<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   March 31, 1997
                              --------------------------------------

                                     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 of         (I.R.S. Employer Identification No.)
 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 May 2, 1997 there were 2,069,998 shares, $.01 par value, of the
registrant's common stock issued and 1,624,874 shares or common shares
equivalents are outstanding.
<PAGE>   2





                        Midwest Federal Financial Corp.
                                 And Subsidiary

                               Table of Contents

PART I - Financial Information

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)                4
Management's Discussion and Analysis of Financial
  Condition and Results of Operations                                11

PART II - Other Information

Item 1.  Legal Proceedings                                           13
Item 2.  Changes in Securities                                       13
Item 3.  Defaults Upon Senior Securities                             13
Item 4.  Submission of Matters to Vote
           of Securities Holders                                     13
Item 5.  Other Information                                           13
Item 6.  Exhibits and Reports on Form 8-K                            13
<PAGE>   3




                 MIDWEST FEDERAL FINANCIAL CORP. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                      MARCH 31, 1997 AND DECEMBER 31, 1996



<TABLE>
<CAPTION>
                                                                                             MARCH 31, 1997      DEC. 31, 1996
                                                                                             --------------      -------------
                                                                                               (UNAUDITED)
<S>                                                                                         <C>                 <C>
                                          ASSETS                                  
CASH AND CASH EQUIVALENTS                                                                   $     7,942,262     $    6,874,107
OTHER INTEREST-BEARING DEPOSITS                                                                     100,000            100,000
SECURITIES HELD TO MATURITY (FAIR VALUE 1997 $1,084,772; 1996 $1,093,240)                         1,100,000          1,100,000
SECURITIES AVAILABLE FOR SALE                                                                    34,002,694         34,320,832
LOANS HELD FOR SALE                                                                                 703,900            527,446
LOANS, NET OF ALLOWANCE FOR LOAN LOSSES 1997 $1,514,673; 1996 $1,538,580                        147,531,469        144,201,689
ACCRUED INTEREST RECEIVABLE                                                                       1,777,915          1,512,342
PREMISES AND EQUIPMENT, NET                                                                       4,124,190          4,030,183
OTHER ASSETS                                                                                      3,787,563          3,633,424
                                                                                               ------------       ------------
                                                                                               $201,069,993       $196,300,023
                                                                                               ============       ============
                                                                                  
                            LIABILITIES AND STOCKHOLDERS EQUITY                   
                                                                                  
LIABILITIES                                                                       
   DEPOSITS:                                                                      
      NON-INTEREST BEARING                                                                    $  12,403,253      $  13,204,354
      INTEREST BEARING                                                                          144,367,468        139,287,113
                                                                                              -------------      -------------
                                                                                               $156,770,721       $152,491,467
   BORROWED FUNDS                                                                                24,750,000         24,800,000
   ADVANCE PAYMENTS BY BORROWERS -- ESCROW ACCOUNTS                                                 209,113            141,893
   ACCRUED INTEREST PAYABLE AND OTHER LIABILITIES                                                 2,022,566          1,962,987
                                                                                              -------------      -------------
                                                                                                183,752,401        179,396,347
                                                                                              -------------      -------------
COMMITMENTS, CONTINGENCIES AND CREDIT RISK                                        
STOCKHOLDER'S EQUITY                                                              
   COMMON STOCK, PAR VALUE $.01 PER SHARE, 9,000,000 SHARES AUTHORIZED,           
      2,069,998 SHARES ISSUED, OUTSTANDING 1,624,874 AND 1,620,379 RESPECTIVELY                      20,700             20,700
   ADDITIONAL PAID-IN CAPITAL                                                                     6,495,310          6,495,310
   RETAINED EARNINGS, SUBSTANTIALLY RESTRICTED                                                   15,067,380         14,507,322
   UNREALIZED GAIN (LOSS) ON SECURITIES AVAILABLE FOR SALE, NET                                   (292,000)           (94,600)
   LOAN TO ESOP                                                                                   (335,624)          (350,142)
TREASURY STOCK, AT COST 445,124 AND 449,619 SHARES RESPECTIVELY                                 (3,638,174)        (3,674,914)
                                                                                             --------------      -------------
                                                                                                 17,317,592         16,903,676
                                                                                             --------------      -------------
                                                                                  
                                                                                               $201,069,993       $196,300,023
                                                                                             ==============      =============
</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
                                                                              -------------



                                                                           03/31/97       03/31/96
                                                                           --------      ---------
 <S>                                                                     <C>            <C>
 Interest and dividend income:
    Mortgage loans                                                       $2,371,797     $2,023,293
    Other loans                                                             940,163        902,124
    Investment securities and interest-bearing deposits                     307,034        376,644
    Mortgage-backed securities                                              240,393        201,803
    Dividends on stock in Federal Home Loan Bank                             23,384         14,860
                                                                        -----------    -----------
    TOTAL INTEREST AND DIVIDEND INCOME                                    3,882,771      3,518,724
                                                                        -----------    -----------
 Interest Expense:
    Deposits                                                              1,706,008      1,624,421
    Borrowed funds                                                          347,666        186,519
                                                                        -----------    -----------
    TOTAL INTEREST EXPENSE                                                2,053,674      1,810,940
                                                                        -----------    -----------

 Net interest income                                                      1,829,097      1,707,784
 Provision for loan losses                                                   69,000         52,500
                                                                        -----------    -----------
 Net interest income after provision for loan losses                      1,760,097      1,655,284
                                                                        -----------    -----------

 Non-interest income:                          
    Loan fees and service charges                                           70,858          73,386
    Deposit account fees and service charges - Net                         213,373         178,590
    Net gain on sale of investment and mortgage-backed securities          150,022         118,779
    Net gain on sale of loans                                               75,269          67,802
    Other income                                                           120,675         126,742
                                                                        ----------    ------------
 TOTAL NON-INTEREST INCOME                                                 630,197         565,299
                                                                        ----------    ------------
 Operating Expenses:
    Compensation and other employee benefits                                753,022        678,553
    Occupancy                                                               190,616        203,080
    Telephone and postage                                                    55,976         53,627
    Data processing                                                          95,152         90,542
    Federal deposit insurance premiums                                       21,892         69,782
    Other                                                                   236,535        244,511
                                                                        -----------   ------------
    TOTAL OPERATING EXPENSES                                              1,353,193      1,340,095
                                                                         ----------    -----------
 Income before provision for income taxes                                 1,037,101        880,488
 Provision for income taxes                                                 338,800        319,500
                                                                        -----------   ------------
 NET INCOME                                                                 698,301        560,988
                                                                        ===========   ============

 Total earning per share                                                $      .40            $.32                        
                                                                        ===========   ============
</TABLE>


See accompanying notes to consolidated financial statements

* Earnings per share for prior periods has 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>
                                                                                     THREE MONTHS ENDED
                                                                                     ------------------

                                                                                  03/31/97           03/31/96
                                                                                  --------           --------
<S>                                                                           <C>                <C>
Cash Flows from operating activities:
      Net Income                                                              $    698,301        $   560,988

      Adjustments to reconcile net income to net cash provided by
         operating activities:
         Depreciation                                                               90,980             92,300
         Amortization                                                               21,803             21,803
         Net amortization (accretion) of bond premiums and                          82,815             36,826
           discounts
         Provision for loan losses                                                  69,000             52,500
         Securities (gains) losses                                                (150,022)          (118,779)
         Gain on sale of loans                                                     (75,629)           (67,802)
         Origination of loans held for sale                                     (4,317,294)        (5,217,233)
         Proceeds from sale of loans held for sale                               4,216,109          5,284,690
         Deferred income taxes                                                           0                  0
         Increase in accrued interest receivable and other assets                (329,515)          (220,960)
         Increase in accrued interest payable and other liabilities                 79,075             65,591
                                                                              ------------        -----------
            Net cash provided by operating activities                              385,983            489,924
                                                                              ------------        -----------

Cash flows from investing activities
    Net (increase) decrease in other interest-bearing deposits                           0            299,000
    Purchases of securities held to maturity                                             0                  0
    Proceeds from maturities of securities held to maturity                              0            800,000
    Purchases of securities available for sale                                  (6,724,728)       (10,461,491)
    Proceeds from sales of securities available for sale                         6,487,746          8,826,180
    Proceeds from maturities of securities available for sale                      312,927          2,513,349
    Net increase in loans                                                       (3,398,780)        (2,739,518)
    Purchases of premises and equipment                                           (184,987)           (90,714)
                                                                              -------------       ------------
         Net cash (used in) investing activities                                (3,507,822)          (853,194)

Cash flows from financing activities
    Net decrease in deposits                                                     4,279,254           3,901,740
    Net increase (decrease) in borrowings                                          (50,000)        (3,000,000)
    Net increase in advance payments by borrowers for escrow                        67,220             81,100
    Purchase of treasury stock                                                           0                  0
    Proceeds from exercise of stock options                                         15,049                  0
    Dividends paid                                                                (121,529)           (61,234)
                                                                              ------------        -----------
         Net cash provided by financing activities                               4,189,994            921,606
                                                                              ------------        -----------
         Increase in cash and cash equivalents                                   1,068,155            558,336
Cash and cash equivalents:
   Beginning                                                                     6,874,107          6,479,903
                                                                              ------------        -----------
   Ending                                                                     $  7,942,262        $ 7,038,239
                                                                              ============        ===========
Supplemental cash flow information
   Cash payments for:
      Interest                                                                $  2,053,674        $ 1,810,940
      Income taxes                                                                 338,800            319,500
</TABLE>

                 See Notes to Consolidated Financial Statements





                                    Page 3
<PAGE>   6

                        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,
Inc.  All significant intercompany accounts and transactions have been
eliminated in consolidation.  BF Financial, 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.

SECURITIES HELD TO MATURITY AND AVAILABLE FOR SALE
Management determines the appropriate classification of debt securities at the
time of purchase.  Debt securities are classified as held-to- maturity when the
Company has the positive intent and ability to hold the securities to maturity.
Held to maturity securities are stated at amortized cost.

Debt securities not classified as held to maturity and marketable equity
securities are classified as available for sale.  Available for sale securities
are stated at fair value, with the unrealized gains and losses, net of tax,
reported as a separate component of shareholders' equity.  Prior to fiscal
1994, investment securities and mortgage-backed and related securities held for
sale were carried at the lower of cost or market value.

The cost of debt securities classified as held to maturity or available for
sale is adjusted for amortization of premiums and accretion of discounts to
maturity, or in the case of mortgage-backed and related securities, over the
estimated life of the security.  Such amortization is based on a level-yield
method and is included in interest income from the respective security.
Interest and dividends are included in interest and dividend income from
investments.  The cost of securities sold is based on 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 4
<PAGE>   7




                        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.

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.

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.

EARNINGS PER SHARE
Earnings per share of common stock for the periods ending March 31, 1997 and
1996 were computed based on consolidated net income and weighted average
outstanding shares.  The weighted average outstanding shares for the quarter
ending March 31, 1997 and 1996 were 1,726,924 and 1,737,852 respectively.
Prior periods have been restated to reflect a 2 for 1 stock dividend executed
in May 1996.





                                    Page 5
<PAGE>   8

                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING CHANGES
In February 1997, the Financial Accounting Standards Board Issued Statement No.
128, "Earnings Per Share" (SFAS No. 128).  SFAS 128 simplifies the standards
for computing earnings per share and makes the calculation comparable to
international standards.  SFAS 128 replaces primary earnings per share with a
presentation of basic earnings per share.  It also requires dual presentation
of basic and diluted earnings per share and a reconciliation of basic to
diluted earnings per share.

Basic earnings per share is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for
the period.  Diluted earnings per share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company.

SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, and requires restatement of all prior period earnings per
share data.  That is, SFAS 128 will be implemented in the fourth quarter of
1997 and restated back to January 1, 1997.  If SFAS 128 had been in effect
during the first quarter of 1997, basic earnings per share would have been $.43
per share and diluted earnings per share would have been $.40 per share for the
period ended March 31, 1997.

RECLASSIFICATIONS
Certain amounts in these financial statements for prior years have been
reclassified to conform to the March 31, 1997, presentation.





                                     Page 6
<PAGE>   9

                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - DEBT AND EQUITY SECURITIES

Debt and equity securities have been classified in the consolidated
statements of financial condition according to management's intent.  The
carrying amount of securities and their approximate fair values are shown
below.

<TABLE>
<CAPTION>
                                                                                       Gross        Gross        Estimated
                                                                         Amortized   Unrealized   Unrealized      Market
                                                                           Cost        Gains        Losses         Value
 <S>                                                                   <C>           <C>           <C>           <C>
 SECURITIES HELD TO MATURITY:
 March 31, 1997
   U.S. Government and agency securities                               $  1,100,000      ----     $   15,228     $1,084,772
                                                                       ============               ==========     ==========

 December 31, 1996
    U.S. Government and agency securities                              $  1,100,000  $      440   $    7,200     $1,093,240
                                                                       ============  ==========   ==========     ==========
 SECURITIES AVAILABLE FOR SALE:
 March 31, 1997
    U.S.  Government and agency securities                              $12,390,622  $   40,714     $244,345    $12,186,991
    State and municipal securities                                        5,785,015      13,712       66,550      5,732,177
    Mortgage-backed and related securities                               15,236,129      31,339      298,870     14,968,598
    Equity securities                                                     1,049,928     121,375       56,375      1,114,928
                                                                       ------------  ----------   ----------  -------------
                                                                       $ 34,461,694  $  207,140     $666,140    $34,002,694
                                                                       ============  ==========   ==========  =============
 December 31, 1996
    U. S. Government and agency securities                             $ 11,907,933  $   30,599     $129,628    $11,808,904
    State and municipal securities                                        5,576,226      94,514        6,373      5,664,367
    Mortgage-backed securities                                           15,827,399      46,298      270,410     15,603,287
    Equity  securities                                                    1,158,874      87,975        2,575      1,244,274
                                                                       ------------  ----------   ----------   ------------
                                                                       $ 34,470,432  $  259,386     $408,986    $34,320,832
                                                                       ============  ==========   ==========  =============
</TABLE>




                                    Page 7
<PAGE>   10

                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 3 - LOANS RECEIVABLE



Details of loans receivable

<TABLE>
<CAPTION>
                                       03/31/97        12/31/96
                                       --------        --------
 <S>                              <C>             <C>
 Commercial real estate           $  35,518,979    $ 35,245,601
 Residential real estate             68,399,567      66,615,603
 Construction                         2,496,601       4,911,600
 Consumer installment                16,908,376      16,435,287
 Home equity                         14,439,062      13,347,187
 Commercial                          12,004,359      10,643,378
                                  -------------    ------------
                                  $ 149,766,944    $147,198,656



 Less:
    Undisbursed loan proceeds           720,802       1,458,387
    Allowance for loan losses         1,514,673       1,538,580
                                  -------------    ------------
                                  $ 147,531,469    $144,201,689
                                  =============    ============
</TABLE>




                                    Page 8
<PAGE>   11




                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 4 - DEPOSIT ACCOUNTS

Deposit accounts are summarized as follows:

<TABLE>
<CAPTION>
                                                                          03/31/97                     12/31/96
                                                                          --------                     --------

                                                                   Amount        Percent           Amount     Percent
                                                                  -------        -------           ------     -------
<S>                                                              <C>               <C>       <C>                <C>
Demand Deposit accounts (noninterest-bearing)                     $ 12,403,253      7.91%     $  13,204,352      8.66%


Negotiable Orders of Withdrawal (NOW) accounts
   (2.25% at December 31, 1996 and March 31, 1997)                   9,905,643      6.32%        10,775,861      7.07%

Savings Accounts
   (2.25% at December 31, 1996 and March 31, 1997)                  11,106,898      7.08%        11,255,467      7.38%

Money market accounts          
    (2.40% to 5.15% at December 31, 1996 and March 31, 1997)        36,099,767     23.03%        30,711,114     20.14%

Certificate Accounts:
    Less than 3.00%                                                          0         0                  0         0

    3.00% to 3.99%                                                   1,183,011      0.75%         2,398,461      1.57%

    4.00% to 4.99%                                                   2,949,785      1.88%         3,474,756      2.28%

    5.00% to 5.99%                                                  51,574,125     32.90%        48,399,408     31.74%

    6.00% to 6.99%                                                  29,516,064     18.83%        29,819,655     19.55%

    7.00% and over                                                   2,032,175      1.30%         2,452,393      1.61%
                                                                --------------  ---------      ------------    -------

Totals                                                          $  156,770,721    100.00%      $152,491,467    100.00%
                                                                ==============  =========      ============    =======

Weighted Average Savings Interest Rate                                              5.14%                        5.10%
                                                                                    =====                        =====
</TABLE>




                                     Page 9
<PAGE>   12





                        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 March 31, 1997:


<TABLE>
<CAPTION>
                                               Tangible          Core       Risk-Based         
                                                Capital        Capital       Capital           
                                                -------        -------       -------           
<S>                                            <C>            <C>          <C>                 
Savings Bank's regulatory percentage                 7.58%          7.58%        11.99%        
                                                                                               
Required regulatory  percentage                      1.50%          3.00%         8.00%        
                                               -----------    -----------   -----------        
                                         
Excess regulatory percentage                         6.08%          4.58%         3.99%        
                                               ===========    ===========   ===========        
                                                                                               
Savings Bank's regulatory capital              $15,089,000    $15,089,000   $16,604,000        
Required regulatory capital                      2,988,000      5,975,000    11,076,000        
                                               -----------    -----------   -----------        
                                                                                               
Excess regulatory capital                      $12,101,000    $ 9,114,000   $ 5,528,000        
                                               ===========    ===========   ===========        
</TABLE>



                                    Page 10
<PAGE>   13


                        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 $4.8 million from December 31, 1996, to March 31,
1997,  an increase of 2.4%.  Deposit growth has funded loan growth.

LOANS
Net loans receivable have increased by $3.3 million from December 31, 1996, to
March 31, 1997.  This is an increase of 2.3 %.  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 $.3 million, or
 .9%.  Proceeds from this decrease in investments were used to fund loan growth.

DEPOSITS
Deposit growth from December 31, 1996, to March 31, 1997, was $4.3 million, or
2.8%.  Deposit growth was used to fund loan growth.

BORROWED FUNDS
The borrowed funds of the Bank have decreased by $50,000.  Borrowings
stayed flat due to deposit growth.

EQUITY
Equity increased only $.4 million or 2.4% due to unrealized losses on
securities available for sale.  The unrealized loss is a result of a
$197,400 decrease in the market value of the investment portfolio as of March
31, 1997.

OPERATING DATA SUMMARY

NET INTEREST INCOME
Net interest income for the first quarter of 1997 is up 7.1% over the first
quarter of 1996.  The increase in net interest income is due to growth in
assets of 12.8% from one year ago.  The percentage increase in net interest
income is less than the percentage increase in assets due to the net interest
margin shrinking by .22 basis points.

NON-INTEREST INCOME
Non-interest income increased by 11.5% from the quarter ending March 31, 1996,
compared to the quarter ending March 31, 1997.  This increase can be attributed
to growth in deposit fees and increases in gains on sale of securities.

NON-INTEREST EXPENSE
Non-interest expenses increased by 1.0% for the quarter ending March 31, 1997,
when compared to the quarter ending March 31, 1996.  The small increase is due
primarily to a reduction in FDIC insurance premium.

NET INCOME
Net income for the first quarter of 1997 is 24.5% higher than the first quarter
of 1996 and earnings per share increased from $.32 to $.40, or 25%.





                                    Page 11
<PAGE>   14



                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY



                              KEY OPERATING RATIOS

                                  (UNAUDITED)

                                 ENDED MARCH 31


<TABLE>
<CAPTION>
                                                                                       Three Month Period             
                                                                                       ------------------             
                                                                                   1997                 1996             
                                                                                   ----                 ----             
<S>                                                                             <C>                 <C>                     
Return on assets                                                                                                         
(Net income divided by average assets) (1)                                        1.41%                1.28%             
                                                                                                                         
Return on average equity                                                                                                 
(net income divided by average equity) (1)                                       16.24%               13.39%             
                                                                                                                         
Average equity to average assets                                                  8.66%                9.59%             
                                                                                                                         
Interest rate spread                                                                                                     
(difference between average yield on interest earning assets and                  3.57%                3.71%             
 average cost of interest bearing liabilities) (1)              
                                                                                                                         
Net interest margin                                                                                                      
(net interest income as a percentage of average interest earning assets) (1)      4.00%                4.22%       
Non-interest expense to average assets                                            2.72%                3.07%             
                                                                                                                         
Average interest earning assets to interest bearing deposits                    109.61%              111.52%   
                                                                                                                         
Allowance for loan losses to total loans at end of period                         1.01%                1.06%             
                                                                                                                         
Net charge-offs to average outstanding loans during the period                     .06%                 .02%             
                                                                                                        
Ratio of non-performing assets to total assets                                     .14%                 .26%             
                                                                                                                         
Risk-based capital (of the Bank)                                                 11.99%               14.14%             

</TABLE>             
---------------

(1) Annualized





                                    Page 12
<PAGE>   15
                           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 March 31, 1997, the Registrant was not
         required to file any Current Reports on Form 8-K, and no reports on
         Form 8-K were filed.





                                   Page 13
<PAGE>   16


                                 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, President & CEO           
---------------------------------------------------

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




Date: May 13, 1997