998        (298)      44    (379)      72
       Less:  reclassification adjustment for gains included in
            net earnings, net of taxes on income
            of $1 and $2 in 1999 and$24 and $36 in 1998                    3       37       5       61
                                                                       -----    -----   -----    -----
Other comprehensive income, net of tax                                 $(301)   $   7   $(384)   $  11
                                                                       -----    -----   -----    -----
Comprehensive income                                                   $  31    $ 416   $ 283    $ 731
                                                                       =====    =====   =====    =====


</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>



                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                  Six months ended
                                                                                      June 30,
                                                                               ------------------------
                                                                                 1999             1998
                                                                               -------          -------
<S>                                                                            <C>              <C>
Cash flows from operating activities:
   Net earnings                                                                $  667           $  720
   Adjustments to reconcile net earnings to net
      cash provided by operating activities:
         Provision for losses on loans                                             24               24
         Gain on sale of securities available for sale                             (7)             (97)
         Depreciation                                                              89               90
         Amortization of loan fees, premiums and discounts                        (19)             (15)
         Increase in accrued interest receivable                                 (149)            (200)
         Increase in other assets                                                (196)             (50)
         Increase in accrued interest payable                                      25                7
         Increase (decrease) in accrued expenses and other liabilities             55              (48)
                                                                              -------          -------
Net cash provided by operating activities                                         489              431
                                                                              -------          -------

Cash flows from investing activities:
   Purchase of securities available for sale                                   (9,489)         (21,016)
   Purchase of FHLB stock                                                           -             (140)
   Proceeds from maturities of securities available for sale                    2,000            6,000
   Proceeds from maturities of securities held to maturity                        457                -
   Proceeds from sales of securities available for sale                         3,364            2,464
   Loans purchased                                                             (4,231)            (317)
   Purchase of mortgage-backed securities held to maturity                     (2,936)               -
   Repayment of principal on mortgage-backed securities                         3,591            5,631
   Decrease (increase) in loans receivable                                      1,728           (3,706)
   Proceeds from sale of real estate owned, net                                   234              107
   Purchase of office property and equipment                                      (39)             (62)
                                                                              -------          -------
Net cash used in investing activities                                          (5,321)         (11,039)
                                                                              -------          -------
Cash flows from financing activities:
   Increase in deposits                                                         1,913              528
   Proceeds from advances from FHLB                                             5,000           10,500
   Repayment of advances from FHLB                                             (4,000)               -
   Exercise of stock option                                                       114               92
   Payment of cash dividends                                                     (231)            (134)
   Net increase in advances from borrowers for taxes and insurance                 19               23
                                                                              -------          -------
Net cash provided by financing activities                                       2,815           11,009
                                                                              -------          -------
Net (decrease) increase in cash and cash equivalents                           (2,017)             401
Cash and cash equivalents at beginning of year                                  4,088            2,524
                                                                              -------          -------
Cash and cash equivalents at end of period                                    $ 2,071          $ 2,925
                                                                              =======          =======
Supplemental disclosures:
   Cash paid during the six months for:
      Interest                                                                $ 3,545          $ 3,573
      Taxes on income                                                             169              256
   Transfers from loans to real estate owned                                       42              468
                                                                              =======          =======


</TABLE>

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>


                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

Note 1.  Significant Accounting Policies

          The  consolidated  financial  statements  for the three and six months
          ended June 30, 1999, and 1998 have not been audited and do not include
          information  or footnotes  necessary  for a complete  presentation  of
          financial   condition,   results  of  operations  and  cash  flows  in
          conformity with generally accepted accounting principles.  However, in
          the opinion of management,  the  accompanying  consolidated  financial
          statements  contain all  adjustments,  which are of a normal recurring
          nature,  necessary for a fair presentation.  The results of operations
          for the interim periods are not necessarily  indicative of the results
          which may be expected  for an entire  year.  The  accounting  policies
          followed  by the  Company  are set  forth  in Note 1 to the  Company's
          consolidated  financial statements contained in the 1998 Annual Report
          to  Stockholders  on  Form  10-KSB  and  are  incorporated  herein  by
          reference.

Note 2. Computation of Per Share Earnings

          Basic earnings per share amounts are computed by dividing net earnings
          by the weighted average number of common shares outstanding during the
          period.  Diluted  earnings per share  amounts are computed by dividing
          net earnings by the weighted average number of shares and all dilutive
          potential  shares   outstanding   during  the  period.  The  following
          information  was used in the computation of earnings per share on both
          a basic and diluted  basis for the three and six months ended June 30,
          1999 and 1998.

<TABLE>
<CAPTION>

                                                        Three Months                Six Months
                                                 ------------------------    ------------------------
                                                     1999          1998         1999          1998
                                                 -----------    ---------    ----------    ----------
<S>                                             <C>            <C>          <C>           <C>
          Basic EPS Computation:
               Numerator - Net earnings          $  332,122    $  408,813    $  666,910    $  719,571

               Denominator - Weighted
                     average shares outstanding   1,102,698     1,036,688     1,099,269     1,031,659
                                                 ----------    ----------    ----------    ----------

               Basic EPS                         $     0.30    $     0.39    $     0.61    $     0.70
                                                 ==========    ==========    ==========    ==========

            Diluted EPS Computation:
               Numerator - Net earnings          $  332,122    $  408,813    $  666,910    $  719,571
                                                 ----------    ----------    ----------    ----------
               Denominator - Weighted
                    average shares outstanding    1,102,698     1,036,688     1,099,269     1,031,659
               Stock options                          9,900        65,524        12,640        70,455
                                                 ----------    ----------    ----------    ----------
                                                  1,112,598     1,102,212     1,111,909     1,102,114
                                                 ----------    ----------    ----------    ----------

               Diluted EPS                       $     0.30    $     0.37    $     0.60    $     0.65
                                                 ==========    ============  ==========    ==========

</TABLE>

         Note 3. Merger Agreement

          On  February  2,  1999,  the  Company  announced  the  execution  of a
          definitive  merger  agreement  with Mahaska  Investment  Company.  The
          merger will be  accomplished  through a tax-free fixed exchange of one
          share of Mahaska  Investment  Company  common  stock for each share of
          outstanding  common stock of the Company.  The transaction is expected
          to be  completed  in  the  third  quarter  of  1999,  after  customary
          regulatory and shareholder approvals have been received.

                                       5


<PAGE>


                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

     When used in this Form 10-QSB,  the words or phrases "will likely  result",
"are expected to", "will continue", "is anticipated",  "estimate", "project", or
similar  expressions  are  intended to identify  "forward-  looking  statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and  uncertainties  including changes in
economic  conditions  in the  Company's  market  area,  changes in  policies  by
regulatory  agencies,  fluctuations in interest  rates,  demand for loans in the
Company's market area and competition, that could cause actual results to differ
materially  from  historical   earnings  and  those  presently   anticipated  or
projected.  The Company wishes to caution readers not to place undue reliance on
any such forward-looking  statements,  which speak only as to the date made. The
Company  wishes to advise readers that the factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ  materially  from any opinions or statements  expressed
with respect to future periods in any current statements.

     The Company does not undertake,  and specifically disclaims any obligation,
to  publicly  release  the  result  of any  revisions  which  may be made to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

Year 2000 Compliance

     The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" problem. The Year
2000  problem is the result of computer  programs  using two digits  rather than
four to define the year.  Any of the Company's  programs that are time sensitive
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could  result in a major system  failure or  miscalculations.  The  enhancements
necessary to prepare the Company's  mission  critical  systems for the year 2000
have been substantially completed.

     The Company is also aware of the risks to third parties,  including vendors
(and to the extent  appropriate,  depositors  and  borrowers)  and the potential
adverse  impact on the  Company  resulting  from  failures  by these  parties to
adequately  address the Year 2000  problem.  The Company has been  communicating
with its outside data processing  service  bureau,  as well as other third party
service  providers,  to assess their progress in evaluating and implementing any
corrective  measures required by them to be prepared for the year 2000. To date,
the Company has not been advised by any of its primary  vendors that they do not
have plans in place to address and correct the Year 2000  problem;  however,  no
assurance can be given as to the adequacy of such plans or to the  timeliness of
their implementation.

     The Company has and will continue to incur  internal staff costs as well as
consulting and other expenses related to the  enhancements  necessary to prepare
its systems for the year 2000.  Based on the Company's  current  knowledge,  the
expense of the year 2000 project as well as the related  potential effect on the
Company's  earnings is not expected to have a material  effect on the  Company's
financial  position or results of operations.  The Company estimates that it has
spent approximately $23,000 through June 30, 1999 on the awareness,  assessment,

                                       6
<PAGE>


                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

renovation,  and  validation  phases of its year 2000  effort.  The  Company has
completed  the  validation  (testing)  phase with its  outside  data  processing
service bureau.

     The worst-case  year 2000 scenario for the Company is that major  suppliers
of electricity,  communication  links, and data processing  services may fail in
spite of their best efforts to remediate  their systems and in spite of our best
effort to test their systems.  The major risk as a result of these possibilities
would be the loss of customer  confidence.  The Company has developed a business
resumption contingency plan to address these possibilities and minimize the loss
of confidence.

Results of Operations

     Midwest Bancshares,  Inc. (the "Company") had net earnings of $332,000,  or
$0.30 per share,  diluted, and $667,000, or $0.60 per share,  respectively,  for
the three months and six months ended June 30, 1999, compared to net earnings of
$409,000,  or $0.37 per share,  and $720,000,  or $0.65 per share,  for the same
periods in 1998.  The  decreases  in net  earnings  for the three months and six
months, respectively,  were primarily a result of decreases in gains on sales of
securities,  and other non-interest income, partially offset by increases in fee
income and decreases in  non-interest  expense.  More detailed  comparisons  are
discussed below.

     Net Interest Income

     Net interest income decreased $31,000 and increased  $3,000,  for the three
months and six months ended June 30,  l999,  respectively,  over the  comparable
periods in 1998.  The  Company's  net interest  rate spread was 2.42% and 2.48%,
respectively,  for the three months and six months ended June 30, 1999, compared
to 2.65%  and  2.60% for the  comparable  periods  in 1998.  The  Company's  net
interest margin on  interest-earning  assets was 2.70% and 2.77%,  respectively,
for the three months and six months  ended June 30, 1999,  compared to 2.88% and
2.84% for the comparable periods in 1998. The interest rate earned on assets has
declined  faster than the interest rate paid on liabilities  due to the flatness
of the yield curve and the ability of  borrowers to prepay and  refinance  their
loans without  penalty.  In addition,  competition  for deposits has reduced our
ability to successfully offer lower rates on deposits, and competition for loans
has limited our ability to raise rates on loans.  The net  interest  rate spread
and net interest margin ratios have been calculated on a tax-equivalent basis.

     Interest  income  decreased  by $53,000 and $7,000 for the three months and
six months ended June 30, 1999,  respectively,  over the  comparable  periods in
1998.  Average  interest-earning  assets increased by approximately $8.1 million
and $8.3  million  for the three  months  and six months  ended  June 30,  1999,
respectively,  compared to the same  periods in 1998.  The  increases in average
interest-earning  assets primarily  consisted of increases in loans  outstanding
and  securities  available  for sale and were the  result  of a  planned  growth
strategy in an effort to maintain net interest income in a challenging  interest
rate  environment.   The  average  yield  on   interest-earning   assets,  on  a
tax-equivalent  basis,  was 7.16% and 7.30% for the three  months and six months
ended  June 30,  1999,  respectively,  compared  to 7.64% and 7.63% for the same
periods in 1998.  The Company  recorded  $158,000  and  $316,000  ($218,000  and
$445,000 on a tax-equivalent  basis), of interest income on tax-exempt municipal
bonds for the three  months and six months  ended June 30,  1999,  respectively,
with average  balances of $12.5  million for both the three and six months ended
June 30, 1999,  compared to $104,000 and  $163,000  ($149,000  and $232,000 on a
tax-equivalent  basis), of interest income with average balances of $8.6 million
and $6.7 million, respectively, for the comparable periods in 1998.

                                       7
<PAGE>


                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     Interest expense  decreased by $22,000 and $10,000 for the three months and
six months ended June 30, 1999,  respectively,  over the  comparable  periods in
1998.  Average  interest-bearing  liabilities  increased by  approximately  $5.7
million and $6.0 million for the three months and six months, respectively, over
the comparable periods in 1998, consisting of increases of $3.2 million and $4.1
million in average  borrowings  from the FHLB and  increases of $2.5 million and
$1.9  million in  average  deposits.  The  Company  utilized  FHLB  advances  to
supplement its funding of new asset growth because the interest cost of new FHLB
advances was generally less than the incremental  cost of adding new certificate
of deposit  accounts.  The average  rates paid on  interest-bearing  liabilities
decreased  24 basis  points and 22 basis points to 4.75% and 4.81% for the three
months and six months  ended June 30, 1999,  respectively,  from 4.99% and 5.03%
for the three months and six months ended June 30, 1998.

     Provision for Losses on Loans

     The  provision  for losses on loans was  $12,000  and $24,000 for the three
months and six months ended June 30, 1999 and 1998.  The amount of provision was
a result of the  determination  to maintain the allowance for losses on loans at
an adequate level to absorb probable loan losses inherent in the loan portfolio.
At June 30, 1999 and 1998,  the Company's  allowance for losses on loans totaled
$504,000 and  $458,000,  respectively,  or 0.51% and 0.48% of total  loans,  and
406.45% and 123.45% of total non-performing loans. There were no net charge-offs
during either the three months or six months ended June 30, 1999 compared to net
charge-offs  of $14,000 and  $134,000  for the three months and six months ended
June 30, 1998, respectively. The $134,000 of charge-offs in the six months ended
June 30, 1998 was primarily due to $120,000 of charge-offs  related to two loans
on  multi-family  properties  which were  transferred  to real  estate  acquired
through foreclosure.

     Non-interest income

     Total non-interest  income decreased by $167,000 and $185,000 for the three
months and six months  ended June 30, 1999,  respectively,  compared to the same
periods in 1998.  The  decreases in  non-interest  income were  primarily due to
reductions  of $57,000 and $90,000 of gains on the sales of  securities  for the
three months and six months ended June 30, 1999, respectively. The previous-year
gains for the three  months and six months  ended June 30,  1998,  respectively,
consisted  of  $61,000  and  $65,000  of gains on the  sale of  common  stock of
non-related,  publicly-traded  companies  (with no comparable  gains on sales of
equity  securities  in 1999) and  $32,000  of gains on the sales of U.S.  Agency
bonds in the six month period  ended June 30, 1998.  In addition to these gains,
the Company recognized a  previously-deferred  gain of $120,000 (pre-tax) on the
sale of the  Association's  mortgage banking  subsidiary,  recorded in the three
month period ended June 30, 1998 with no comparable gain in 1999.

     The decreases in non-interest  income discussed above were partially offset
by  increases  of $14,000 and $32,000 for the three  months and six months ended
June 30, 1999,  respectively,  (a 19% increase year-to-date) in fees and service
charges as a result of increased  transaction account activity and increased ATM
transaction volumes, in part as a result of the in-store branch,  located in the
Wal-Mart  Supercenter  in West  Burlington,  Iowa,  which opened for business on
December 8, 1997.



                                       8
<PAGE>

                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Non-interest expense

     Total  non-interest  expense decreased by $55,000 and $32,000 for the three
months and six months ended June 30, 1999  compared to the same periods in 1998.
The decreases  were  primarily a result of decreased  compensation  and benefits
paid to senior management.

     Taxes on Income

     Taxes on income were  $66,000 and $97,000 less for the three and six months
ended June 30, 1999,  respectively,  than the  comparable  periods in 1998.  The
decreases were primarily due to decreased  taxable  income,  and would have been
less if not for the increases in tax-exempt  interest  income on municipal bonds
discussed above under "Net Interest Income".

Financial Condition

     The Company's total assets at June 30, 1999 were $165.3 million, increasing
from $162.3  million at December 31, 1998.  The increase of  approximately  $3.0
million  was due to an  intentional  increase in  interest-earning  assets in an
effort to increase net interest  income and was primarily due to the purchase of
$9.5 million of securities  available for sale,  the purchase of $2.9 million of
securities  held to  maturity  and the  purchase  of  loans  receivable  of $4.2
million,   partially  offset  by  principal  repayments  of  $3.6  million  from
mortgage-backed  securities,  $2.0  million from  matured  securities,  and $3.4
million  proceeds  from  the  sale of  securities  available  for sale and a net
decrease (exclusive of loans purchased) in loans receivable of $1.7 million. The
net increase in total assets was primarily funded by an increase of $1.9 million
of savings  deposits and an increase of $1.0 million of advances  from the FHLB.
The Company does not currently anticipate  significant additional growth for the
remainder of 1999.

     Total  stockholders'  equity  increased  $273,000  due to the  $667,000 net
earnings  for the six months and  $114,000  received  from the exercise of stock
options,  less a  $384,000  decrease  in net  unrealized  gains  on  investments
available for sale and less $124,000 in dividends declared.

Liquidity and Capital Resources

     The Company's principal sources of funds are deposits and advances from the
FHLB,  amortization and prepayment of loan principal (including  mortgage-backed
securities),  sales or  maturities  of  investment  securities,  mortgage-backed
securities and  short-term  investments  and  operations.  While  scheduled loan
repayments and maturing  investments are relatively  predictable,  deposit flows
and early  loan  repayments  are more  influenced  by  interest  rates,  general
economic  conditions and competition.  The Company generally manages the pricing
of its deposits to maintain a steady deposit balance,  but has from time to time
decided not to pay deposit  rates that are as high as those of its  competitors,
and,  when  necessary,  to  supplement  deposits  with  longer  term and/or less
expensive alternative sources of funds.

     Federal  regulations  require the Association to maintain minimum levels of
liquid assets  consisting of cash and other eligible  investments.  The required

                                       9
<PAGE>


                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


percentage is currently 4% of net  withdrawable  savings deposits and borrowings
payable on demand or in one year or less during the preceding  calendar quarter.
For June 1999, the Association's  liquidity ratio was 33.1% compared to 8.5% for
December 1998. The increase was primarily due to  reclassification of investment
securities as liquid  assets in accordance  with  regulations.  Assuming  market
interest  rates are stable or  decrease,  a high level of  liquidity  may have a
negative effect on the Association's interest rate spread due to a larger amount
of the  Association's  assets earning the then-current  lower rates of interest.
However,  a high level of  liquidity  positions  the  Association  to respond to
possible higher interest rates by providing the Association  with the ability to
deploy  liquid  assets  into  higher  yielding  assets  as rates  increase.  The
Association  has, and intends to continue to deploy  liquid assets by increasing
its loan portfolio;  however, its ability to do so depends on the loan demand in
its market  areas,  competition  for such  loans,  to the  extent  they meet the
Association's  underwriting  guidelines,  and opportunities for participating in
and purchasing loans in nearby markets.

     Liquidity  management  is  both a daily  and  long-term  responsibility  of
management.  The Association adjusts its investments in liquid assets based upon
management's  assessment  of (i) expected  loan demand,  (ii)  expected  deposit
flows,  (iii)  yields  available  on  interest-bearing  deposits,  and  (iv) the
objectives  of its  asset/liability  management  strategy.  Excess  liquidity is
invested generally in  interest-bearing  overnight deposits and other short-term
government and agency obligations.  If the Association requires funds beyond its
ability to generate them internally,  it has additional  borrowing capacity with
the Federal Home Loan Bank.

     The Association anticipates that it will have sufficient funds available to
meet current loan and purchase  commitments.  At June 30, 1999, the  Association
had  outstanding  commitments  to extend  credit  totaling  $4.5  million and to
purchase loans of $1.0 million.

     At June 30, 1999,  the  Association  had tangible and core capital of $11.5
million,  or 7.01% of total  adjusted  assets,  which  exceeded  the  regulatory
requirements  of 1.5% and 3.0%, by $9.1 million and $6.6 million,  respectively.
The risk-based capital  requirement is currently 8% of risk-weighted  assets. As
of June 30, 1999, the Association had risk-weighted  assets of $81.7 million,  a
risk-based  requirement of $6.5 million and risk-based capital of $12.0 million,
or 14.76%,  which exceeds the  requirement  by $5.5 million.  The  Association's
regulatory capital information is shown in the table below.

<TABLE>
<CAPTION>

        Regulatory Capital Table

                                                              (In thousands)

                                                    Tangible      Core       Risk-based
                                                    Capital      Capital      Capital
                                                    --------     -------     ----------
        <S>                                        <C>          <C>          <C>

        Association's capital                       $11,548      $11,548      $11,548
        Additional capital - general allowances         ---          ---          504
                                                    -------      -------      -------

        Regulatory capital                           11,548       11,548       12,052
        Minimum capital requirement                   2,470        4,941        6,533
                                                    -------      -------      -------

                                                    $ 9,078      $ 6,607      $ 5,519
                                                    =======      =======      =======

</TABLE>
                                       10
<PAGE>

                    MIDWEST BANCSHARES, INC. and SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



     The unrealized  appreciation on securities  available for sale,  which is a
component of stockholders'  equity,  is a result of the application of Statement
No. 115 of the Financial  Accounting  Standards Board. At June 30, 1999, the net
unrealized  gain of $36,000,  down from a net gain of  $420,000 at December  31,
1998,  consisted  primarily of the net  unrealized  market gain,  net of tax, on
certain  mortgage-backed  securities and investment securities,  which have been
identified as available for sale by management.

Pending Accounting Pronouncements

     The Financial Accounting  Standards Board has issued,  effective for fiscal
years beginning after June 15, 1999, Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative  Instruments and Hedging Activities".
SFAS  133  establishes   accounting  and  reporting   standards  for  derivative
instruments  and for hedging  activities.  The Company expects to adopt SFAS 133
when  required and  management  believes  the adoption  will not have a material
effect on the Company's financial statements when adopted.



                                       11

<PAGE>

                            MIDWEST BANCSHARES, INC.

                           PART II. Other Information

Item 1.  Legal Proceedings

         None.

Item 2.  Changes in Securities

         None.

Item 3.  Defaults Upon Senior Securities

         None.

Item 4.  Submission of Matters to a Vote of Security Holders

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

        (a)  Exhibit:

             Exhibit 27  Financial Data Schedule

        (b) There  were  no reports on Form 8-K filed  during  the  quarter  for
which this report is filed.


                                       12

<PAGE>



                                   Signatures


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


                                      MIDWEST BANCSHARES, INC.
                                      Registrant



Date: August 13, 1999                 /s/  William D. Hassel
      --------------------            ------------------------------
                                      William D. Hassel
                                      President and Chief Executive Officer
                                      (Principal Executive Officer)


Date: August 13, 1999                 /s/  Robert D. Maschmann
      --------------------            ------------------------------
                                      Robert D. Maschmann
                                      Executive Vice President and
                                      Chief Financial Officer
                                      (Principal Financial and
                                       Accounting Officer)

                                       13
<PAGE>

                                Index to Exhibits


                                                            Sequentially
                                                            Numbered Page
Exhibit                                                     Where Attached
Number                                                      Exhibits are Located
-------                                                     --------------------


27               Financial Data Schedule                            15



                                       14