<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, 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 November 10, 1997 there were 2,069,998 shares, $.01 par value, of the
registrant's common stock issued and 1,627,674 shares or common shares
equivalents are outstanding.


<PAGE>   2






                        Midwest Federal Financial Corp.
                                 And Subsidiary

                               Table of Contents

<TABLE>
<S>                                                                             <C>              
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
Managements discussion and Analysis of financial
Condition and Results of Operations                                             11

PART II - Other Information
---------------------------

Item 1.                   Legal Proceedings                                     14
Item 2.                   Changes in Securities                                 14
Item 3.                   Defaults Upon Senior Securities                       14
Item 4.                   Submission of Matters to Vote
                            of Securities Holders                               14
Item 5.                   Other Information                                     14
Item 6.                   Exhibits and Reports on Form 8-K                      14
</TABLE>


<PAGE>   3



                 Midwest Federal Financial Corp. And Subsidiary

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                    September 30, 1997 and December 31, 1996


<TABLE>
<CAPTION>
                                                                                    Sept. 30, 1997         Dec. 31, 1996
                                                                              --------------------  --------------------
<S>                                                                           <C>                   <C>
                                   ASSETS
Cash and cash equivalents                                                            $  4,880,988          $  6,874,107
Other Interest-bearing deposits                                                                 0               100,000
Securities held to maturity (fair value 1997 $901,014; 1996 $1,093,240)                   900,000             1,100,000
Securities available for sale                                                          36,825,350            34,320,832
Loans held for sale                                                                     1,278,900               527,446
Loans, net of allowance for loan losses 1997 $1,644,423; 1996 $1,538,580              158,117,955           144,201,689
Accrued interest receivable                                                             1,624,421             1,512,342 
Premises and equipment, net                                                             4,232,220             4,030,183
Other Assets                                                                            3,829,475             3,633,424
                                                                              -------------------   -------------------
                                                                                     $211,689,309          $196,300,023
                                                                              ===================   ===================
                    LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities
 Deposits:
  Non-interest bearing                                                               $ 14,324,181          $ 13,204,354
  Interest bearing                                                                    145,102,595           139,287,113
                                                                              -------------------   -------------------
                                                                                      159,426,776           152,491,467
 Borrowed Funds                                                                        30,600,000            24,800,000
  Advance payments by borrowers -- escrow accounts                                        409,195               141,893
  Accrued interest payable and other liabilities                                        2,206,300             1,962,987
                                                                              -------------------   -------------------
                                                                                      192,642,271           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 1,627,674 and 1,620,379 respectively                 20,700                20,700
 Additional paid-in capital                                                             6,495,310             6,495,310
 Retained earnings, substantially restricted                                           16,311,532            14,507,322
 Unrealized gain (loss) on securities available for sale, net                             137,500               (94,600)
 Loan to ESOP                                                                            (302,715)             (350,142)
Treasury stock, at cost 442,324 and 449,619 shares respectively                        (3,615,289)           (3,674,914)
                                                                              -------------------   -------------------
                                                                                       19,047,038            16,903,676
                                                                              -------------------   -------------------
                                                                                     $211,689,309          $196,300,023
                                                                              ===================   ===================
</TABLE>

                                     Page 1



See accompanying notes to consolidated financial statements

<PAGE>   4



                        Midwest Federal Financial Corp.
                                 And Subsidiary
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                  Quarter Ended                    Nine Months Ended
                                                        ----------------------------------  ------------------------------
                                                        09/30/97          09/30/96           09/30/97           09/30/96
                                                        ----------        ----------        -----------        -----------
<S>                                                     <C>               <C>               <C>                <C>
Interest and dividend income:                          
 Mortgage loans                                         $2,553,597        $2,226,211        $ 7,400,358        $ 6,486,808
 Other loans                                             1,094,303           915,025          3,054,691          2,703,476
 Investment securities and interest-bearing deposits       276,405           362,606            917,272          1,093,875
 Mortgage-backed securities                                281,107           285,950            796,637            729,197
 Dividends on stock in Federal Home Loan Bank               27,341            18,679             75,373             48,539
                                                        ----------        ----------        -----------        -----------
 TOTAL INTEREST AND DIVIDEND INCOME                      4,232,753         3,848,471         12,244,331         11,061,895
                                                        ----------        ----------        -----------        -----------
Interest Expense:                                      
 Deposits                                                1,823,260         1,722,391          5,323,028          5,009,995
 Borrowed funds                                            394,920           308,037          1,125,598            714,208
                                                        ----------        ----------        -----------        -----------
 TOTAL INTEREST EXPENSE                                  2,218,180         2,030,428          6,448,626          5,724,203
                                                        ----------        ----------        -----------        -----------
Net interest income                                      2,014,573         1,818,043          5,795,705          5,337,692
Provision for loan losses                                   69,000           145,000            207,000            250,000
                                                        ----------        ----------        -----------        -----------
Net interest income after provision for loan losses      1,945,573         1,673,043          5,588,705          5,087,692
                                                        ----------        ----------        -----------        -----------
Non-interest income:                                   
 Loan fees and service charges                              79,672            60,520            219,120            197,609
 Deposit account fees and service charges - Net            222,326           207,612            650,352            591,553
 Net gain on sale of investment and mortgage-backed     
  securities                                               194,768           100,008            527,605            258,942
 Net gain on sale of loans                                 162,919           213,805            344,296            352,818
 Other income                                              151,730           141,274            413,404            400,111
                                                        ----------        ----------        -----------        -----------
TOTAL NON-INTEREST INCOME                                  811,415           723,219          2,154,777          1,801,033
                                                        ----------        ----------        -----------        -----------
Operating Expenses:                                    
 Compensation and other employee benefits                  846,835           755,933          2,387,185          2,182,923
 Occupancy                                                 195,249           192,539            584,573            589,189
 Telephone and postage                                      55,168            65,581            165,826            172,123
 Data processing                                            92,835            89,708            277,514            270,674
 Federal deposit insurance premiums                         21,603           914,121             65,129          1,051,815
 Other                                                     349,596           230,064            881,108            686,477
                                                        ----------        ----------        -----------        -----------
 TOTAL OPERATING EXPENSES                                1,561,286         2,247,946          4,361,335          4,953,201
                                                        ----------        ----------        -----------        -----------
Income before provision for income taxes                 1,195,702           148,316          3,382,147          1,935,523
Provision for income taxes                                 419,000            45,600          1,152,500            688,800
                                                        ----------        ----------        -----------        -----------
NET INCOME                                              $  776,702        $  102,716        $ 2,229,647        $ 1,246,723
                                                        ==========        ==========        ===========        ===========
Total earning per share                                 $      .45        $      .06        $      1.29        $       .73
                                                        ==========        ==========        ===========        ===========
</TABLE>

See accompanying notes to consolidated financial statements




                                     Page 2

<PAGE>   5


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

                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                               Nine Months Ended
                                                                        ------------------------------
                                                                         09/30/97           09/30/96
                                                                        -----------        -----------
<S>                                                                     <C>                <C>
Cash Flows from operating activities:
 Net Income                                                             $ 2,229,647        $ 1,246,723
 Adjustments to reconcile net income to net cashprovided by
  operating activities:
  Depreciation                                                              281,757            282,224
  Amortization                                                               65,408             65,408
  Net amortization (accretion) of bond premiums and discounts               417,503            (17,611)
  Provision for loan losses                                                 207,000            250,000
  Securities (gains) losses                                                (527,605)          (258,942)
  Gain on sale of loans                                                    (344,296)          (352,818)
  Origination of loans held for sale                                    (16,068,114)       (17,476,401)
  Proceeds from sale of loans held for sale                              15,660,956         17,987,624
  Deferred income taxes                                                           0                  0
  Increase in accrued interest receivable and other assets                 (232,038)          (496,823)
  Increase in accrued interest payable and other liabilities                133,118            354,403
                                                                        -----------        -----------
   Net cash provided by operating activities                              1,823,336          1,583,787
                                                                        -----------        -----------
Cash flows from investing activities
  Net (increase) decrease in other interest-bearing deposits                100,000            498,999
  Purchases of securities held to maturity                                        0                  0
  Proceeds from maturities of securities held to maturity                   200,000            800,000
  Purchases of securities available for sale                            (25,924,034)       (18,943,213)
  Proceeds from sales of securities available for sale                   21,672,022         13,576,943
  Proceeds from maturities of securities available for sale               2,244,596          4,000,967
  Net increase in loans                                                 (14,123,266)       (17,655,273)
  Purchases of premises and equipment                                      (483,794)          (289,624)
                                                                        -----------        -----------
   Net cash (used in) investing activities                              (16,314,476)       (18,011,201)
Cash Flows From Financing Activities
 Net increase in deposits                                                 6,935,309         10,687,466
 Net increase (decrease) in borrowings                                    5,800,000          6,100,000
 Net increase in advance payments by borrowers for escrow                   267,302            336,182
 Purchase of treasury stock                                                       0           (751,688)
 Proceeds from exercise of stock options                                     31,758             82,277
 Dividends paid                                                            (536,348)          (304,148)
                                                                        -----------        -----------
   Net cash provided by financing activities                             12,498,021         16,150,089
                                                                        -----------        -----------
   Increase in cash and cash equivalents                                 (1,993,119)           330,971
Cash and cash equivalents:
 Beginning                                                                6,874,107          6,479,903
                                                                        -----------        -----------
 Ending                                                                 $ 4,880,988        $ 6,810,874
                                                                        ===========        ===========
Supplemental Cash Flow Information
 Cash payments for:
  Interest                                                              $ 5,323,028        $ 5,009,995
  Income taxes                                                            1,152,500            688,800
</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
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.

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 September 30, 1997
and 1996 were computed based on consolidated net income and weighted average
outstanding shares.  The weighted average outstanding shares for the quarter
ending September 30, 1997 and 1996 were 1,720,142 and 1,744,313 respectively.


                                     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 third quarter of 1997, basic earnings per share would have been $.48
per share and diluted earnings per share would have been $.45 per share for the
period ended September 30, 1997.

RECLASSIFICATIONS
Certain amounts in these financial statements for prior years have been
reclassified to conform to the September 30, 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:
September 30, 1997
 U.S. Government and agency securities       $   900,000    $  1,311     $    297   $   901,014
                                           =============  ==========  ===========  ============
December 31, 1996
 U.S. Government and agency securities       $ 1,100,000    $    440     $  7,200   $ 1,093,240
                                           =============  ==========  ===========  ============
SECURITIES AVAILABLE FOR SALE:
September 30, 1997
 U.S. Government and agency securities       $ 8,228,073    $ 30,799     $ 11,354   $ 8,247,518
 State and municipal securities                6,246,033     141,768        2,099     6,385,702
 Mortgage-backed and related securities       21,454,980      97,496      104,609    21,447,867
 Equity securities                               679,263      74,375        9,375       744,263
                                           -------------  ----------  -----------  ------------
                                             $36,608,349    $344,438     $127,437   $36,825,350
                                           =============  ==========  ===========  ============
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>
                                09/30/97            12/31/96
                              ------------        ------------
<S>                           <C>                 <C>
Commercial real estate        $ 40,687,273        $ 35,245,601
Residential real estate         64,961,656          66,615,603
Construction                     6,640,510           4,911,600
Consumer installment            20,631,434          16,435,287
Home equity                     16,114,563          13,347,187
Commercial                      12,970,458          10,643,378
                              ------------        ------------
                              $162,005,894        $147,198,656
Less:
Undisbursed loan proceeds        2,243,516           1,458,387
Allowance for loan losses        1,644,423           1,538,580
                              ------------        ------------
                              $158,117,955        $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>
                                                                 09/30/97               12/31/96
                                                         ---------------------  ----------------------
                                                            Amount     Percent     Amount      Percent
                                                         ------------  -------  -------------  -------
<S>                                                      <C>           <C>      <C>            <C>
Demand Deposit accounts (noninterest-bearing)
Negotiable Orders of Withdrawal (NOW) accounts           $ 13,384,025    8.40%   $ 13,204,352    8.66%
 (2.25% at December 31, 1996 and September 30, 1997)       11,092,403    6.96%     10,775,861    7.07%
Savings Accounts
 (2.25% at December 31, 1996 and September 30, 1997)       11,549,795    7.24%     11,255,467    7.38%
Money market accounts
 (2.40% to 5.30% at December 31, 1996 and September 30,
  1997)                                                    33,984,528   21.32%     30,711,114   20.14%
Certificate Accounts:
 Less than 3.00%                                                    0       0               0       0
 3.00% to 3.99%                                               550,339    0.35%      2,398,461    1.57%
 4.00% to 4.99%                                             3,191,304    2.00%      3,474,756    2.28%
 5.00% to 5.99%                                            49,396,376   30.98%     48,399,408   31.74%
 6.00% to 6.99%                                            34,498,566   21.64%     29,819,655   19.55%
 7.00% and over                                             1,779,440    1.11%      2,452,393    1.61%
                                                         ------------  ------   -------------  ------
Totals                                                   $159,426,776  100.00%   $152,491,467  100.00%
                                                         ============  ======   =============  ======
Weighted Average Savings Interest Rate                                   5.23%                   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 September 30, 1997:


<TABLE>
<CAPTION>
                                          Tangible        Core       Risk-Based
                                          Capital       Capital       Capital
                                        ------------  ------------  ------------
<S>                                     <C>           <C>           <C>
Savings Bank's regulatory percentage           7.27%         7.27%        10.01%
Required regulatory percentage                 1.50%         3.00%         8.00%
                                        -----------   -----------   -----------
Excess regulatory percentage                   5.77%         4.27%         2.01%
                                        ===========   ===========   ===========
Savings Bank's regulatory capital       $15,262,000   $15,262,000   $16,906,000
Required regulatory capital               3,147,000     6,293,000    13,510,000
                                        -----------   -----------   -----------
Excess regulatory capital               $12,115,000   $ 8,969,000   $ 3,396,000
                                        ===========   ===========   ===========
</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 by $15.4 million from December 31, 1996, to
September 30, 1997,  an increase of 7.8%.  Deposit growth, and to a lessor
extent, borrowings, have funded increases in earning assets.

LOANS
Net loans receivable have increased by $13.9 million from December 31, 1996, to
September 30, 1997, an increase of 9.7 %.  Commercial mortgage loans account
for $5.4 million of this increase and consumer loans account for $7.0 million.
Adjustable rate mortgage loans, commercial and consumer loans are held in the
portfolio of the Bank.  Fixed rate mortgage originations continue to be sold to
FHLMC.

CASH AND INVESTMENTS
Mortgage backed securities and investments have increased by $2.3 million from
December 31, 1996 to September 30, 1997, an increase of 6.5%.

DEPOSITS
Deposit growth from December 31, 1996, to September 30, 1997, was $6.9 million,
an increase of 4.5%.  Deposit growth was used to fund the growth in loans and
investments.

BORROWED FUNDS
The borrowed funds of the Bank have increased by $5.8 million from December 31,
1996 to September 30, 1997, an increase of 23.4%.  The increase in borrowed
funds has helped fund growth in earning assets.

EQUITY
Equity increased $2.1 million or 12.7% since December 31, 1996.  The increase
is primarily due to increased retained earnings.

OPERATING DATA SUMMARY

NET INTEREST INCOME
Net interest income for the third quarter of 1997 is up 10.8% over the third
quarter of 1996.  The increase in net interest income is due to growth in
assets of 8.7% from one year ago.  Year to date net interest income is up 7.9%
due to similar increases in asset growth year to date.  Third quarter 1997 net
interest margin was 4.13% compared to 4.10% for the third quarter of 1996.

NON-INTEREST INCOME
Non-interest income increased by 10.9% from the quarter ending September 30,
1996, compared to the quarter ending September 30, 1997, and is up 19.6% year
to date.  Increases in gain on sale of securities are primarily responsible for
this increase.

NON-INTEREST EXPENSE
Non-interest expenses decreased by 30.5% for the quarter ending September 30,
1997, when compared to the quarter ending September 30, 1996, and is
down 11.9% year to date.  The decrease is due to a one time FDIC insurance
assessment of $842,600 booked on September 30, 1996. Non-interest expense, net
of the one time assessment in 1996, is up 11.1% for the quarter and 6.1% year
to date.

NET INCOME
Net income for the third quarter of 1997 is 27.6% higher than pre-FDIC
assessment earnings for the third quarter of 1996 and
pre-FDIC assessment earnings per share increased from $.35 to $.45, or 29%.
Net income year to date is 27.2% higher than pre-FDIC assessment earnings in
1996 and year to date pre-FDIC assessment earnings per share increased from
$1.02 to $1.29, or 26.5%.


                                    Page 11

<PAGE>   14




ASSET QUALITY
Midwest Federal Financial Corp. and its subsidiary has specific targets in
evaluating asset quality.

The allowance for loan losses as of September 30, 1997, amounts to $1,644,423
or 1.02% of total loans.  This exceeds the internally established target of
1.00% and compares relatively unchanged when compared to 1.04% as of September
30, 1996.

The ratio of non-performing assets to total assets is at .09% as of September
30, 1997, well below the internally acceptable standard of .33% and has
improved from the September 30, 1996, ratio of .24%

Net charge-offs to average outstanding loans during the third quarter ending
September 30, 1997, is at .03%.  This ratio at September 30, 1996, was at .05%


                                    Page 12
<PAGE>   15

                        MIDWEST FEDERAL FINANCIAL CORP.
                                 AND SUBSIDIARY


                              KEY OPERATING RATIOS
                                  (UNAUDITED)
                               ENDED SEPTEMBER 30



<TABLE>
<CAPTION>
                                                                    Three Month Period
                                                                  ---------------------
                                                                    1997        1996
                                                                  ---------   ---------
<S>                                                               <C>        <C>
Return on assets
(Net income divided by average assets) (1)                            1.49%     .21%(2)
Return on average equity
(net income divided by average equity) (1)                           16.66%    2.44%(3)
Average equity to average assets                                      8.91%    8.78%
Interest rate spread
(difference between average yield on interest earning assets and
average cost of interest bearing liabilities) (1)                     3.59%    3.62%
Net interest margin
(net interest income as a percentage of average interest
earning assets) (1)                                                   4.13%    4.10%
Non-interest expense to average assets (1)                            2.99%    4.69%(4)
Average interest earning assets to interest bearing deposits        111.98%  110.57%
Allowance for loan losses to total loans at end of period             1.02%    1.04%
Net charge-offs to average outstanding loans during the period         .03%     .05%
Ratio of non-performing assets to total assets                         .09%     .24%
Risk-based capital (of the Bank)                                     10.01%   12.08%
</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 13

<PAGE>   16


                           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, 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 14

<PAGE>   17


                                   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 13, 1997