<PAGE>   1



                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                  FORM 10-QSB

(Mark One)

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

For the quarterly period ended       September 30, 1996
                               ---------------------------------------
                                       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:    0-20331
                       ---------------------------------------------------
  Midwest Federal Financial Corp.
--------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

          Wisconsin                                39-1725856
--------------------------------------------------------------------------
  (State or other jurisdiction        (I.R.S. Employer Identification No.)
of incorporation or organization)  

1159 Eighth Street, Baraboo, Wisconsin                              53913
---------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

(608) 356-7771
---------------------------------------------------------------------------
(Registrant's telephone number, including area code)

N/A
---------------------------------------------------------------------------
(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 for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past
90 days.          X    YES        NO
                ----        ----
Registrant became subject to the filing requirements of the Act on July 7,
1992.

As of November 12, 1996, there were 2,069,998 shares, $ .01 par value, of the
registrant's common stock issued and 1,634,379 shares or common shares
equivalents are outstanding.


<PAGE>   2




                        Midwest Federal Financial Corp.
                                 And Subsidiary

                               Table of Contents

PART I - Financial Information


<TABLE>
<S>                                                                                <C>
Consolidated Statements of Financial Condition (unaudited)                           1
Consolidated Statements of Operations (unaudited)                                    2
Consolidated Statements of Cash Flows (unaudited)                                    3
Notes to Consolidated Financial Statements (unaudited)                               5
Managements discussion and Analysis of financial
Condition and Results of Operations                                                 12

PART II - Other Information


Item 1.                      Legal Proceedings                                      15
Item 2.                      Changes in Securities                                  15
Item 3.                      Defaults Upon Senior Securities                        15
Item 4.                      Submission of Matters to Vote
                                   of Securities Holders                            15
Item 5.                      Other Information                                      15
Item 6.                      Exhibits and Reports on Form 8-K                       15
</TABLE>


<PAGE>   3





                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


<TABLE>
<CAPTION>

                                                                                (UNAUDITED)

                                                                                 09/30/96              12/31/95
                                                                                 --------              --------
ASSETS          
<S>                                                                            <C>                   <C>
Cash                                                                           $  6,792,499          $  6,332,222
Interest bearing deposits                                                            18,375               147,681
                                                                               ------------          ------------ 
Cash and cash equivalents                                                         6,810,874             6,479,903
Other interest-bearing deposits                                                     100,000               598,999
Loans held for sale                                                                 688,750               847,155
Securities available for sale:
  Investment securities                                                          18,686,835            24,600,319
  Mortgage-backed securities                                                     17,952,719            11,359,554
Securities held to Maturity:
  Investment securities                                                           1,300,000             2,095,025
Investment in Federal Home Loan Bank stock                                        1,205,000               936,100
Interest receivable on interest-bearing  deposits and investment securities         538,374               611,890
Loans receivable - net                                                          140,330,695           122,925,422
Interest receivable on loans                                                        996,566               785,172
Office properties and equipment                                                   4,020,069             4,012,669
Deferred income taxes                                                               178,189                38,000
Other asset                                                                       1,179,029             1,088,984
Deposit Base Intangible                                                             719,493               784,901
                                                                               ------------          ------------
TOTAL ASSETS                                                                   $194,706,593          $177,164,093
                                                                               ============          ============
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities:
  Deposit accounts                                                             $153,277,980          $142,590,514
  Borrowed funds                                                                 22,100,000            16,000,000
  Advance payments by borrowers for taxes and insurance                             513,103               176,921
Accrued and other liabilities:
  Interest                                                                          611,330               657,696
  Deferred compensation and director fees                                           346,265               317,465
  Other                                                                           1,517,988               880,185
                                                                               ------------          ------------
    Total liabilities                                                           178,366,666           160,622,781
                                                                               ------------          ------------
Commitments and contingencies
Stockholders' Equity:
  Common Stock--$.01 par value:
   Authorized--3,000,000 shares
   Issued--2,069,998 shares and 1,034,999 shares respectively                        20,700                10,350
Additional Paid-in capital                                                        6,495,310             6,500,960
Retained earnings-substantially restricted                                       14,030,898            13,162,529
Unrealized Gains (Losses) on securities available for sale, net of tax             (289,000)              187,600
Loan to ESOP                                                                       (389,353)             (419,142)
Treasury stock at cost--466,018 shares and 437,118 shares respectively           (3,528,628)           (2,900,985)
                                                                               ------------          ------------
   Total Stockholders' equity                                                    16,339,927            16,541,312
                                                                               ------------          ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                     $194,706,593          $177,164,093
                                                                               ============          ============
</TABLE>
See accompanying notes to consolidated financial statements


                                     Page 1
<PAGE>   4





                        Midwest Federal Financial Corp.
                                 And Subsidiary
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                            Quarter Ended                 Nine Months Ended
                                                                            -------------                 -----------------
                                                                    09/30/96          09/30/95        09/30/96          09/30/95
                                                                    --------          --------        --------          ---------
<S>                                                                <C>              <C>             <C>               <C>
Interest and dividend income:
 Mortgage loans                                                    $2,266,211        $1,951,714     $ 6,486,808        $5,538,233
 Other loans                                                          915,025           880,247       2,703,476         2,398,819
 Investment securities and interest-bearing deposits                  362,606           304,526       1,093,875           761,011
 Mortgage-backed securities                                           285,950           123,511         729,197           425,111
 Dividends on stock in Federal Home Loan Bank                          18,679            10,500          48,539            35,369
                                                                   ----------        ----------     -----------        ----------  
TOTAL INTEREST AND DIVIDEND INCOME                                  3,848,471         3,270,498      11,061,895         9,158,543
                                                                   ----------        ----------     -----------        ----------
Interest Expense:
 Deposits                                                           1,722,391         1,595,250       5,009,995         4,462,817
 Borrowed funds                                                       308,037            93,764         714,208           320,328
                                                                   ----------        ----------     -----------        ----------
 TOTAL INTEREST EXPENSE                                             2,030,428         1,689,014       5,724,203         4,783,145
                                                                   ----------        ----------     -----------        ----------
Net interest income                                                 1,818,043         1,581,484       5,337,692         4,375,399
Provision for loan losses                                             145,000            45,000         250,000           100,000
                                                                   ----------        ----------     -----------        ----------
Net interest income after provision for loan losses                 1,673,043         1,536,484       5,087,692         4,275,399
                                                                   ----------        ----------     -----------        ----------
Non-interest income:
 Loan fees and service charges                                         60,520            53,566         197,609           140,747
 Deposit account fees and service charges - Net                       207,612           181,371         591,553           461,861
 Net gain on sale of investment and mortgage-backed securities        100,008             4,825         258,942            90,796
 Net gain on sale of loans                                            213,805            46,013         352,818           123,337
 Other income                                                         141,274           106,681         400,111           311,239
                                                                   ----------        ----------     -----------        ----------
TOTAL NON-INTEREST INCOME                                             723,219           392,457       1,801,033         1,127,980
                                                                   ----------        ----------     -----------        ----------
 Operating Expenses:
 Compensation and other employee benefits                             755,933           607,527       2,182,923         1,748,988
 Occupancy                                                            192,539           174,520         589,189           511,806
 Office supplies, telephone and postage                                92,215            71,652         267,552           232,248
 Data processing                                                       89,708            85,059         270,674           270,999
 Federal deposit insurance premiums                                   914,121            73,747       1,051,815           205,264
 Other                                                                203,430           225,260         591,048           615,895
                                                                   ----------        ----------     -----------        ----------
 TOTAL OPERATING EXPENSES                                           2,247,946         1,237,765       4,953,201         3,585,200
                                                                   ----------        ----------     -----------        ----------
Income before provision for income taxes                              148,316           691,176       1,935,523         1,818,179
Provision for income taxes                                             45,600           253,100         688,800           665,400
                                                                   ----------        ----------     -----------        ----------
NET INCOME                                                         $  102,716        $  438,076     $ 1,246,723        $1,152,779
                                                                   ==========        ==========     ===========        ==========
Total earning per share                                            $      .06        $      .25     $       .73        $      .65
                                                                   ==========        ==========     ===========        ==========
</TABLE>



See accompanying notes to consolidated financial statements



* Earnings per share for prior periods have been restated to reflect a 2 for 1
  stock dividend executed in May 1996.


                                     Page 2
<PAGE>   5


                        Midwest Federal Financial Corp.
                                 And Subsidiary
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                               Nine Months Ended
                                                                               -----------------
                                                                         09/30/96           09/30/95
                                                                         --------           --------
<S>                                                                  <C>                 <C>
Cash Flows from operating activities:
 Net Income                                                          $  1,246,723        $ 1,152,779
                                                                     ------------        -----------
 Adjustments to reconcile net income to net cash
  provided by operating activities:
   Depreciation                                                           282,224            241,038
   Net amortization of premiums and discounts on
   Investment and mortgage-backed securities                               12,636             27,035 
   Provision for loan losses                                              250,000            100,000
   Gain on sale of investment and mortgage-backed securities             (258,942)           (90,796)
   Dividends reinvested in Federal Home Loan Bank Stock                         0            (11,100)
   Gain on sale of loans                                                 (352,818)          (123,338)
   Origination of loans held for sale                                 (18,693,960)        (8,393,858)
   Proceeds from sale of loans originated for sale                     18,834,706          8,624,708
   Provision (credit) for deferred taxes                                  140,189           (496,511)
   Increase (decrease) in other assets                                     24,637           (826,748)
   Increase (decrease) in other liabilities                               620,237            217,005
                                                                     ------------        -----------
     Total adjustments                                                    858,909           (732,565)
                                                                     ------------        -----------
Net cash provided by operating activities                               2,105,632            420,214
                                                                     ------------        -----------
Cash flows from investing activities
    Net (increase) decrease in interest-bearing deposits                  498,999           (201,999)
    Securities available for sale:
      Purchase of investment securities                               (10,365,272)        (9,774,313)
      Proceeds from sale of investment securities                      13,509,854          2,405,486
      Proceeds from maturities of investment securities                 2,220,000          3,500,000
      Purchases of mortgage-backed securities                          (8,577,941)                 0
      Proceeds from sale of mortgage-backed securities                          0          2,106,749
      Principal repayment on mortgage-backed securities                 1,780,967            819,871
    Securities held to maturity:
      Purchase of investment securities                                         0         (2,994,800)
      Proceeds from maturities of investment securities                   800,000                  0
Redemption of Federal Home Loan Bank stock                                136,100                  0
Purchase of Federal Home Loan Bank Stock                                 (268,900)                 0
Net increase in loans                                                 (17,405,273)        (9,408,849)
Capital expenditures                                                     (283,073)          (665,018)
Payment received on loan to ESOP                                           29,789             19,135
                                                                     ------------        -----------
Net cash used in Investing activities                                 (17,924,750)       (14,193,738)
                                                                     ------------        ----------- 
</TABLE>


                                     Page 3
<PAGE>   6

                         MIDWEST FEDERAL FINANCIAL CORP
                                 And Subsidiary
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (Unaudited)

(Continued)

<TABLE>
<CAPTION>
                                                               Nine Months Ended
                                                               -----------------

                                                        09/30/96           09/30/95
                                                        --------           --------
<S>                                                    <C>                <C>
Cash Flows from financing activities:
  Net increase (decrease) in deposits                  10,687,466         15,062,888
  Net increase (decrease) in borrowed funds             6,100,000         (1,000,000)
  Net increase (decrease) in advance payments
   by borrowers for taxes and insurance                   336,182            551,076
  Net proceeds from sale of stock                               0                  0
  Purchase of treasury stock                             (751,688)          (402,373)
  Dividends paid                                         (304,148)          (166,241)
  Proceeds from the exercise of stock options              82,277             25,200
                                                      -----------        -----------
Net Cash provided by financing activities              16,150,089         14,070,550
                                                      -----------        -----------
Net increase (decrease) in cash and cash equivalents      330,971            297,026
Cash and cash equivalents at beginning                  6,479,903          5,876,454
                                                      -----------        -----------
Cash and cash equivalents at end                      $ 6,810,874        $ 6,173,480
                                                      ===========        ===========
Supplemental cash flow information:
 Cash paid during the period for:
  Interest on deposit accounts                        $ 5,009,995        $ 4,462,817
  Interest on borrowings                                  714,208            320,328
  Income taxes                                            688,800            665,400
</TABLE>

See accompanying notes to consolidated financial statements.


                                     Page 4
<PAGE>   7


                        Midwest Federal Financial Corp.
                                 And Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Midwest Federal Financial Corp. and Subsidiary (the
Company) conform to generally accepted accounting principles and prevailing
practices within the thrift industry.  A summary of the more significant
accounting policies follows:

PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Midwest Federal Financial Corp., its wholly-owned subsidiary, Baraboo Federal
Bank, FSB (the Bank), and the Bank's wholly-owned subsidiary, BF Financial
Services, Inc.  All significant intercompany accounts and transactions have
been eliminated in consolidation.  BF Financial Services, Inc. offers full
service brokerage services and insurance annuity contracts to its customers.

CASH EQUIVALENTS
The Company generally considers all highly liquid debt instruments with
original maturities when purchased of three months or less to be cash
equivalents.

INVESTMENT IN SECURITIES
The Company's investments in securities are classified in two categories and
accounted for as follows:

     Securities held to maturity - Debt and mortgage-backed securities for which
     the Company has the positive intent and ability to hold to maturity are
     reported at cost, adjusted for amortization of premiums and accretion of
     discounts, which are recognized in interest income using the interest
     method over the period to maturity.

     Securities available for sale - Securities available for sale consist of
     equity securities and certain debt and mortgage backed securities not
     classified as securities held to maturity.  Unrealized holding gains and
     losses, net of tax, on securities available for sale are reported as a net
     amount in a separate component of stockholders' equity until realized, if
     judged to be temporary.

Gains and losses on the sale of securities available for sale are determined
using the specific-identification method.

LOANS HELD FOR SALE
Mortgage loans held for sale generally consist of current production of certain
fixed-rate first mortgage loans.  Mortgage loans held for sale are carried at
the lower of cost (less principal payments received) or market value.

LOANS RECEIVABLE
Loans receivable are stated as unpaid principal balances, less the allowance
for loan losses and net deferred loan origination fees.  Interest income is
recognized using methods which approximate a level yield on principal amounts
outstanding.  Accrual of interest is discontinued either when reasonable doubt
exists as to the full, timely collection of interest or principal or when a
loan becomes contractually past due by 90 days or more with respect to interest
or principal.  At that time, any accrued but uncollected interest is reversed,
and additional income is recorded only to the extent that payments are received
and the collection of principal is reasonably assured.

LOAN FEES AND RELATED COSTS
Certain loan origination fees, commitment fees and direct loan origination
costs are being deferred and the net amounts amortized as an adjustment of the
related loan's yield.  The Bank is amortizing these amounts into interest
income, using the level yield method, over the contractual life of the related
loan.

Other origination and commitment fees not required to be recognized as a yield
adjustment are included in loan fees and service charges.



                                     Page 5
<PAGE>   8




                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FORECLOSED PROPERTIES
Real estate acquired by foreclosure or deed in lieu of foreclosure, is adjusted
to its fair market value upon acquisition and is subsequently carried at the
lower of cost or net realizable value.  Costs related to the development and
improvement of property are capitalized; holding costs are charged to expense.

ALLOWANCE FOR LOSSES ON LOANS AND FORECLOSED PROPERTIES
Management periodically reviews loans and foreclosed properties to determine
whether the estimated realizable value of the related asset is less than the
carrying amount.  In making such determinations, consideration is given to
estimated sales price, refurbishing costs, and direct holding and selling
costs.  When a loss is anticipated, an allowance for the estimated loss is
provided.  In addition, general loss allowances are established in excess of
identifiable losses.  This allowance is based on the Bank's own loss
experience, that of the financial services industry, and management's ongoing
assessment of the credit risk inherent in the portfolio.

In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan," which was subsequently amended by SFAS No. 118.  This
statement addresses the accounting by creditors for certain impaired loans and
requires that applicable impaired loans be measured based on future cash flows
or fair value of the underlying collateral.  The statements have been adopted
by the Company effective January 1, 1995.  The adoption of SFAS No. 114 and
SFAS No. 118 has had a minimal effect on the Company's financial position.

OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment are recorded at cost.  Maintenance and repair
costs are charged to expense as incurred.  When property is retired or
otherwise disposed of, the related cost and accumulated depreciation are
removed from the respective accounts and the resulting gain or loss is recorded
in income.  The cost of office properties and equipment is being depreciated
principally by accelerated and straight-line methods over the estimated useful
lives of the assets for both financial reporting and tax reporting purposes.

INTANGIBLES
The deposit base intangible is being amortized on a straight-line basis over a
ten-year period.

INCOME TAXES
Deferred income taxes have been provided under the liability method.  Deferred
tax assets and liabilities are determined based upon the difference between the
financial statement and tax bases of assets and liabilities, as measured by the
enacted tax rates which will be in effect when these differences are expected
to reverse.  Deferred tax expense is the result of changes in the deferred tax
asset and liability.

PER SHARE AMOUNTS
Earnings per share are based on the weighted average number of common shares
outstanding during each period and common stock equivalent shares, using the
treasury share method, as adjusted for the two-for-one stock split effected in
the form of a dividend during 1996.  Primary and fully diluted earnings per
share are the same.  The Company's common stock equivalents consist entirely of
stock options.  The resulting weighted average number of shares used in
computing earnings per share for the quarter ending September 30, 1996 and 1995
were 1,744,313 and 1,795,836 respectively.  The resulting weighted average
number of shares used in computing earnings per share for the year to date
period ending September 30, 1996 and 1995 were $1,746,177 and $1,785,954.  All
other references to numbers of shares and dividends per share in these
financial statements have also been restated to reflect the stock split
effected in the form of a dividend.



                                     Page 6
<PAGE>   9


                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING CHANGES
In December 1991, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures about
Fair Value of Financial Instruments."  This statement requires disclosure of
the fair value of financial instruments, both assets and liabilities, whether
or not such instruments are recognized in the balance sheet.  Financial
instruments involve either a right or an obligation to receive or deliver cash
or an equivalent to another entity.  Such disclosure could be on the face of
the financial statements or in footnotes thereto to the extent that such fair
value is reasonably attainable, and would not necessarily result in any
adjustment to the carrying amounts of such instruments on the Company's
statement of financial condition.  As it relates to the Company, financial
instruments include primarily cash equivalents, investment securities,
mortgage-backed securities, loans receivable and deposits.  SFAS No. 107 has
been adopted by the Company for the fiscal year ending December 31, 1995.

The financial Accounting Standards board (FASB) issued SFAS No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" in March 1995.  SFAS No. 121 requires long-lived assets and
certain intangibles to be held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate the carrying amount of an
asset may not be recoverable.  The statement also requires long-lived assets
and certain intangibles to be disposed of be reported at the lower of carrying
amount or fair value less cost to sell (except assets covered by APB Opinion
No. 30, "Reporting the Results of Operations - Reporting the Effects of
Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions").  This statement has been adopted by the
Company on January 1, 1996.  The adoption of SFAS No. 121 is not anticipated to
have a significant impact on the Company's financial condition or results of
operations once implemented.

The FASB issued SFAS No. 122, "Accounting for Mortgage Servicing Rights" in May
1995.  SFAS No. 122 requires accounting recognition of the rights to service
mortgage loans for others.  The total cost of the mortgage loan will be
allocated between the relative fair values of the loan and the mortgage
servicing rights.  The cost allocated to mortgage servicing rights will be
recognized as a separate asset and amortized over the period of estimated
servicing income.  This statement has been adopted by the Company as of January
1, 1996.  The actual impact of adoption is contingent on the future levels of
mortgage loan sales.

The FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation" in
October 1995.  SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans.  The statement
encourages a "fair value based method" of accounting for stock-based
compensation plans.  Upon adoption of SFAS No. 123, the Company will be
required to disclose in the notes to the financial statements the difference
between the "fair value method" and the "intrinsic value method" as prescribed
by APB Opinion No. 25 "Accounting for Stock Issued to Employees".  The Company
will continue to account for stock-based compensation in accordance with APB
Opinion No. 25 on the Company's financial statements.  SFAS No. 123 is required
to be adopted as of January 1, 1996 and will not have a significant impact on
the Company's financial condition or results of operations.

RECLASSIFICATIONS
Certain amounts in these financial statements for prior years have been
reclassified to conform to the September 30, 1996 presentation.



                                     Page 7
<PAGE>   10



                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated market values of investment securities
available for sale.


<TABLE>
<CAPTION>
                                                                Gross        Gross      Estimated
                                                  Amortized   Unrealized  Unrealized     Market
                                                    Cost        Gains       Losses        Value
                                                 -----------  ----------  -----------  -----------
              September 30, 1996
              ------------------
<S>                                              <C>          <C>         <C>          <C>
U.S. government and agencies securities          $12,542,019    $ 41,238     $216,685  $12,366,572
Obligations of state and political subdivisions    4,578,338      21,499       29,308    4,570,529
Other                                                857,385      20,933                   878,318
Equity securities - Common stock                     794,416      88,262       11,262      871,416
                                                 -----------    --------     --------  -----------
    TOTALS                                       $18,772,158    $171,932     $257,255  $18,686,835
                                                 ===========    ========     ========  ===========
               December 31, 1995
               -----------------
U.S. government and agencies securities          $20,486,905    $242,154     $     11  $20,729,048
Obligations of state and political subdivisions    2,875,769      63,957       11,356    2,928,370
Other                                                             24,000                    24,000
Equity securities - Common stock                     885,901      33,000                   918,901
                                                 -----------    --------     --------  -----------
    TOTALS                                       $24,248,575    $363,111     $ 11,367  $24,600,319
                                                 ===========    ========     ========  ===========
</TABLE>

The amortized cost and estimated market values of mortgage-backed securities
available for sale.


<TABLE>
<CAPTION>
                                                            Gross       Gross      Estimated
                                              Amortized   Unrealized  Unrealized     Market
                                                Cost        Gains       Losses       Value
                                             -----------  ----------  ----------  ------------
            September 30, 1996
            ------------------
<S>                                          <C>          <C>         <C>         <C>
Participation certificates:
  FHLMC                                      $ 5,722,384     $   982    $ 81,710   $ 5,641,656
  FNMA                                         4,091,338      19,560      64,150     4,046,748
  GNMA                                         4,599,204       4,945      37,229     4,566,920
  SBA                                            283,099         570                   283,669
  Other                                          312,698       4,529                   317,227
Real estate mortgage investment Conduits
("REMICS")                                     2,158,204       2,906      47,771     2,113,339
Adjustable rate mortgage mutual fund             346,960                   2,776       344,184
Collateralized mortgage obligations (CMO's)      664,509                  25,533       638,976
                                             -----------     -------    --------   -----------
    TOTALS                                   $18,178,396     $33,492    $259,169   $17,952,719
                                             ===========     =======    ========   ===========
             December 31, 1995
             -----------------
Participation certificates:
  FHLMC                                      $ 2,004,515     $          $ 39,527   $ 1,964,988
  FNMA                                         1,572,252       8,165       8,359     1,572,058
  GNMA                                         4,744,533      11,750      17,208     4,739,075
  SBA                                            288,088       7,117                   295,205
Collateralized mortgage Conduits (REMICS")     1,582,318      10,147                 1,592,465
Collateralized mortgage obligations (CMOs)       867,032         124      17,312       849,844
Adjustable rate mortgage mutual fund             346,960                   1,041       345,919
                                             -----------     -------    --------   -----------
    TOTALS                                   $11,405,698     $37,303    $ 83,447   $11,359,554
                                             ===========     =======    ========   ===========
</TABLE>



                                     Page 8
<PAGE>   11




                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







NOTE 2 - INVESTMENT SECURITIES HELD TO MATURITY



The amortized cost and estimated market values of investment securities held to
maturity.



<TABLE>
<CAPTION>
                     
                                                                                       Gross         Gross      Estimated
                                                                      Amortized      Unrealized    Unrealized    Market
                                                                        Cost           Gains         Losses      Value
 September 30, 1996                                                  ---------      ----------     ----------   ---------
 ------------------
<S>                                                                 <C>               <C>          <C>       <C>
U.S. Treasury obligations and obligations of U.S. agencies           $1,300,000       $   120       $10,190    $1,289,930
                                                                     ==========       =======       =======    ==========

                                                                                       Gross         Gross      Estimated
                                                                      Amortized      Unrealized    Unrealized    Market
                                                                        Cost           Gains         Losses      Value
  December 31, 1995                                                  ---------      ----------     ----------   ---------
  -----------------
U.S. Treasury obligations and obligations of U.S. agencies           $2,095,025       $16,997                  $2,112,022
                                                                     ==========       =======                  ==========
</TABLE>

NOTE 3 - LOANS RECEIVABLE

Details of loans receivable

<TABLE>
<CAPTION>


                                        09/30/96            12/31/95
                                        --------            --------
<S>                                  <C>                 <C>
First Mortgage Loans:
 One-to-four family residential      $ 59,717,432        $ 59,178,880
 Multi-family residential               6,683,639           7,328,630
 Commercial                            30,812,397          18,082,781
 Construction                           6,134,307           4,661,327
                                     ------------        ------------ 
Total first mortgage loans            103,347,775          89,251,618
 Consumer and other loans:
 Home Equity                           13,807,034          12,171,585
 Consumer                              14,678,076          12,692,942
 Commercial                             8,939,799           9,032,325
 Education loans                          947,413             711,066
 Savings account                          304,738             244,217
 Agricultural                           1,470,342           1,763,872
                                     ------------        ------------
Total consumer and other loans         40,147,402          36,616,007
                                     ------------        ------------
Subtotals                             143,495,177         125,867,625
Less:
 Undisbursed Loan Proceeds              1,687,281           1,620,226
 Allowance for Estimated Losses         1,482,198           1,320,734
 Deferred Loan Fees - Net                  (4,997)              1,243
                                     ------------        ------------
 Totals                              $140,330,695        $122,925,422
                                     ============        ============

</TABLE>


                                     Page 9
<PAGE>   12





                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 4 - DEPOSIT ACCOUNTS

Deposit accounts are summarized as follows:


<TABLE>
<CAPTION>
                                                                             09/30/96                   12/31/95
                                                                             --------                   --------
<S>                                                                       <C>            <C>      <C>           <C>
                                                                            Amount      Percent    Amount      Percent
Demand Deposit Accounts (noninterest-bearing)                             $ 13,537,598    8.83%  $ 13,273,632    9.31%

Negotiable Orders of Withdrawal (NOW) Accounts
(2.25% at December 31, 1995 and at September 30, 1996)                       8,455,578    5.52%     6,921,389    4.85%
Super NOW Accounts
(2.40% at December 31, 1995 and at September 30, 1996)                       1,473,257    0.96%     1,663,425    1.17%

Savings Accounts
(2.25% at December 31, 1995 and at September 30, 1996)                      11,403,485    7.44%    11,609,058    8.14%

Cash Management Accounts
(3.50% to 5.25% at December 31, 1995 and 3.30% to
5.00% at September 30, 1996)                                                27,816,528   18.15%    23,457,210   16.45%

Money Market Accounts
(2.40% to 3.25% December 31, 1995 and at                                     3,180,388    2.07%     3,238,356    2.27%
September 30, 1996)

Certificate Accounts:
                                                                                 8,566    0.00%        11,204    0.01%
Less than 3.00%                                                              1,287,617    0.84%     1,264,327    0.89%
3.00% - 3.99%                                                                4,500,793    2.94%     9,652,733    6.77%
4.00% - 4.99%                                                               46,287,341   30.20%    31,222,733   21.90%
5.00% - 5.99%                                                               32,727,019   21.35%    37,185,191   26.07%
6.00 - 6.99%                                                                 2,599,810    1.70%     3,091,256    2.17%
                                                                          ------------  -------  ------------  -------
7.00 - over                                                               $153,277,980  100.00%  $142,590,514  100.00%
Totals                                          

Weighted Average Savings Interest Rate                                                    5.13%                  5.24%
                                                                                          =====                  =====
</TABLE>


                                    Page 10
<PAGE>   13






                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 -  RETAINED EARNINGS - SUBSTANTIALLY RESTRICTED

Under the provisions of FIRREA, the Savings Bank is required to meet certain
tangible, core and risk-based capital requirements.  Tangible capital generally
consists of stockholders' equity minus certain intangible assets.  Core capital
generally consists of stockholders' equity.  The risk-based capital
requirements presently address risk related to both recorded assets and
off-balance-sheet commitments and obligations.

The following table summarizes the Savings Bank's capital ratios and the ratios
required by FIRREA and subsequent regulations at September 30, 1996:



<TABLE>
<CAPTION>
                                        Tangible       Core      Risk-Based
                                        Capital       Capital      Capital
                                      ------------  -----------  -----------
<S>                                   <C>           <C>          <C>
Savings Bank's regulatory percentage     7.13%         7.13%       12.07%
Required regulatory percentage           1.50%         3.00%        8.00%
                                      -----------   -----------  -----------
Excess regulatory percentage             5.63%         4.13%        4.07%
                                      -----------   -----------  -----------
Savings Bank's regulatory capital     $13,765,000   $13,765,000  $15,247,000
Required regulatory capital             2,895,000     5,790,000   10,101,000
                                      -----------   -----------  -----------
Excess regulatory capital             $10,870,000   $ 7,975,000  $ 5,146,000
                                      ===========   ===========  ===========
</TABLE>

NOTE 6 - SAIF ASSESSMENT

Midwest Federal Financial Corp. has taken a one-time $506 thousand after tax
charge against earnings for the third quarter, 1996.  The one-time assessment,
which affected all SAIF insured FDIC depository institutions, was a result of
legislation passed to fully fund the Savings Association Insurance Fund (SAIF).
The legislation was signed into law by President Clinton on September 30,
1996.  The special assessment was fully and eagerly anticipated by Midwest
Federal.  The decline in FDIC insurance cost from an annual charge of 23.4
basis points to 6.4 basis points, (which occurs as a result of this
assessment), will have a long-term positive effect on our ability to compete
for deposits in our marketplace.













                                    Page 11
<PAGE>   14

                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                     MANAGEMENT'S DISCUSSIONS AND ANALYSIS
                           OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

FINANCIAL DATA SUMMARY

TOTAL ASSETS
Total assets have increased by $17.5 million from December 31, 1995 to
September 30, 1996.  This is an increase of  9.9%.  Deposit growth and
borrowings, have funded increases in earning assets.

LOANS
Net loans receivable have increased by $17.4 million from December 31, 1995 to
September 30, 1996,  an increase of 14.2 %.  Commercial mortgage loans account
for $13.5 million of this increase.  Adjustable rate mortgage loans, commercial
and consumer loans are put into the portfolio of the Bank.  Fixed rate mortgage
originations continue to be sold to FHLMC.

CASH AND INVESTMENTS
Mortgage backed securities and investments have decreased by $.1 million, a
decrease of .3%.  Proceeds from this decrease in investments were used to fund
loan growth.

DEPOSITS
Deposit growth from December 31, 1995, to September 30, 1996, was $10.7
million, an increase of 7.5%.  Deposit growth was used to fund loan growth.

BORROWED FUNDS
The borrowed funds of the Bank have increased by $6.0 million, or 38.1%.  The
increase in borrowed funds has helped fund loan growth.

EQUITY
Equity is down $.2 million or 1.2% due to the purchase of Midwest Stock for
treasury and unrealized losses on securities available for sale.  The
unrealized losses of $289,000 are a result of a decrease in the market value of
the investment portfolio as of September 30, 1996.  Additionally, the one time
FDIC insurance assessment had a negative $506,000 after tax impact to the
retained earnings section of total equity.

OPERATING DATA SUMMARY

NET INTEREST INCOME
Net interest income for the third quarter of 1996 is up 15.0% over the third
quarter of 1995.  The increase in net interest income is due to growth in
assets of 16.1% from one year ago.  Year to date net interest income is up
22.0% due to increases in asset growth and margin year to date.



                                    Page 12
<PAGE>   15




OPERATING DATA SUMMARY (CONT.)

NON-INTEREST INCOME
Non-interest income increased by 84.3% from the quarter ending September 30,
1995,  compared to the quarter ending September 30, 1996, and is up 59.7% year
to date.  Year to date increases in loan and deposit fee income of 40.4% and
28.1% are due to growth and the company's focus on opportunities in these
areas.  Year to date gains on sale of investment securities are up $168,000
from last year due to investment strategies designed to take advantage of rate
swings.  Year to date gains on sale of loans have increased primarily due to
the implementation of FAS 122 "Accounting for Mortgage Service Rights" in
calendar year 1996.

NON INTEREST EXPENSE
Non-interest expenses increased by 81.6% for the quarter ending September 30,
1996 when compared to the quarter ending September 30, 1995, and is up 38.2%
year to date.  The primary reason for the increase is a one time FDIC insurance
assessment of $842,600 booked on 09/30/96.  The lower FDIC insurance premium
resulting from the assessment will allow a 3.5 year recovery of the assessment.

NET INCOME
Net income for the third quarter of 1996 is down 83% from the third quarter of
1995 and earnings per share decreased from $ .25 to $ .06.  Net income year to
date is 8.2% higher than 1995 and year to date earnings per share increased
from $ .65 to $ .73, or 12.3%.

Net income for the third quarter, exclusive of the one time FDIC assessment,
would have been up $609,000 or $.35 per share, up 39% from the quarter ending
September 30, 1995.  Exclusive of the FDIC assessment, year to date 1996
earnings would have been 52% above year to date 1995 earnings.

                                    Page 13
<PAGE>   16




                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY





                              KEY OPERATING RATIOS

                                  (UNAUDITED)

                              ENDED SEPTEMBER 30,



<TABLE>
<CAPTION>
                                                                   Three Month Period
                                                                  --------------------
                                                                      1996       1995
                                                                      ----       ----
<S>                                                                  <C>        <C>
Return on assets
(Net income divided by average assets) (1) (2)                         .21%      1.08%

Return on average equity
(net income divided by average equity) (1) (3)                        2.44%     10.86%

Average equity to average assets                                      8.78%      9.95%

Interest rate spread
(difference between average yield on interest earning assets and
average cost of interest bearing liabilities) (1)                     3.62%      3.59%

Net interest margin
(net interest income as a percentage of average interest
earning assets) (1)                                                   4.10%      4.19%

Non-interest expense to average assets (1) (4)                        4.69%      3.06%

Average interest earning assets to interest bearing deposits        110.57%    113.50%

Allowance for loan losses to total loans at end of period             1.04%      1.02%

Net charge-offs to average outstanding loans during the period         .05%       .00%

Ratio of non-performing assets to total assets                         .24%       .00%

Risk-based capital (of the Bank)                                     12.08%     14.09%
</TABLE>
------------------------------------------------------------
(1) Annualized
(2) Before one time FDIC assessment:  1.27%  (1)
(3) Before one time FDIC assessment: 14.45%  (1)
(4) Before one time FDIC assessment:  2.93%  (1)







                                    Page 14
<PAGE>   17








                           PART II. OTHER INFORMATION



Item 1.  Legal Proceedings

          Not Applicable
  
Item 2.  Changes in Securities

          Not Applicable

Item 3.  Defaults upon Senior Securities

          Not Applicable

Item 4.  Submission of Matters to Vote of Securities Holders

          Not Applicable

Item 5.  Other information

          Not Applicable

Item 6.  Exhibits and Reports on Form 8-K

         During the quarter ended September 30,1996, the Registrant was not
         required to file any Current Reports on Form 8-K, and no reports on
         Form 8-K were filed.


                                    Page 15
<PAGE>   18

                                   SIGNATURES



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


                        MIDWEST FEDERAL FINANCIAL CORP.




     /S/ Gary E. Wegner
--------------------------------------------
     Gary E. Wegner, President & CEO


     /S/  Dean C. Carter
--------------------------------------------
     Dean C. Carter, Chief Financial Officer



Date: November 12, 1996