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 June 30, 1999.

     [ ]  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: 0-26577

                          WEBSTER CITY FEDERAL BANCORP
             (Exact name of registrant as specified in its charter)

        United States                                     42-1491186
       ---------------                                  --------------
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                      Identification Number)

820 Des Moines Street, Webster City, Iowa                  50595-0638
-----------------------------------------                 -------------
 (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code  515-832-3071
                                                    ------------

-------------------------------------------------------------------------------
              (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
                                         ---    ---

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

2,122,219 shares of common stock outstanding at July 31, 1999.
                                                -------------



<PAGE>

                  Webster City Federal Bancorp and Subsidiaries

                                      Index




                                                                            Page

Part I. Financial Information


         Item 1. Financial Statements

                  Consolidated Balance Sheets
                  at June 30, 1999 and December 31, 1998                       1

                  Consolidated Statements of Operations
                  for the three and six months ended June 30, 1999
                  and 1998                                                     2

                  Consolidated Statements of Cash Flows
                  for the six months ended June 30, 1999
                  and 1998                                                     3

                  Notes to Consolidated Financial Statements                   4

         Item 2. Management's Discussion and Analysis of
                   Financial Condition and Results of Operations               6



Part II. Other Information

                  Other Information                                           11


<PAGE>

PART I. FINANICAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>

                       Webster City Federal Bancorp and Subsidiaries

                                Consolidated Balance Sheets


                                                        June 30,          December 31,
                                                          1999                1998
                                                    ----------------     ---------------
Assets                                                          (Unaduited)

<S>                                                     <C>                <C>
Cash and cash equivalents                               $ 4,672,246        $ 13,186,836
Time deposits in other financial institutions             2,611,000           2,265,000
Investment securities held to maturity                   25,202,216          19,886,768
Loans receivable, net                                    57,856,075          56,751,506
Real estate, net                                                  -              22,460
Office property and equipment, net                          489,109             496,356
Federal Home Loan Bank stock, at cost                       613,200             613,200
Deferred taxes on income                                    137,000             137,000
Accrued interest receivable                                 756,670             663,648
Prepaid expenses and other assets                            34,157              60,954
                                                    ----------------     ---------------

      Total assets                                     $ 92,371,673        $ 94,083,728
                                                    ================     ===============


Liabilities and Stockholders' Equity

Deposits                                               $ 66,765,760        $ 68,703,588
FHLB advance                                              1,200,000           1,200,000
Employee stock ownership plan borrowings                          -             159,064
Advance payments by borrowers for
    taxes and insurance                                     243,918             219,583
Accrued interest payable                                     89,753             110,393
Current income taxes payable                                      -              51,554
Accrued expenses and other liabilities                      562,125             553,811
                                                    ----------------     ---------------

      Total liabilities                                  68,861,556          70,997,993
                                                    ----------------     ---------------


Stockholders' Equity

Common stock, .10 par value                                 211,905             211,599
Additional paid-in capital                                9,053,649           9,012,687
Retained earnings, substantially restricted              14,244,563          14,020,513
Unearned employee stock ownership plan shares                     -            (159,064)
                                                    ----------------     ---------------

      Total stockholders' equity                         23,510,117          23,085,735
                                                    ----------------     ---------------

      Total liabilities and stockholders' equity       $ 92,371,673        $ 94,083,728
                                                    ================     ===============

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                                             Webster City Federal Bancorp and Subsidiaries

                                                                Consolidated Statements of Operations

                                                  For the Three                                       For the Six
                                                     Months                                              Months
                                                 Ended June 30,                                     Ended June 30,
                                      --------------------------------------              --------------------------------------
                                           1999                  1998                           1999                  1998
                                      ----------------      ----------------              -----------------      ---------------
                                                                           (Unaudited)
                               Income

                     Interest Income:
<S>                                       <C>                   <C>                            <C>                  <C>
                     Loans receivable      $1,102,807            $1,061,585                     $2,199,851           $2,120,264
 Mortgage-backed & related securities         152,791               225,343                        302,994              470,157
                Investment securities         238,912               238,614                        455,580              528,132
        Other interest earning assets         105,243               137,344                        247,060              243,874
                                      ----------------      ----------------              -----------------      ---------------
                Total interest income       1,599,753             1,662,886                      3,205,485            3,362,427

                    Interest Expense:
                             Deposits         728,861               826,162                      1,460,908            1,657,152
                         FHLB advance          14,530                14,530                         28,900               25,387
                            ESOP loan           1,610                 3,704                          4,294                7,695
                                      ----------------      ----------------              -----------------      ---------------
               Total interest expense         745,001               844,396                      1,494,102            1,690,234
                                      ----------------      ----------------              -----------------      ---------------
                  Net interest income         854,752               818,490                      1,711,383            1,672,193
        Provision for losses on loans               -                     -                              -                    -
                                      ----------------      ----------------              -----------------      ---------------
            Net interest income after
        provision for losses on loans         854,752               818,490                      1,711,383            1,672,193
                                      ----------------      ----------------              -----------------      ---------------

                 Non-interest income:
             Fees and service charges          26,909                61,050                         68,639              102,490
                                Other          11,110                 7,413                         12,573                8,324
                                      ----------------      ----------------              -----------------      ---------------
            Total non-interest income          38,019                68,463                         81,212              110,814
                                      ----------------      ----------------              -----------------      ---------------

                              Expense

                Non-interest expense:
         Compensation, payroll taxes,
               and employees benefits         298,944               197,900                        485,892              396,853
        Office property and equipment          18,181                17,267                         37,682               41,141
             Data processing services          26,183                23,794                         57,129               50,749
           Federal insurance premiums          10,200                13,934                         20,400               25,105
      Other real estate expenses, net              73                 2,738                          1,008                5,245
                          Advertising           7,100                 5,606                         12,730               12,875
                                Other         101,483                94,871                        205,575              186,791
                                      ----------------      ----------------              -----------------      ---------------
           Total non-interest expense         462,164               356,110                        820,416              718,759
                                      ----------------      ----------------              -----------------      ---------------

      Earnings before taxes on income         430,607               530,843                        972,179            1,064,248

                      Taxes on income         162,464               202,466                        366,003              406,049
                                      ----------------      ----------------              -----------------      ---------------

                         Net earnings        $268,143              $328,377                       $606,176             $658,199
                                      ================      ================              -----------------      ---------------

           Earnings per share - basic           $0.13                 $0.16                          $0.29                $0.31
                                      ================      ================              =================      ===============

        Earnings per share - dilluted           $0.13                 $0.16                          $0.29                $0.31
                                      ================      ================              =================      ===============

</TABLE>

 See notes to consolidated financial statements.

                                       2
<PAGE>


<TABLE>
<CAPTION>

                                    Webster City Federal Bancorp and Subsidiaries

                                        Consolidated Statements of Cash Flows

                                                                           For the Six Months Ended June 30,
                                                                 ----------------------------------------------
                                                                      1999                          1998
                                                                 ----------------             -----------------
                                                                                    (Unaudited)
                            Cash flows from operating activities
                                                    Net earnings        $606,176                      $658,199
                                                                 ----------------             -----------------

               Adjustments to reconcile net earnings to net cash
                               provided by operating activities:
<S>                                                                       <C>                           <C>
                                                    Depreciation          16,502                        13,110
                     Amortization of premiums and discounts, net           2,144                         6,569
                     Stock appreciation of allocated ESOP shares           9,060                        24,357
                         Increase in accrued interest receivable        (93,022)                       (3,003)
              (Increase) decrease  in prepaid expenses and other          26,797                      (45,095)
                                                          assets
                 (Decrease) increase in accrued interest payable        (20,640)                         2,105
              Increase in accrued expenses and other liabilities           8,314                        64,351
                     Decrease in accrued current taxes on income        (51,554)                      (61,103)
                                   Net change in ESOP stock plan         159,064                        38,795
                                                                 ----------------             -----------------

                                               Total adjustments          56,665                        40,086
                                                                 ----------------             -----------------

                       Net cash provided by operating activities         662,841                       698,285
                                                                 ----------------             -----------------

                            Cash flows from investing activities
         Proceeds from the maturity of interest bearing deposits       2,265,000                     2,000,000
                           Purchase of interest bearing deposits     (2,611,000)                   (6,955,000)
             Proceeds from the maturity of investment securities       3,900,000                     9,650,000
                          Proceeds from redemption of FHLB Stock               -                       166,300
                               Purchase of investment securities     (9,905,818)                   (7,902,281)
                          Purchase of mortgage-backed securities     (1,070,487)                             -
   Principal collected on mortgage-backed and related securities       1,754,664                     2,447,069
                                 Proceeds on sale of real estate          22,460                        59,282
                                  Net change in loans receivable     (1,100,520)                   (1,456,069)
                       Purchase of office property and equipment         (9,255)                             -
                                                                 ----------------             -----------------

                           Net cash used in investing activities     (6,754,956)                   (1,990,699)
                                                                 ----------------             -----------------

                            Cash flows from financing activities
                                  Net change in savings deposits     (1,937,828)                       507,593
                                      Proceeds from FHLB advance               -                     1,200,000
                   Net increase in advance payments by borrowers
                                         for taxes and insurance          24,335                        16,570
                                     Proceeds from stock options          32,207                        36,337
                                     Payments on ESOP borrowings       (159,064)                      (38,795)
                                                  Dividends paid       (382,125)                     (376,418)
                                                                 ----------------             -----------------
             Net cash (used in) provided by financing activities     (2,422,475)                     1,345,287
                                                                 ----------------             -----------------

            Net (decrease) increase in cash and cash equivalents     (8,514,590)                        52,873

                Cash and cash equivalents at beginning of period      13,186,836                     5,892,852
                                                                 ----------------             -----------------

                      Cash and cash equivalents at end of period      $4,672,246                    $5,945,725
                                                                 ================             =================

              Supplemental disclosures of cash flow information:
                                  Cash paid during the year for:
                                                        Interest      $1,481,548                    $1,625,883
                                                 Taxes on income         419,182                       438,991
                    Transfers from loans to real estate acquired
                                             through foreclosure              $-                       $49,893
                                                                 ================             =================
</TABLE>

See notes to consolidated financial statements.

                                       3

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. REORGANIZATION

The Registrant is the successor to Webster City Federal  Savings Bank, a federal
stock  savings  bank (the "Bank")  which  reorganized  into the holding  company
structure, effective July 1, 1999 (the "Holding Company Reorganization"). In the
Holding  Company  Reorganization,  each  outstanding  share of the Bank's common
stock was converted into one share of the  Registrant's  common stock,  and each
stockholder of the Bank received the same  ownership  interest in the Registrant
immediately following the Holding Company Reorganization as he or she had in the
Bank immediately prior to that transaction. Because the reporting period covered
by this report ended on June 30, 1999 (the day prior to the  consummation of the
Holding Company Reorganization), the consolidated financial statements presented
herein reflect the financial performance of the Bank and not the Registrant.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES

The consolidated  financial statements for the three and six-month periods ended
June 30, 1999 and 1998 are  unaudited.  In the opinion of  management of Webster
City  Federal  Bancorp  these  financial  statements  reflect  all  adjustments,
consisting only of normal recurring  accruals  necessary to present fairly these
consolidated  financial  statements.  The results of operations  for the interim
periods are not  necessarily  indicative  of results that may be expected for an
entire year. Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles have been omitted.

Principles of Consolidation

The consolidated  financial  statements include the accounts of the Bank and its
wholly owned subsidiary,  WCF Service  Corporation which is engaged in the sales
of mortgage  life and credit life  insurance to the Bank's loan  customers.  All
material inter-company accounts and transactions have been eliminated.


3. EARNINGS PER SHARE COMPUTATIONS - 1999

Earnings  per share - basic is computed  using the  weighted  average  number of
common  shares  outstanding  of 2,119,049  and  2,118,650  for the three and six
months ended June 30, 1999, respectively, reduced by the 13,539 weighted average
unearned  ESOP shares and divided into the net earnings of $268,100 and $606,200
for the three and six months  ended June 30,  1999,  respectively,  resulting in
earnings  per share of $.13 and $.29 for the three and six months ended June 30,
1999, respectively.

Earnings per share - diluted is computed  using the weighted  average  number of
common shares outstanding after giving effect to additional shares assumed to be
issued in relation to the Bank's stock  option plan using the average  price per
share for the period.  Such additional shares were 5,172 and 7,454 for the three
and six months ended June 30, 1999, respectively. Earnings for the three and six
months ended June 30, 1999 were $268,100 and $606,200,  respectively,  resulting
in earnings  per share of $.13 and $.29 for the three and six months  ended June
30, 1999, respectively.


                                       4

<PAGE>




EARNINGS PER SHARE COMPUTATIONS - 1998

Earnings  per share - basic is computed  using the  weighted  average  number of
common  shares  outstanding  of 2,093,866  and  2,115,194  for the three and six
months ended June 30, 1998, respectively, reduced by the 20,127 weighted average
unearned  ESOP shares and divided into the net earnings of $328,400 and $658,200
for the three and six months  ended June 30,  1998,  respectively,  resulting in
earnings  per share of $.16 and $.31 for the three and six months ended June 30,
1998, respectively.

Earnings per share - diluted is computed  using the weighted  average  number of
common shares outstanding after giving effect to additional shares assumed to be
issued in relation to the Bank's stock  option plan using the average  price per
share for the  period.  Such  additional  shares  were 21,328 and 22,409 for the
three and six months ended June 30, 1998,  respectively.  Earnings for the three
and six months  ended June 30, 1998 were  $328,400 and  $658,200,  respectively,
resulting  in  earnings  per share of $.16 and $.31 for the three and six months
ended June 30, 1998, respectively

4. DIVIDENDS

On April 21, 1999 the Bank  declared a cash dividend on its common stock payable
on May 21, 1999 to stockholders  of record as of May 7, 1999,  equal to $.20 per
share or approximately  $422,393.  Of this amount,  the payment of approximately
$230,000  (representing  the dividend  payable on 1,150,000  shares owned by WCF
Financial,  M.H.C.,  the Bank's mutual holding company) was waived by the mutual
holding company, resulting in an actual dividend distribution of $192,393.







                                       5


<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations


FINANCIAL CONDITION

Total assets decreased by $1.7 million,  or 1.8%, from December 31, 1998 to June
30, 1999. Cash and cash  equivalents  decreased $8.5 million or 64.6% while time
deposits in other financial institutions increased $346,000 to $2.6 million from
$2.3  million.  The  increase  in time  deposits  was due to the  Bank  matching
certificate  of deposits  of public  funds with  certificate  of deposits at the
Federal Home Loan Bank. Loans receivable  increased $1.1 million, or 1.9% during
the same period. At June 30, 1999, the Bank had no real estate owned. Investment
securities  increased  from December 31, 1998 to June 30, 1999  primarily due to
the  Bank  having  some  securities  that  matured  at the  end of  1998,  while
reinvestment  of these funds did not occur until the first quarter of 1999. When
the Bank  reinvested  the funds in the first  quarter this caused an  offsetting
decrease in cash and cash  equivalents.  During the  six-month  period  deposits
decreased $1.9 million, or 2.8%.

Total  stockholders'  equity  increased by $424,400 to $23.5 million at June 30,
1999 from $23.1 at December  31, 1998 as  earnings  of $606,200  were  partially
offset by two quarterly  dividends  totaling  $382,100 and  amortization  of the
employee stock ownership plan.

CAPITAL

The Bank's total stockholders' equity increased by $424,400, to $23.5 million at
June 30, 1999 from $23.1  million at  December  31,  1998.  The Office of Thrift
Supervision   (OTS)  requires  that  the  Bank  meet  certain   minimum  capital
requirements. As of June 30, 1999 the Bank was in compliance with all regulatory
capital requirements.  The Bank's required,  actual and excess capital levels as
of June 30, 1999 were as follows:

<TABLE>
<CAPTION>

                           Required          % of             Actual            % of             Excess
                           Amount           Assets            Amount            Assets           Capital
                           --------         -------          --------         ---------         ---------
                                                     (Dollars in thousands)

<S>  <C>                     <C>            <C>                 <C>             <C>                <C>
Tier 1 (Core) Capital        $3,696         4.0%                $23,511         25.44%             $19,815
Risk-based Capital           $3,552         8.0%                $23,892         53.81%             $20,340
</TABLE>

LIQUIDITY

OTS  regulations  require  the Bank to  maintain  an  average  daily  balance of
qualified liquid assets (cash, certain time deposits and specified United States
government,  state or federal agency  obligations) equal to a monthly average of
not less than 4% of its net withdrawable deposits plus short term borrowings. At
June 30, 1999, the Bank's quarterly average liquidity position was $19.2 million
or 27.7% compared to $13.8 million or 19.7% at December 31, 1998.

RESULTS OF OPERATIONS

Interest  Income.  Total  interest  income  decreased  $63,100 or 3.8% from $1.7
million for the three  months  ended June 30, 1998  compared to $1.6 million for
the three months ended June 30, 1999.  Interest  income totaled $3.2 million for
the six months  ended June 30, 1999  compared to $3.4 million for the six months
ended June 30, 1998.  This was the result of a decrease in the average  yield on
interest-earning  assets to 7.02% for the six months  ended  June 30,  1999 from
7.15% for the six months  ended  June 30,  1998 and a  decrease  in the  average
balance of interest  earning assets of $2.7 million or 2.9% to $91.4 million for
the six months  ended June 30, 1999 from $94.1  million for the six months ended
June 30, 1998.

                                       6

<PAGE>

Interest on loans for the three months ended June 30, 1999 increased  $41,200 or
3.9% compared to the three months ended June 30, 1998. Interest on loans for the
six months  ended June 30, 1999  increased  $79,600 or 3.8%  compared to the six
months ended June 30, 1998. The increases resulted primarily from an increase in
total loans outstanding  during the periods,  offset by a decrease in the yields
on loans  receivable  from 7.75% for the six months ended June 30, 1998 compared
to 7.72% for the six months ended June 30, 1999.  The decreases in the yields on
loans  receivable  were  primarily  due to lower market rates and a  substantial
volume of adjustable  rate loans  repricing at a lower rate based on the lagging
index used by the Bank.

Interest on  mortgage-backed  securities  decreased  by $72,600 or 32.2% for the
three-month period ended June 30, 1999 as compared to the same period ended June
30, 1998. Interest on mortgage-backed securities decreased $167,200 or 35.6% for
the six months ended June 30, 1999  compared to same period ended June 30, 1998.
These declines  resulted from a decrease of $4.1 million or 30.5% in the average
balance of  mortgage-backed  securities to $9.4 million for the six months ended
June 30, 1999 compared to $13.5 million for six months ended June 30, 1998 and a
decrease of 51 basis points in the average yield on  mortgage-backed  securities
to 6.42% for the six months  ended  June 30,  1999 from 6.93% for the six months
ended June 30, 1998 as higher rate mortgage-backed securities were paid off.

Interest on investment  securities remained unchanged for the three months ended
June 30,  1999  compared  to the same period  ended June 30,  1998.  Interest on
investment  securities  decreased  by $72,600 or 13.8% for the six months  ended
June 30, 1999 as compared to the same period ended June 30,  1998.  This was due
to a decrease in the average balance of investment securities from $16.2 million
for the six months  ended June 30, 1998  compared  to $14.6  million for the six
months  ended June 30,  1999 as well as a decrease  in the  average  yield of 28
basis  points  from  6.51%,  on June 30, 1998 to 6.23%,  on June 30,  1999.  The
generally  lower  interest  rate  environment  during the  current  fiscal  year
resulted in the declining yields on investment securities.

Interest Expense. Interest expense decreased by $99,400, or 11.8%, from $844,400
for the three  months ended June 30, 1998 to $745,000 for the three months ended
June 30,  1999.  Interest  expense  decreased  by $196,100  or 11.6%,  from $1.6
million for the six months  ended June 30, 1998 to $1.5 for the six months ended
June 30,  1999.  This  decrease  resulted  from a decrease  in average  deposits
outstanding as average deposits decreased by $3.1 million from $69.9 million for
the six months  ended June 30, 1998 to $66.8  million  for the six months  ended
June 30, 1999.  The average cost of deposits also decreased 36 basis points from
4.74% for the six  months  ended  June 30,  1998  compared  to 4.38% for the six
months ended June 30, 1999.

Net Interest  Income.  Net interest income before  provision for losses on loans
increased  by $36,300 or 4.4% from  $818,500 for the three months ended June 30,
1998 compared to $854,800 for the three months ended June 30, 1999. Net interest
income  increased  by  $39,200 or 2.4% for the six  months  ended June 30,  1999
compared to the same period ended June 30, 1998. The Bank's interest rate spread
at June 30, 1999  increased  by 23 basis  points to 2.64% from 2.41% at June 30,
1998.

Provision for Losses on Loans.  There were no provisions for losses on loans for
the three and six months  ended June 30,  1999.  The Bank had no  non-performing
loans as of June 30,  1999  compared  to $15,300 as of December  31,  1998.  The
allowance for losses on loans is based on  management's  periodic  evaluation of
the loan  portfolio and reflects an amount that,  in  management's  opinion,  is
adequate to absorb probable losses in the existing portfolio.  In evaluating the
portfolio,  management  takes into  consideration  numerous  factors,  including
current economic conditions,  prior loan loss experience, the composition of the
loan portfolio, and management's estimate of anticipated credit losses.

Non-interest Income. Total non-interest income decreased by $30,400 or 44.4% for
the three-month  period ended June 30, 1999 as compared to the same period ended
June 30, 1998. Non-interest income decreased $29,600 or 26.7% for the six months
ended June 30,  1999 as compared to the same  period  ended June 30,  1998.  The
decreases  were  related to a decrease in fees and service  charges,  due to the
repricing of service charges.



                                       7
<PAGE>




Non-interest  Expense.  Non-interest expense increased $106,100 or 29.8% for the
three-month  period  ended June 30, 1999  compared to the same period ended June
30, 1998.  Non-interest  expense  increased  $101,700 or 14.2% for the six-month
period  ended June 30, 1999  compared to the same  period  ended June 30,  1998.
Compensation and benefit costs increased $101,000 or 51.0% from $197,900 for the
three  months  ended June 30, 1998 to $298,900  for the three month period ended
June 30, 1999.  Compensation  and benefit costs increased by $89,000 to $485,900
for the six months  ended June 30, 1999 from  $396,900  for the six months ended
June 30,  1998.  The  increases  were  primarily  due to the Bank paying off the
balance of the ESOP loan of $141,800 on June 30, 1999.

Taxes on Income.

Income  taxes for the three and six months  ended June 30,  1999,  decreased  to
$162,500 and $366,000  from $202,500 and $406,000 for the same periods for 1998.
The  effective  income  tax rate for the  first  six  months  of 1999 was  37.7%
compared to 38.2% for the first six months of 1998.

Net Earnings.  Net earnings totaled $268,100 for the three months ended June 30,
1999 compared to $328,400 for the three months ended June 30, 1998. Net earnings
decreased  $52,000 or 7.9% for the six-month period ended June 30, 1999 compared
to the same period ended June 30, 1998.


Impact of Year 2000 Compliance

         The federal banking regulators recently issued guidelines  establishing
minimum safety and soundness  standards for achieving Year 2000 compliance.  The
guidelines,  which took effect  October  15, 1998 and apply to all  FDIC-insured
depository  institutions,  establish  standards for developing and managing Year
2000 project plans, testing remediation efforts, and planning for contingencies.
The guidelines are based upon guidance  previously  issued by the agencies under
the  auspices of the Federal  Financial  Institutions  Examination  Council (the
"FFIEC"),  but are not intended to replace or supplant the FFIEC  guidance which
will continue to apply to all federally insured depository institutions.

         The  guidelines  were issued  under  section 39 of the Federal  Deposit
Insurance  Act, as amended (the  "FDIA"),  which  requires  the federal  banking
regulators to establish  standards for the safe and sound operation of federally
insured depository institutions. Under section 39 of the FDIA, if an institution
fails  to  meet  any  of  the  standards  established  in  the  guidelines,  the
institution's  primary federal regulator may require the institution to submit a
plan for achieving  compliance.  If an institution fails to submit an acceptable
compliance plan, or fails in any respect to implement a compliance plan that has
been  accepted by its primary  federal  regulator,  the regulator is required to
issue an order directing the  institution to cure the deficiency.  Such an order
is  enforceable  in court in the same manner as a cease and desist order.  Until
the  deficiency  cited in the  regulator's  order is cured,  the  regulator  may
restrict the institution's  rate of growth,  require the institution to increase
its capital,  restrict the rates the institution pays on deposits or require the
institution  to take any  action  the  regulator  deems  appropriate  under  the
circumstances.  In addition to the enforcement procedures established in section
39 of the FDIA,  noncompliance with the standards  established by the guidelines
may  also be  grounds  for  other  enforcement  action  by the  federal  banking
regulators,   including   cease  and  desist  orders  and  civil  money  penalty
assessments.

         The Board of Directors  is aware of  potential  risk that the year 2000
poses for the Bank and has assigned an individual to establish  Year 2000 formal
project plans,  which have been  developed and adopted by the Bank.  Testing and
contingency  plans have also been  developed  and  adopted by the Bank.  Testing
procedures have been completed.



                                       8
<PAGE>


         The Bank's contingency plans include two components, which are business
remediation and business resumption. The business remediation plan was developed
to mitigate the risk associated with the failure to successfully complete system
renovation, validation or implementation of the Bank's Year 2000 readiness. This
plan  pertains  to  mission-critical  systems  developed  in-house,  by  outside
software vendors, and by third-party service providers.  The business resumption
plan will be designed to be implemented  in the event there are system  failures
at critical dates.

         The Bank  anticipates that it will incur internal staff costs and other
expenses  related to the  enhancements  necessary to become Year 2000 compliant.
Based  on the  Bank's  current  knowledge,  the  expense  related  to Year  2000
compliance  is not  expected to have a material  effect on the Bank's  financial
position or results of  operations.  It is estimated  that the costs incurred by
the Bank for Year 2000 compliance will be approximately $ 10,000.

         Accurate data processing is essential to the operation of the Bank, and
a lack of accurate  processing by its vendors  could have a significant  adverse
impact on the Bank's financial condition and results of operations.

         The Bank has been assured by its data  processing  service  bureau that
their computer services will function properly on and after January 1, 2000.

         Notwithstanding  the  foregoing,  if the Bank is unable to resolve this
potential  problem in time,  the Bank will likely  experience  significant  data
processing  delays,  mistakes or failures.  These  delays,  mistakes or failures
could have a significant  adverse impact on the financial  condition and results
of operations of the Bank.

         The Bank has also tested such things as vault  doors,  alarms,  phones,
etc. and is not aware of any significant problems with such systems.

         The Bank has  received  year 2000  updates  from  most of its  material
non-information  system providers,  and based on these updates the Bank does not
anticipate any significant year 2000 issues.

         In addition to expenses  related to its own computer  system,  the Bank
could  incur  losses if loan  payments  are  delayed  due to year 2000  problems
affecting any of its  significant  borrowers or impairing the payroll systems of
large employers in the Bank's market area. The Bank is communicating  with these
companies to assess their progress in evaluating  their systems and implementing
any corrective measures required by them to be prepared for the year 2000.

Impact of New Accounting Standards


         SFAS  133,   "Accounting   for  Derivative   Instruments   and  Hedging
Activities,"  and SFAS 137, an amendment to SFAS 133,  will be effective for the
Bank for the year  beginning  January 1, 2001.  Management  is  evaluating  what
impact  the  adoption  of  SFAS  133  and  SFAS  137  will  have  on the  Bank's
consolidated  financial  statements.  The Bank expects to adopt SFAS No. 133 and
137 when required.



                                       9
<PAGE>





Safe Harbor Statement

         This report  contains  certain  forward-looking  statements  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange Act of 1934, as amended.  The Bank intends such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and  describe  future  plans,  strategies  and  expectations  of the  Bank,  are
generally  identifiable  by use  of the  words  "believe,"  "expect,"  "intend,"
"anticipate,"  "estimate," "project" or similar expressions.  The Bank's ability
to  predict  results  or the  actual  effect of future  plans or  strategies  is
inherently uncertain.

         Factors which could have a material  adverse  effect on the  operations
and  future  prospects  of the Bank and the  subsidiaries  include,  but are not
limited  to,  changes in:  interest  rates,  general  economic  conditions,  the
legislative/regulatory  situation,  monetary  and  fiscal  policies  of the U.S.
Government,  including  polices of the U.S.  Treasury  and the  Federal  Reserve
Board, the quality of composition of the loan or investment  portfolios,  demand
for loan products, deposit flows, competition,  demand for financial services in
the Bank's market area and accounting principles, policies and guidelines. These
risks and  uncertainties  should be  considered  in  evaluating  forward-looking
statements and undue reliance should not be placed on such statements.

         Further  information  concerning  the Bank and its business,  including
additional factors that could materially affect the Bank's financial results, is
included in the Bank's filings with the Office of Thrift Supervision.



                                       10
<PAGE>



                           PART II. Other Information



Item 1. Legal Proceedings

         There are  various  claims  and  lawsuits  in which the  Registrant  is
periodically involved incidental to the Registrant's business. In the opinion of
management,  no material  loss is expected  from any of such  pending  claims or
lawsuits.


Item 2. Changes in Securities
         None


Item 3. Defaults Upon Senior Securities
         None


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

         The  Registrant  convened its 1998 Annual  Meeting of  Stockholders  on
         April  21,1999.  At the  meeting  the  stockholders  of the  Registrant
         considered and voted upon:

     1.   The  election  of Donald I.  Newman  as  director  for a term of three
          years.

     2.   The  ratification  of the  appointment  of KPMG LLP as auditors of the
          Registrant for the fiscal year ending December 31, 1999.

     3.   The  establishment  of Webster City Federal Bancorp as a stock holding
          company parent of the Bank.

                  The  election of Donald I. Newman as director  was as approved
                  by a vote of 1,902,353  votes in favor,  25,680 withheld and 0
                  abstaining.

                  The ratification of the engagement of KPMG LLP as auditors was
                  approved by a vote of 1,925,133 votes in favor,  1,500 opposed
                  and 1,400 abstaining.

                  The  establishment  of Webster City Federal Bancorp as a stock
                  holding  company  parent of the Bank was approved by a vote of
                  1,557,233   votes  in  favor,   359,071   opposed  and  11,729
                  abstaining.


Item 5. Other Information
         None


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

          No form 8-K reports were filed during the quarter ended June 30, 1999.

                                       11



<PAGE>




                                   Signatures

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


                                           WEBSTER CITY FEDERAL BANCORP
                                           Registrant




Date: August 10, 1999            By:/s/ Phyllis A. Murphy
                                    __________________________________
                                    Phyllis A. Murphy
                                    President and Chief Executive Officer




Date: August 10, 1999            By:/s/ Stephen L. Mourlam
                                    ___________________________________
                                    Stephen L. Mourlam
                                    Exec. Vice President/Chief Financial Officer












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