MID IOWA FINANCIAL CORP/IA, PRER14A, 1999-02-10

MID IOWA FINANCIAL CORP/IA
PRER14A, 1999-02-10
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c)
or Subsection 240.14a-12

MID-IOWA FINANCIAL CORP.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.

1. Title of each class of securities to which
transaction applies:

________________________________________________________________

2. Aggregate number of securities to which transaction
applies:

________________________________________________________________

3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11:

________________________________________________________________

4. Proposed maximum aggregate value of transaction:

________________________________________________________________

5. Total fee paid:

________________________________________________________________

[x ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.

1. Amount Previously Paid:
____________________________________________

2. Form, Schedule or Registration Statement No.:
____________________________________________

3. Filing Party:
____________________________________________

4. Date Filed:
____________________________________________<PAGE>
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MID-IOWA FINANCIAL CORP.
123 West Second Street North
Newton, Iowa 50208
(515) 792-6236

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on March 22, 1999

Notice is hereby given that the annual meeting of
stockholders (the "Annual Meeting") of Mid-Iowa Financial Corp.
("Mid-Iowa" or the "Company") will be held at the office of
Mid-Iowa Savings Bank, FSB (the "Bank") located at 123 West
Second Street North, Newton, Iowa on March 22, 1999 at 5:00
p.m., local time, for the purpose of considering and acting upon
the proposals described below.

A PROXY CARD AND A PROXY STATEMENT FOR THE MEETING ARE
ENCLOSED.

The Annual Meeting is for the purpose of considering and
acting upon the
following proposals:

I. ELECTION OF DIRECTORS. The election of one director of
the Company.

II. MERGER. To approve a $15.00 per share cash-out of
shares of Company common stock , par value $.01 per share
("Common Stock") and the Agreement and Plan of
Reorganization (the "Merger Agreement"), dated August 17,
1998, among Mid-Iowa, the Bank ( a wholly-owned subsidiary
of Mid-Iowa), First Federal Bankshares, M.H.C. ("Bancorp")
(a federally-chartered mutual holding company) and First
Federal Savings Bank of Siouxland ("First Federal") (a
federally-chartered savings bank __% owned by Bancorp).
Pursuant to the Merger Agreement, the Company will be
acquired by First Federal by means of merger of a
to-be-formed Delaware corporation (wholly-owned by First
Federal) with and into the Company (the "Company Merger"),
and immediately following the Company Merger, the
Company will liquidate with and into First Federal with the
result that First Federal will acquire all of the assets
and liabilities of the Company and the Company will cease
to exist. Subsequent to the liquidation of the Company,
the Bank will merge with and into First Federal with the
result that First Federal will acquire all of the assets
and liabilities of the Bank and the Bank will cease to
exist. The foregoing transactions are referred to
collectively herein as the "Merger." At the effective time
of the Merger (the "Effective Time"), each share of Common
Stock outstanding immediately prior thereto, except
for shares held by dissenting stockholders , would be
canceled and converted into the right to receive a cash
payment from First Federal equal to $15.00, subject to
possible upward adjustment as provided in the Merger
Agreement (the "Merger Consideration"). The Merger
Consideration received by a stockholder of the Company in
exchange for shares of Common Stock will be a taxable event
for federal income tax purposes. See "Proposal II --
Approval of the $15.00 Per Share Cash Purchase Price and
the Merger Agreement -- Federal Income Tax Consequences --
The $15.00 Per Share Purchase Price is Taxable to Company
Stockholders." As a result of the Merger, Company
stockholders will no longer have an equity interest in the
Company or any subsidiary.

III. ADJOURNMENT. To adjourn the Annual Meeting if
necessary to permit further solicitation of proxies in the
event that there are not sufficient votes at the time of
the Annual Meeting to approve the Merger Agreement.

IV. OTHER BUSINESS. To transact such other business as may
properly come before the Annual Meeting.

Any action may be taken on the foregoing proposals at the
Annual Meeting on the date specified above, or on any date or
dates to which the Annual Meeting may be adjourned. Stockholders
of record at the close of business on February 2, 1999 are the
stockholders entitled to vote at the Annual Meeting, and any
adjournments thereof. A complete list of stockholders entitled
to vote at the Meeting will be available for inspection by
stockholders at the offices of the Company during the ten days
prior to the Annual Meeting as well as at the Annual Meeting.

You are requested to complete, sign and date the enclosed
Proxy Card which is solicited on behalf of the Board of
Directors, and to mail it promptly in the enclosed envelope.
The Proxy Card will not be used if you attend and vote at the
Annual Meeting in person.

By Order of the Board of Directors

Newton, Iowa Kevin D. Ulmer
February 10, 1999 President and Chief Executive
Officer

IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM
AT THE MEETING. A PRE- ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES.

PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.
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MID-IOWA FINANCIAL CORP.
123 WEST SECOND STREET NORTH
NEWTON, IOWA 50208
(515) 792-6236

ANNUAL MEETING OF STOCKHOLDERS
MARCH 22, 1999

PROXY STATEMENT
________________________

INTRODUCTION

This Proxy Statement is furnished in connection with the
solicitation on behalf of the Board of Directors of Mid-Iowa
Financial Corp., ("Mid-Iowa" or the "Company"), the holding
company for Mid-Iowa Savings Bank, FSB (the "Bank"), of proxies
to be used at the Annual Meeting of Stockholders of the Company
(the " Annual Meeting") which will be held at Mid-Iowa Savings
Bank located at 123 West Second Street North, Newton, Iowa on
March 22, 1999 at 5:00 p.m., local time, and all adjournments or
postponements of the Annual Meeting. The accompanying Notice of
Annual Meeting, proxy card and this Proxy Statement are first
being mailed to stockholders on or about February 10, 1999.
Certain information provided herein relates to the Bank, a
wholly owned subsidiary of the Company.

At the Annual Meeting, stockholders of the Company are
being asked to consider and vote upon the election of one
director of the Company. See " PROPOSAL I -- ELECTION OF
DIRECTORS." Also at the Annual Meeting stockholders will be
asked to approve a $15.00 per share cash-out of shares of
Company common stock, par value $.01 per share ("Common Stock")
and the Agreement and Plan of Reorganization (the "Merger
Agreement"), dated August 17, 1998, among Mid-Iowa, the Bank ( a
wholly-owned subsidiary of the Company), First Federal
Bankshares, M.H.C. ("Bancorp")( a federally-chartered mutual
holding company) and First Federal Savings Bank of Siouxland
("First Federal") (a federally-chartered savings bank ____%
owned by Bancorp). Pursuant to the Merger Agreement the Company
will be acquired by First Federal by means of merger of a to-be-
formed Delaware corporation (wholly-owned by First Federal) with
and into the Company (the "Company Merger"), and immediately
following the Company Merger, the Company will liquidate with
and into First Federal with the result that First Federal will
acquire all of the assets and liabilities of the Company and the
Company will cease to exist. Subsequent to the liquidation of
the Company, the Bank will merge with and into First Federal
with the result that First Federal will acquire all of the
assets and liabilities of the Bank and the Bank will cease to
exist. The foregoing transactions are referred to collectively
herein as the "Merger." At the effective time of the Merger
(the "Effective Time"), each share of Common Stock outstanding
immediately prior thereto, except for shares held by dissenting
stockholders , would be canceled and converted into the right to
receive a cash payment from First Federal equal to $15.00,
subject to possible upward adjustment as provided in the Merger
Agreement (the "Merger Consideration"). The Merger
Consideration received by a stockholder of the Company in
exchange for shares of Common Stock will be a taxable event for
federal income tax purposes. See "Proposal II -- Approval of
the $15.00 Per Share Cash Purchase Price and the Merger
Agreement -- Federal Income Tax Consequences -- The $15.00 Per
Share Purchase Price is Taxable to Company Stockholders." As a
result of the Merger, Company stockholders will no longer have
an equity interest in the Company or any subsidiary. In
connection with and prior to the Merger, and in order to raise
capital to complete the Merger, Bancorp will effect a full
conversion from a thrift mutual holding company to a thrift
stock holding company (the "Conversion"), and will offer shares
(the "Conversion Shares") of its common stock, par value $.01
per share ("Bancorp Common Stock"), in a subscription and
community offering at $10.00 per share and in an exchange
offering to the existing public stockholders of First Federal.
The completion of the Merger is subject to various conditions,
including completion of the Conversion, the receipt of all
required regulatory approvals and the receipt of the approval of
the stockholders of the Company. The Merger is expected to be
completed early in the second quarter of 1999. See "PROPOSAL II
- -- APPROVAL OF THE $15.00 PER SHARE CASH PURCHASE PRICE AND THE
MERGER AGREEMENT -- Description of the Merger ." Stockholders
may be asked to consider and vote upon a third proposal to
adjourn the Annual Meeting in the event there are not
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sufficient votes at the time of the Annual Meeting to approve
the Merger Agreement. See PROPOSAL III -- ADJOURNMENT OF THE
ANNUAL MEETING."

VOTING RIGHTS AND PROXY INFORMATION

Stockholders of record as of the close of business on
February 2, 1999 are entitled to one vote for each share then
held. As of February 2, 1999 the Company had 1,796,732 shares
of Common Stock issued and outstanding.

All shares of Company common stock, par value $.01 per
share (the "Common Stock"), represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual
Meeting, and not revoked, will be voted at the Annual Meeting in
accordance with the instructions thereon. If no instructions
are indicated, properly executed proxies will be voted FOR the
Board of Directors' nominees and FOR the Merger. The Company
does not know of any matters, other than as described in the
Notice of Annual Meeting, that are to come before the Annual
Meeting. If any other matters are properly presented at the
Annual Meeting for action, the persons named in the enclosed
form of proxy will have the discretion to vote on such proposals
in accordance with their best judgment.

Directors shall be elected by a plurality of the votes
present in person or represented by proxy at the Annual Meeting
and entitled to vote on the election of directors. Approval of
the adjournment proposal will require the affirmative vote of
the majority of shares present in person or represented by proxy
at the Annual Meeting and entitled to vote on the matter.
Proxies marked as abstaining with respect to a proposal have the
same effect as votes against the proposal. Broker non-votes
will not be counted as votes cast and will have the effect as a
vote against the Merger. One-third of the shares of the
Company's Common Stock present, in person or represented by
proxy, shall constitute a quorum for purposes of the Annual
Meeting. Abstentions and broker non-votes are counted for
purposes of determining a quorum.

A proxy given pursuant to this solicitation may be revoked
at any time before it is voted. Proxies may be revoked by: (i)
filing with the Secretary of the Company at or before the Annual
Meeting a written notice of revocation bearing a later date than
the proxy; (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the
Company at or before the Annual Meeting; or (iii) attending the
Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute revocation
of a proxy). Any written notice revoking a proxy should be
delivered to Mr. Gary R. Hill, Secretary, Mid-Iowa Financial
Corp., 123 West Second Street North, Newton, Iowa 50208.

AVAILABLE INFORMATION

The Company is subject to the annual and periodic
reporting requirements of the Exchange Act of 1934, as amended
(the "Exchange Act"), pursuant to Rule 15(d) of such Act. The
reports and other information the Company, can be examined,
without charge, and copies, at prescribed rates, at the public
reference facilities of the SEC located at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Regional Offices of the Securities and Exchange Commission
("SEC") located at Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661 and 7 World Trade Center, Thirteenth Floor, New
York, N.Y. 10048. In addition, the SEC maintains a web site
that contains reports, proxy and information statements and
other information regarding registrants that file electronically
with the SEC. The address of this web site is
http://www.sec.gov. The Company's materials are also available
for inspection at the office of the Nasdaq Stock Market, Reports
Section, 1735 K Street, N.W., Washington, D.C. 20006.

The statements contained herein as to the contents of any
contract or other document are, of necessity, brief descriptions
thereof and are not necessarily complete but do contain all
material information regarding such documents. In each instance
of such a statement, if such contract or document is filed as an
exhibit to a registration statement or to reports, proxy
statements and other information filed by the Company with the
SEC, reference is made to the copy of the contract or document
filed as such exhibit, each of such statements being qualified
in all respects by such reference.
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INCORPORATION BY REFERENCE

This Proxy Statement incorporates by reference the
documents set forth below, which are not presented herein or
delivered herewith. These documents (other than exhibits not
incorporated by reference in such documents) are available to
stockholders without charge upon written or oral request to Gary
R. Hill, Secretary, Mid-Iowa Financial Corp., 123 West Second
Street North, Newton, Iowa 50208, or by telephone request to
(515) 792-6236. Persons requesting copies of exhibits which are
not specifically incorporated by reference in such documents may
be charged the cost of reproduction and mailing. In order to
ensure timely delivery of the documents, any request should be
made by March 8, 1999.

The following documents previously filed with the SEC by
Mid-Iowa Financial Corp. (File No. 0-20464) pursuant to the
Exchange Act are incorporated herein by reference.

(i) Annual Report on Form 10-KSB of Mid-Iowa Financial
Corp. for the year ended September 30, 1998;

(ii) Quarterly Report on Form 10-QSB of Mid-Iowa
Financial Corp. for the quarter ended December 31,
1998; and

(iii) Current Report(s) of Mid-Iowa Financial Corp. on
Form 8-K dated August 17, 1998.

All documents filed by Mid-Iowa Financial Corp. with the
SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Proxy Statement and prior to
the date of the Annual Meeting shall be deemed to be
incorporated by reference herein and to be a part hereof from
the date of filing of such documents.

Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Proxy Statement
to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement.

FORWARD-LOOKING STATEMENTS

Certain statements in this Proxy Statement and in the
documents incorporated by reference herein constitute "forward-
looking statements" within the meaning of Section 21E of the
Exchange Act. Further, any statements contained in or
incorporated into this Proxy Statement that are not statements
of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "except,"
"anticipate," "plan," "believe," "seek," "estimate," "internal"
and similar words are intended to identify expressions that may
be forward-looking statements. Forward-looking statements
involve certain risks and uncertainties, and actual results may
differ materially from those contemplated by such statements.
For example, actual results may be adversely affected by the
following possibilities: (i) competitive pressure among
depository institutions may increase; (ii) changes in interest
rates may reduce banking interest margins; (iii) general
economic conditions and real estate values may be less favorable
than contemplated; (iv) adverse legislation or regulatory
requirements may be adopted; (v) contemplated cost savings,
revenue enhancements, etc., from the Merger may not be timely or
fully realized; and (vi) the impact of the Year 2000 issue may
be more significant than currently anticipated. Many of such
factors are beyond Bancorp's, First Federal's the Company's or
the Bank's ability to control or predict. Readers of this Proxy
Statement are accordingly cautioned not to place undue reliance
on forward-looking statements. Bancorp and First Federal, and
the Company and the Bank disclaim any intent or obligation to
update publicly any of the forward-looking statements herein,
whether in response to new information, future events or
otherwise.
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TABLE OF CONTENTS

PAGE
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SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . (i)
SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . .(vi)
PROPOSAL I -- ELECTION OF DIRECTORS. . . . . . . . . . . . . 1
General. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Meetings and Committees of the Board of Directors . . . 2
Executive Compensation. . . . . . . . . . . . . . . . . 3
Employment Agreement. . . . . . . . . . . . . . . . . . 3
Certain Transactions. . . . . . . . . . . . . . . . . . 4
PROPOSAL II --APPROVAL OF THE $15.00 PER
SHARE CASH PURCHASE PRICE AND
THE MERGER AGREEMENT. . . . . . . . . . . . . . . . . . . 4
General. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Parties to the Merger Agreement . . . . . . . . . . 4
Background of the Merger. . . . . . . . . . . . . . . . 6
Recommendation of the Board of Directors -- The Board
of Directors Believes that the $15.00 Per Share
Cash Price is Fair to Stockholders. . . . . . . . . 7
Opinion of Financial Advisor -- The $15.00 Per
Share Cash Purchase Price is Fair to Stockholders
According to Investment Banker Prairie Capital. . . 8
Vote Required -- 50.1% of Outstanding Common
Stock is Required to Approve the Merger . . . . . . 13
Dissenters' Rights. . . . . . . . . . . . . . . . . . . 13
Description of the Merger . . . . . . . . . . . . . . . 14
Treatment of Outstanding Stock Options. . . . . . . . . 14
Exchange of Stock Certificates. . . . . . . . . . . . . 15
Effective Time. . . . . . . . . . . . . . . . . . . . . 15
Conditions to the Merger. . . . . . . . . . . . . . . . 15
Conduct of Business Pending the Merger. . . . . . . . . 17
No Solicitation. . . . . . . . . . . . . . . . . . . . .20
Representations and Warranties of the

Company and the Bank . . . . . . . . . . . . . . . . 20
Representations and Warranties and Covenants

of First Federal . . . . . . . . . . . . . . . . . . 20
Termination of the Merger Agreement . . . . . . . . . . 21
Additional Agreements of the Parties. . . . . . . . . . 23
Waiver and Amendment. . . . . . . . . . . . . . . . . . 24
Expenses. . . . . . . . . . . . . . . . . . . . . . . . 24
Termination Fee . . . . . . . . . . . . . . . . . . . . 25
Effect on Employees and Certain
Employee Benefit Plans . . . . . . . . . . . . . . . 25
Interests of Directors and Officers in the Merger . . . 26
Federal Income Tax Consequences -- The $15.00
Per Share Purchase Price is Taxable to Company
Stockholders. . . . . . . . . . . . . . . . . . . . 27
Accounting Treatment. . . . . . . . . . . . . . . . . . 28
Regulatory Approvals. . . . . . . . . . . . . . . . . . 28

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PROPOSAL III -- ADJOURNMENT OF THE ANNUAL
MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . 28
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS. . . . . . . . . . . . . . . . . . . . . 29
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . 30
MARKET FOR THE COMMON STOCK . . . . . . . . . . . . . . . . 30
BENEFICIAL OWNERSHIP REPORTS . . . . . . . . . . . . . . . . 30
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . 30
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . 30
APPENDICES
Appendix A - Agreement and Plan of Reorganization . . . A-1
Appendix B - Opinion of Prairie Capital Services, Inc...B-1
Appendix C - Section 262 of the Delaware General
Corporation Law. . . . . . . . . . . . . . . . . . ..C-1
Appendix D - Mid-Iowa Financial Corp.
1998 Annual Report . . . . . . . (Furnished Separately)

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SUMMARY

The following is a brief summary of certain information
regarding the Merger contained in this Proxy Statement, the
Appendices hereto and the documents incorporated herein by
reference. Each stockholder is urged to give careful
consideration to all of the information contained herein before
casting his or her vote.

INFORMATION RELATING TO THE ANNUAL MEETING

The Annual Meeting of Stockholders of Mid-Iowa Financial
Corp. ("Mid-Iowa" or the "Company") (the "Annual Meeting") will
be held on Monday, March 22, 1999 at 5:00 p.m., local time, at
the main office of Mid-Iowa Savings Bank, located at 123 West
Second Street North, Newton, Iowa. At the Annual Meeting,
stockholders will be asked to consider and vote upon proposals
to: (i) the election of one director of the Company, (ii)
approve an Agreement and Plan of Reorganization (the "Merger
Agreement"), dated August 17, 1998 by and among Mid-Iowa and
Mid-Iowa Savings Bank, FSB (the "Bank") on the one hand and
First Federal Bankshares, M.H.C. ("Bancorp")and First Federal
Savings Bank of Siouxland ("First Federal") on the other hand
providing for the acquisition of the Company and Bank by First
Federal, and (iii) the adjournment of the Annual Meeting to a
later date in the event an insufficient number of shares is
present in person or by proxy at the Annual Meeting to approve
the Merger Agreement. A copy of the Merger Agreement is
attached to this Proxy Statement as Appendix A. Only
stockholders of record as of the close of business on February
2, 1999 (the "Record Date") are entitled to notice of and to
vote at the Annual Meeting. See "VOTING RIGHTS AND PROXY
INFORMATION."

APPROVAL OF THE MERGER AGREEMENT WILL REQUIRE THE
AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF ALL VOTES ENTITLED TO
BE CAST BY THE HOLDERS OF THE COMPANY'S COMMON STOCK, $0.01 PAR
VALUE PER SHARE (THE "COMMON STOCK").

THE MERGER, IN WHICH SHARES OF COMPANY COMMON STOCK WILL BE
CASHED OUT AT A PER SHARE PRICE OF $15.00

The Merger Agreement provides for the acquisition of the
Company by First Federal by means of merger of a to-be-formed
Delaware Corporation (wholly owned by First Federal) with and
into the Company (the "Company Merger"). Immediately following
the Company Merger, the Company will liquidate with and into
First Federal with the result that First Federal will acquire
all of the assets and liabilities of the Company and the Company
will cease to exist. Subsequent to the liquidation of the
Company, the Bank will merge with and into First Federal with
the result that First Federal will acquire all of the assets and
liabilities of the Bank and the Bank will cease to exist. The
foregoing transactions are referred to collectively herein as
the "Merger." At the effective time of the Company Merger (the
"Effective Time"), each share of Common Stock outstanding
immediately prior thereto, other than dissenting shares, will be
canceled and converted into the right to receive a cash payment
from First Federal equal to $15.00, subject to possible upward
adjustment as provided in the Merger Agreement (the "Merger
Consideration"). As a result of the Merger, stockholders of the
Company will no longer have an equity interest in the Company,
and the separate existence of the Company and the Bank shall
cease with First Federal continuing as the surviving
institution. The Merger Agreement has been approved and adopted
by the Board of Directors of the Company and the Bank and by
Bancorp and First Federal. See "Proposal II -- APPROVAL OF THE
$15.00 PER SHARE CASH PURCHASE PRICE AND THE MERGER AGREEMENT --
Description of the Merger."

The Merger Consideration was determined in negotiations
between the Company and First Federal. For a general discussion
of these negotiations, the factors considered by the Board of
Directors of the Company in evaluating the Merger and the basis
for the opinion of the Company's financial advisor that the
Merger Consideration is fair to Company stockholders from a
financial point of view, see "Proposal II -- APPROVAL OF THE
$15.00 PER SHARE

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CASH PURCHASE PRICE AND THE MERGER AGREEMENT -- Background of
the Merger," " -- Recommendation of the Board of Directors --
The Board of Directors Believes that the $15.00 Per Share Cash
Price is Fair to Stockholders" and " -- Opinion of Financial
Advisor -- The $15.00 Per Share Cash Purchase Price is Fair to
Stockholders According to Investment Banker Prairie Capital."

FEDERAL INCOME TAX CONSEQUENCES -- THE $15.00 PER SHARE PURCHASE
PRICE IS TAXABLE TO COMPANY STOCKHOLDERS

The receipt of cash by a stockholder of the Company in
exchange for shares of the Common Stock pursuant to the Merger
will be a taxable transaction to such stockholder for federal
income tax purposes. In general, a stockholder who receives
cash in the Merger in exchange for such stockholder's shares of
Common Stock will recognize gain or loss equal to the
difference, if any, between (i) the sum of the cash payment of
$15.00 per share, subject to a possible adjustment in the Merger
Agreement, received from First Federal in exchange for the
shares of the Common Stock and (ii) the stockholder's tax basis
in such shares of Common Stock. See "Proposal II -- APPROVAL OF
THE $15.00 PER SHARE CASH PURCHASE PRICE AND THE MERGER
AGREEMENT -- Federal Income Tax Consequences --The $15.00 Per
Share Purchase Price is Taxable to Company Stockholders."

All stockholders should read carefully the discussion in
"Proposal II -- APPROVAL OF THE $15.00 PER SHARE CASH PURCHASE
PRICE AND THE MERGER AGREEMENT -- Federal Income Tax
Consequences --The $15.00 Per Share Purchase Price is Taxable to
Company Stockholders" and other sections of this Proxy
Statement. Stockholders are urged to consult their own tax
advisors as to the specific consequences to them of the Merger
under applicable tax laws.

THE PARTIES TO THE MERGER AGREEMENT

Mid-Iowa Financial Corp. The Company was incorporated
under the laws of the State of Delaware in 1992 to become a
savings and loan holding company for the Bank, which is its sole
subsidiary. The Company acquired all of the capital stock of
the Bank issued in connection with the Bank's conversion from
mutual to stock form on October 13, 1992. The Company's
principal business is the business of the Bank and its
subsidiary. The Company is classified as a unitary savings and
loan holding company subject to regulation by the Office of
Thrift Supervision ("OTS"). At September 30, 1998, the Company
and the Bank on a consolidated basis, had assets of $147.5
million, deposits of $96.4 million and stockholders' equity of
$13.8 million.

The Bank offers a variety of financial services to meet
the needs of the families in the communities it serves. It
attracts retail deposits from the general public and uses such
deposits, together with borrowings and other funds, to invest in
primarily one- to four-family residential mortgage loans and
mortgage-backed and related securities, and to a lesser extent,
consumer, commercial real estate, and commercial business loans.
Most loans are presently originated in the Company's primary
market area, Jasper County and West Des Moines, Iowa; and to a
lesser extent loans are also originated in other parts of Iowa.
The Bank also invests in U.S. Government and agency obligations
and other permissible investments and occasionally purchases
loan participations. The Bank, through its wholly-owned
subsidiary, Center of Iowa Investments, Limited, also offers
mutual funds, annuities, discount securities brokerage services,
credit reporting and collection services.

First Federal Bankshares, M.H.C. Bancorp is a federally
chartered mutual holding company formed in 1992, which owns ___%
of First Federal, its sole subsidiary. Bancorp's principal
business is the business of First Federal. In connection with
and prior to the Merger, and in order to raise capital to
facilitate the Merger, Bancorp will effect a full conversion
from a thrift mutual holding company to a thrift stock holding
company (the "Conversion") and will offer shares (the
"Conversion Shares") of its common stock, par value $.01 per
share ("Bancorp Common Stock"), in
(ii)<PAGE>
<PAGE>
a subscription and community offering at $10.00 per share and in
an exchange offering to the existing public stockholders of
First Federal.

First Federal Savings Bank of Siouxland. First Federal is
a federally-chartered stock savings bank headquartered in Sioux
City, Iowa. First Federal's deposits have been federally
insured since 1935. First Federal has been a member of the
Federal Home Loan Bank ("FHLB") of Des Moines since 1935. At
September 30, 1998, First Federal had total assets of $569.6
million, total deposits of $392.7 million, and total
stockholders' equity of $43.2 million.

First Federal is a community-oriented financial
institution offering traditional financial services to its local
community. First Federal's primary lending area includes
northwest Iowa, contiguous portions of Nebraska and South Dakota
and central Iowa. First Federal's primary lending activity
involves the origination of fixed rate and adjustable rate
mortgage (ARM) loans secured by single family residential real
estate. Fixed rate mortgage loans with terms longer than
fifteen years are originated primarily for sale in the secondary
market on a servicing released basis, while ARM loans are
retained in First Federal's portfolio. To a lesser extent,
First Federal makes second mortgage loans secured by the
borrower's principal residence and other types of consumer
loans, such as auto loans and home improvement loans. In
addition, First Federal makes commercial and multi-family loans
and First Federal anticipates an increase in its commercial and
multi-family loan portfolios in the future. In addition, First
Federal invests in mortgage-backed securities and in securities
issued by the United States Government and its agencies.

First Federal conducts operations through its main office
in Sioux City, Iowa, and its 12 branch offices.

The principal executive offices of Bancorp and First
Federal are located at 329 Pierce Street, Sioux City, Iowa
51101. Their telephone number at that address is (712)
277-0200.

RECOMMENDATION OF THE BOARD OF DIRECTORS -- THE BOARD OF
DIRECTORS BELIEVES THAT THE $15.00 PER SHARE CASH PRICE IS FAIR
TO STOCKHOLDERS

The Board of Directors of the Company has unanimously
approved the Merger Agreement and determined that the Merger is
in the best interests of the Company and its stockholders. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR APPROVAL OF THE MERGER AGREEMENT. See "Proposal II --
APPROVAL OF THE $15.00 PER SHARE CASH PURCHASE PRICE AND THE
MERGER AGREEMENT -- Recommendation of The Board of Directors--
The Board of Directors Believes that the $15.00 Per Share Cash
Price is Fair to Stockholders -."

VOTE REQUIRED -- 50.1% OF OUTSTANDING COMMON STOCK IS REQUIRED
TO APPROVE THE MERGER

Approval of the Merger Agreement requires the affirmative
vote of at least a majority of the shares of Common Stock
outstanding. As of the Record Date, directors and executive
officers of the Company and their affiliates were the beneficial
owners of 367,592 shares, or 19.74%, excluding options, of the
Common Stock outstanding at that date. As of the date hereof,
the Company believes that directors and executive officers and
their affiliates will vote all their shares FOR approval of the
Merger Agreement. See "Proposal II -- APPROVAL OF THE $15.00
PER SHARE CASH PURCHASE PRICE AND THE MERGER AGREEMENT -- Vote
Required--50.1% of Outstanding Common Stock is Required to
Approve the Merger."

CONDITIONS TO THE MERGER

The Merger Agreement sets forth a number of conditions
which must be satisfied before the Merger may be consummated,
including the approval of the Merger Agreement by the requisite
vote of the stockholders of the Company, the receipt of all
governmental approvals required by the Merger Agreement and the
Conversion of Bancorp from mutual to stock form. Applications
for approval of the Merger and the Conversion of Bancorp to
stock form have
(iii)<PAGE>
<PAGE>
been submitted to the OTS. No assurance can be
given that such applications will be approved or that they will
not be approved on terms or conditions that may require an
amendment to the Merger Agreement. No amendment to the Merger
Agreement may be made after the Company's stockholders have
approved the Merger Agreement unless, in the opinion of the
Company's Board of Directors, the amendment will not have a
material adverse effect on the benefits intended under the
Merger Agreement for the Company's stockholders and will not
require resolicitation of proxies from such stockholders.

If stockholder approval of the Merger Agreement is not
obtained, or the Conversion is not completed, none of the
transactions contemplated thereby, including the Merger, will be
consummated. While no definitive plans have been formulated as
to what course of action would be pursued in this event, the
Board of Directors presently believes that it would continue the
operation of the Company as an independent entity.

The Merger is also subject to a number of other conditions
set forth in the Merger Agreement. See "Proposal II -- APPROVAL
OF THE $15.00 PER SHARE CASH PURCHASE PRICE AND THE MERGER
AGREEMENT -- Conditions to the Merger."

EXCHANGE OF STOCK CERTIFICATES

As soon as practicable after the Effective Time, First
Federal will appoint an Exchange Agent (the "Exchange Agent")
who will send a notice and a form of letter of transmittal to
each holder of certificate(s) which immediately prior to the
Effective Time represented shares of Common Stock, advising the
holders of the terms of the exchange and the procedure for
surrendering such certificate(s) in exchange for the Merger
Consideration. Upon receipt of the certificate(s) and properly
completed transmittal forms or letters, the Exchange Agent will
make the appropriate cash payment. See "Proposal II -- APPROVAL
OF THE $15.00 PER SHARE CASH PURCHASE PRICE AND THE MERGER
AGREEMENT -- Exchange of Stock Certificates."

PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.

OPINION OF FINANCIAL ADVISOR -- THE $15.00 PER SHARE CASH
PURCHASE PRICE IS FAIR TO STOCKHOLDERS ACCORDING TO INVESTMENT
BANKER PRAIRIE CAPITAL

The Board of Directors retained Prairie Capital Services,
Inc. ("Prairie Capital") to render its opinion with respect to
the fairness of the consideration, from a financial perspective,
to be paid by First Federal to the Company's stockholders in the
Merger. Prairie Capital rendered its opinion to the Board as of
August 17, 1998, that, from a financial perspective, the
consideration to be offered in the Merger was fair to the
stockholders of the Company. This opinion has been updated and
confirmed as of the date of this Proxy Statement. (Such
opinion, as updated, is hereinafter referred to as the
"Opinion"). The Opinion sets forth a description of the
assumptions made and matters considered by Prairie Capital and
contains certain limitations and qualifications. For its
services in connection with rendering its fairness opinion,
Prairie Capital received a fee of $15,000. Prairie Capital also
received reimbursement for certain out-of-pocket expenses and
the Company agreed to indemnify Prairie Capital against certain
liabilities, including liabilities which may arise under the
securities laws. A copy of the Opinion is attached as Appendix
B hereto, and the description set forth herein is qualified in
its entirety by reference to the attached Opinion. For
additional information, see "Proposal II -- APPROVAL OF THE
$15.00 PER SHARE CASH PURCHASE PRICE AND THE MERGER AGREEMENT --
Opinion of Financial Advisor -- The $15.00 Per Share Cash
Purchase Price is Fair to Stockholders According to Investment
Banker Prairie Capital " and the Opinion attached hereto as
Appendix B.

NO SOLICITATION

The Merger Agreement provides that the Company and the
Bank will not initiate, solicit, or encourage, or take any other
action to facilitate any inquiries or the making of any proposal
which constitutes a "Superior Proposal," as defined in the
Merger Agreement, except with respect to negotiations regarding,
and the endorsement of a Superior

(iv)<PAGE>
<PAGE>

Proposal, as legally required by the fiduciary duties of the
Company's Board of Directors under applicable law and as advised
by counsel to the Company's Board of Directors. The Company
must promptly notify First Federal of all the relevant details
relating to all inquiries or proposals received by, or any such
negotiations or discussions are sought to be initiated with, the
Company or any subsidiary. These provisions will have the
effect of discouraging competing offers to acquire or merge with
the Company. See "Proposal II -- APPROVAL OF THE $15.00 PER
SHARE CASH PURCHASE PRICE AND THE MERGER AGREEMENT -- No
Solicitation."

TERMINATION OF THE MERGER AGREEMENT; TERMINATION FEE

The Merger Agreement is subject to termination by the
mutual agreement of the parties thereto or, in case of certain
breaches of the representations, warranties, covenants and
agreements contained in the Merger Agreement, by notice of
termination given by the non-breaching party. In addition, the
Merger Agreement may be terminated (i) if stockholders of the
Corporation fail to approve the Merger Agreement, (ii) if all
regulatory approvals required for consummation of the Merger are
not received, (iii) if the Boards of Directors of Bancorp and
First Federal determine, in their sole discretion exercised in
good faith, that the Conversion has become inadvisable for
certain reasons or cannot otherwise be completed, and (iv) under
certain circumstances, if the Merger is not consummated by
August 31, 1999.

Upon termination under certain circumstances, including
those involving the Company's receipt of a Superior Proposal,
the Company entering into an agreement to be acquired by another
entity and the Company's failure to receive stockholder approval
of the Merger Agreement under certain facts, First Federal will
be entitled to a termination fee of $1.4 million. See
"Proposal II -- APPROVAL OF $15.00 PER SHARE CASH PURCHASE PRICE
AND THE MERGER AGREEMENT -- Termination of the Merger Agreement"
and " -- Termination Fee."

DISSENTERS' RIGHTS

Under Delaware law, dissenters' rights of appraisal are
available to stockholders of the Company who comply with the
statutory procedures for requesting appraisal in connection with
the Merger. AMONG OTHER REQUIREMENTS, STOCKHOLDERS WISHING TO
EXERCISE THEIR RIGHTS OF APPRAISAL MUST MAKE A WRITTEN DEMAND
FOR APPRAISAL BEFORE THE TAKING OF A VOTE ON THE MERGER. A VOTE
AGAINST THE MERGER DOES NOT CONSTITUTE SUCH A WRITTEN DEMAND.
STOCKHOLDERS WHO RETURN AN EXECUTED BLANK PROXY WILL BE DEEMED
TO HAVE VOTED IN FAVOR OF THE MERGER AND THEREBY TO HAVE WAIVED
THEIR DISSENTERS' RIGHTS OF APPRAISAL. See "Proposal II --
APPROVAL OF THE $15.00 PER SHARE CASH PURCHASE PRICE AND THE
MERGER AGREEMENT -- Dissenters' Rights" and the copy of Section
262 of the Delaware General Business Corporation Law ("DGCL")
attached as Appendix C hereto.

INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER

Certain members of the Company's and the Bank's Boards of
Directors and their officers and employees have interests in the
Merger in addition to their interests as stockholders of the
Company generally. These interests include, among others,
provisions in the Merger Agreement relating to liability
insurance and indemnification, severance payments to Mr. Kevin
D. Ulmer and Mr. Gary R. Hill for approximately $390,000 and
$271,000, respectively, a non-competition agreement with Mr.
Ulmer for $50,000 and other employee benefit matters. It is
also currently anticipated that three directors of the Company
will be entitled to serve as advisory directors of First Federal
for at least one year, and such advisory directors will receive
an annual fee of at least $2,000 plus $200 per meeting attended.
See "Proposal II --APPROVAL OF THE $15.00 PER SHARE CASH
PURCHASE PRICE AND THE MERGER AGREEMENT -- Effect on Employees
and Certain Employee Benefit Plans" and " -- Interests of
Directors and Officers in the Merger."

(v)<PAGE>
<PAGE>
MID-IOWA FINANCIAL CORP.

SELECTED CONSOLIDATED FINANCIAL DATA

The following tables present selected consolidated
financial information for the Company at the dates and for the
periods indicated. This information is derived from and should
be read in conjunction with the Company's consolidated financial
statements and the notes thereto contained in the Company's 1998
Annual Report to Stockholders (the "Annual Report") which
accompany this Proxy Statement, and are incorporated herein by
reference. In the opinion of management of the Company, such
information reflects all adjustments (which consist only of
normal recurring adjustments) necessary for a fair presentation
of the selected financial information and other data.

<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-----------------------------------------------------
1998 1997 1996 1995 1994
-----------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Selected Financial Condition Data:
- ---------------------------------
Total assets . . . . . . . . . . . $147,517 $128,017 $115,804 $108,221 $100,562
Loans receivable, net. . . . . . . 71,436 66,418 62,123 57,847 54,269
Securities available for sale. . . 4,994 4,983 4,974 837 851
Mortgage-backed and related
securities held for investment. . 25,862 26,180 23,974 28,139 29,497
Investment securities. . . . . . . 23,932 21,587 20,258 16,787 11,310
Deposits . . . . . . . . . . . . . 96,353 89,378 82,872 78,671 78,883
Total borrowings . . . . . . . . . 36,000 25,000 20,500 18,000 10,750
Stockholder's equity - partially
restricted . . . . . . . . . . . 13,760 12,061 10,601 10,261 9,770

</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------
1998 1997 1996 1995 1994
-----------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Selected Operations Data:
- ------------------------
Total interest income. . . . . . . $9,806 $8,963 $8,227 $7,330 $6,211
Total interest expense . . . . . . 6,081 5,345 4,939 4,492 3,347
------ ------ ------ ------ ------
Net interest income . . . . . . 3,725 3,618 3,288 2,838 2,864
Provision for losses on loans. . . 60 81 36 33 46
------ ------ ------ ------ ------
Net interest income after
provision for losses on
loans . . . . . . . . . . . . 3,665 3,537 3,252 2,805 2,818
Fees and service charges . . . . . 395 365 325 314 428
Gain on loans, mortgage-backed
and investment securities. . . . 25 24 33 14 25
Other noninterest income . . . . . 928 1,073 741 650 449
Total noninterest expense. . . . . 3,082 2,658 3,115 2,394 2,247
------ ------ ------ ------ ------
Income before taxes on income and
cumulative effect of accounting
changes. . . . . . . . . . . . . 1,931 2,341 1,236 1,389 1,473
Taxes on income. . . . . . . . . . 599 791 411 462 470
Cumulative effect of accounting
changes. . . . . . . . . . . . . -- -- -- -- 64
------ ------ ------ ------ ------
Net income . . . . . . . . . . . . $1,332 $1,550 $ 825 $ 927 $1,067
====== ====== ====== ====== ======

Earnings per common share-
diluted (1). . . . . . . . . . . $ .73 $ .89 $ .47 $ .52 $ .58
Cash dividends per common
share(1) . . . . . . . . . . . . $ .08 $ .08 $ .08 $ .08 $ .07
</TABLE>
(vi)

<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------
1998 1997 1996 1995 1994
-----------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Other Data:
- ----------
Average interest rate spread . . . . 2.38% 2.63% 2.54% 2.32% 2.72%
Net interest margin(2) . . . . . . . 2.77 3.04 2.97 2.74 3.07
Ratio of operating expense to
average total assets(3) . . . . . . 1.62 1.57 2.16 1.79 1.97

Average interest-earning assets to
average interest-bearing
liabilities . . . . . . . . . . . .108.51 108.95 109.55 109.61 109.81

Non-performing assets to total
assets at end of period . . . . . . .15 .01 .13 .13 .03

Stockholder's equity to total
assets at end of period . . . . . . 9.33 9.42 9.15 9.48 9.72
Return on assets (net income to
average total assets) . . . . . . . .96 1.27 .73 .88 1.14
Return on stockholder's equity
(net income to average
stockholder's equity) . . . . . . . 10.26 13.70 7.79 9.25 11.38
Stockholder's equity-to-assets ratio
(average stockholder's equity to
average total assets) . . . . . . . 9.37 9.27 9.36 9.61 9.98
Number of full-service offices . . . 7 7 6 6 6
<FN>
____________________
(1) As adjusted for Mid-Iowa Financial Corp.'s 100% stock dividends paid on February 24,
1995 and January 25, 1996.
(2) Net interest income divided by average interest-earning assets.
(3) Excludes the expenses of the subsidiaries of Mid-Iowa Savings Bank, F.S.B. Such
ratios, including such expenses would be 2.22%, 2.18%, 2.76%, 2.30% and 2.39% for the
years ended September 30, 1998, 1997, 1996, 1995, and 1994, respectively.
</FN>
</TABLE>
(vii)
<PAGE>
<PAGE>
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND

SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth selected consolidated
historical financial and other data of First Federal (including
its subsidiaries) for the periods and the dates indicated. The
selected consolidated financial condition and operating data at
and for the three month periods ended September 30, 1998 and
1997 are derived from unaudited consolidated financial
statements and, in the opinion of management of First Federal,
all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the results for the
unaudited periods have been made. The result of operations data
presented below for the three months ended September 30, 1998,
are not necessarily indicative of the results of First Federal
that may be expected for the entire year.

<TABLE>
<CAPTION>
AT AT JUNE 30,
SEPTEMBER 30, -------------------------------------------
1998 1998(8) 1997 1996 1995 1994
------------ ---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total assets . . . . . . . . $569,612 $551,450 $468,568 $443,516 $434,122 $391,166
Loans receivable, net. . . . 407,455 404,800 341,254 320,408 311,775 264,616
Securities held in maturity. 32,108 32,023 29,758 22,459 96,802 101,322
Securities available for
sale . . . . . . . . . . . 87,457 65,195 64,098 74,498 -- --
FHLB stock, at cost. . . . . 6,270 5,671 5,000 4,769 4,675 4,675
Office property and
equipment, net . . . . . . 11,071 10,845 9,638 8,697 7,559 7,549
Excess of cost over fair
value of assets acquired . 8,080 8,158 318 355 190 204
Deposits . . . . . . . . . . 392,677 392,425 326,734 335,223 339,426 343,588
FHLB advances. . . . . . . . 124,885 107,901 96,500 66,000 54,500 10,000
Stockholders' equity . . . . 43,167 42,020 38,865 36,857 34,864 33,029
</TABLE>
______________________
(footnotes on next succeeding page)
(viii)<PAGE>
<PAGE>

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED JUNE 30,
--------------- --------------------------------------
1998 1997 1998(8) 1997 1996 1995 1994
----- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA

Total interest income. . . . . . $10,056 $8,510 $35,364 $33,691 $31,686 $29,007 $27,460
Total interest expense . . . . . 6,283 5,172 21,377 20,328 19,645 17,707 15,642
------ ------ ------ ------ ------ ------ ------
Net interest income. . . . . . 3,773 3,338 13,987 13,363 12,041 11,300 11,818
Provision for loan losses. . . . 75 70 345 258 233 142 100
------ ------ ------ ------ ------ ------ ------
Net interest income after
provision for
loan losses. . . . . . . . . . 3,698 3,268 13,642 13,105 11,808 11,158 11,718
------ ------ ------ ------ ------ ------ ------
Noninterest income
Fees and service charges . . . 449 287 1,392 1,143 1,092 771 800
Gain on sale of real estate
owned . . . . . . . . . . . . -- -- -- -- -- 3 870
Gain on sale of loans held
for sale . . . . . . . . . . 87 49 242 207 290 160 261
Other income . . . . . . . . . 366 339 1,544 1,201 1,124 689 862
------ ------ ------ ------ ------ ------ ------
Total noninterest income . . . 902 675 3,178 2,551 2,506 1,623 2,793
------ ------ ------ ------ ------ ------ ------
Noninterest expense:
Compensation and benefits. . . 1,452 1,466 6,702 5,655 5,150 4,615 4,225
Office property and equipment. 447 334 1,500 1,293 1,159 1,064 1,063
Special deposit insurance
assessment . . . . . . . . . -- -- -- 2,233 -- -- --
Other noninterest expense. . . 1,063 839 3,326 3,512 3,410 3,327 3,590
------ ------ ------ ------ ------ ------ ------
Total noninterest expense. . . 2,962 2,639 11,528 12,693 9,719 9,006 8,878
------ ------ ------ ------ ------ ------ ------
Earnings before income taxes
and cumulative effect of
accounting change. . . . . . 1,638 1,304 5,292 2,963 4,595 3,775 5,633
------ ------ ------ ------ ------ ------ ------
Income taxes . . . . . . . . . . 620 463 1,874 1,024 1,543 1,259 1,556
Net earnings before cumulative
effect of accounting change. . 1,018 841 3,418 1,939 3,052 2,516 4,077
Cumulative effect of accounting
change . . . . . . . . . . . . -- -- -- -- -- -- 732
------ ------ ------ ------ ------ ------ ------
Net earnings . . . . . . . . . . $1,018 $ 841 $3,418 $1,939 $3,052 $2,516 $4,809
====== ====== ====== ====== ====== ====== ======
Earnings per share (1)
Net earnings before cumulative
effect of accounting change. .$ .36 $ .30 $ 1.21 $ .69 $ 1.08 $ 90 $ 1.46
Cumulative effect of accounting
change . . . . . . . . . . . .$ -- $ -- $ -- $ -- $ -- $ -- $ .26
------ ------ ------ ------ ------ ------ ------
Basic earnings per share . . . .$ .36 $ .30 $ 1.21 $ .69 $ 1.08 $ .90 $ 1.72
====== ====== ====== ====== ====== ====== ======
Diluted earnings per share . . .$ .35 $ .29 $ 1.19 $ .67 $ 1.06 $ .88 $ 1.70
====== ====== ====== ====== ====== ====== ======
Cash dividends declared per
common share . . . . . . . . . .$ .12 $ .12 $ .48 $ .47 $ .44 $ .36 $ .34
====== ====== ====== ====== ====== ====== ======
<FN>
_____________________________
(1) Adjusted for stock distributions.
</FN>
</TABLE>
(footnotes on next page)
(ix) <PAGE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30,(9) AT OR FOR THE YEAR ENDED JUNE 30,
--------------- --------------------------------------
1998 1997 1998(8) 1997 1996 1995 1994
----- ---- ------- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
SELECTED OPERATING RATIOS
AND OTHER DATA(2)
<S> <C> <C> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS:
Return on assets (net income
divided by average total
assets) (1) (2). . . . . . . . .73% .73% .71% .43% .70% .60% 1.22%
Return on equity (net income
divided by average
equity) (1) (2). . . . . . . . 9.57 8.51 8.39 5.20 8.44 7.42 15.49
Stockholder's equity to assets
ratio (average (equity divided
by average total assets) . . . 7.53 8.61 8.46 8.20 8.32 8.14 7.86
Net interest rate spread (3) . . 2.58 2.67 2.74 2.71 2.52 2.49 2.88
Net yield on average interest-
earning assets (4) . . . . . . 2.87 3.05 3.07 3.07 2.88 2.82 3.13
Net interest income after
provisions for loan losses to
total other expenses (1) . . .106.07 108.04 118.34 103.25 121.50 123.90 132.00

ASSET QUALITY RATIOS:
Nonperforming loans to total
loans. . . . . . . . . . . . . .30 .28 .33 .15 .22 .22 .35
Nonperforming loans to total
assets. . . . . . . . . . . . .21 .21 .24 .11 .16 .16 .24
Nonperforming assets as a
percentage of total
assets (5). . . . . . . . . .34 .22 .34 .11 .17 .17 .26
Nonperforming loans and real
estate owned to total loans
and real estate owned. . . . .47 .29 .47 .15 .24 .23 .38
Average interest-earning assets
to average interest-bearing
liabilities. . . . . . . . . 106.07 108.04 107.14 107.69 107.74 107.27 105.98

CAPITAL, EQUITY AND DIVIDEND
RATIOS:
Tangible capital (6) . . . . . 6.17 8.62 6.20 8.24 8.37 7.99 8.39
Core capital (6) . . . . . . . 6.17 8.62 6.20 8.24 8.37 7.99 8.77
Risk-based capital (6) . . . . 12.33 17.10 12.51 17.00 18.45 18.02 21.02
Average equity to average
assets ratio . . . . . . . . 7.58 8.61 8.46 8.20 8.32 8.14 7.86
Dividend payout ratio (7). . . 33.33 40.00 39.67 68.12 40.74 40.00 19.77

PER SHARE DATA:
Book value per share (7) . . . 15.17 14.08 $ 14.80 $13.74 $13.08 $12.42 $11.81
Earnings per share (basic) . . .36 .30 1.21 .69 1.08 .90 1.72

OTHER DATA:
Full-service offices . . . . . 15 13 15 13 13 12 12
<FN>
___________________________
(1) Excluding the SAIF assessments, the Bank's return on assets, return on equity, and net
interest income after provision for loan losses to total other expenses would have been
.73%, 8.95% and 125.29%, respectively, for the year ended June 30, 1997.
(2) Includes the cumulative effect of change in the method of accounting for income taxes of
$732,000 for the year ended June 30, 1994, representing .19% return on assets and 2.36%
return on equity.
(3) Represents the difference between the average yield on interest-earning assets and the
average cost of interest-bearing liabilities.
(4) Represents net interest income as a percentage of average interest-earning assets.
(5) Nonperforming assets include nonaccruing loans, accruing loans delinquent 90 days or more,
and foreclosed assets but do not include restructured loans.
(6) End of period ratio.
(7) Adjusted for stock distributions
(8) Data includes the effect of First Federal's acquisition of GFS Bancorp, Inc. for periods
subsequent to March 31, 1998.
(9) Annualized where appropriate.
</FN>
</TABLE>

(x)<PAGE>
<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
GENERAL

The Company's Board of Directors is currently composed of
five members, each of whom is also a director of the Bank.
Directors are generally elected to serve for three-year terms or
until their respective successors are elected and qualified.
The directors are divided into three classes, and approximately
one-third of the directors are elected annually. In September
1998, Mr. John Switzer, a director with the Bank since 1972,
passed away, and as a result, the number of directors on the
Board of Directors was reduced from six to five directors.

The table below sets forth certain information regarding
the composition of the Company's Board of Directors, including
each director's term of office. The Board of Directors acting
as the nominating committee has recommended and approved Mr.
Gary R. Hill as a nominee for director of the Bank and Company
for a term of three years to expire in January 2002 or until
consummation of the Merger. It is intended that the proxies
solicited on behalf of the Board of Directors (other than
proxies in which the vote is withheld as to a nominee) will be
voted at the Annual Meeting FOR the election of the nominee. If
a nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute
nominee as the Board of Directors may recommend. At this time,
the Board of Directors knows of no reason why the nominee might
be unable to serve if elected. Except as disclosed herein,
there are no arrangements or understandings between any director
or nominee and any other person pursuant to which the nominee
was selected.

SHARES OF
COMMON STOCK
BENEFICIALLY
DIRECTOR TERM TO OWNED AT PERCENT OF
NAME AGE(1) POSITION(S) HELD IN THE COMPANY SINCE(2) EXPIRE FEBRUARY 2, 1999(3) CLASS(3)
- ---- ------ ------------------------------- -------- ------ -------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES FOR THREE-YEAR TERMS
-----------------------------

Gary R. Hill 51 Director, Executive Vice President, 1986 1999(4) 122,558 (5) 6.82%
Secretary and Treasurer of the
Company and the Bank

DIRECTORS CURRENTLY IN OFFICE
-----------------------------

Carney D. Loucks 48 Director of the Company and the Bank 1997 2000 8,000 .44

Kevin D. Ulmer 47 Director, President and Chief 1990 2000 169,136 (5) 9.29
Executive Officer of the Company
and the Bank

John E. Carl 57 Director of the Company and the Bank 1984 2001 29,250 1.62

David E. Sandeen 54 Director of the Company and the Bank 1985 2001 77,048 (5) 4.24
<FN>
________________
(1) As of September 30, 1998.
(2) Includes service as a director of the Bank.
(3) Amount includes shares held directly and jointly with certain family members or held by
trusts of which the named individual is a trustee, with respect to which shares the listed
individuals or group members may be deemed to have sole or shared voting and investment
power. This amount also includes options to purchase 24,000, 12,896, 0, 8,000 and 20,792
shares of Common Stock held by Messrs. Ulmer, Carl, Hill, Loucks and Sandeen,
respectively, which options are currently exercisable. The amount reported above excludes
shares held by family members that do not live in the same household as such officers and
directors, with respect to which beneficial ownership is expressly disclaimed.
(4) Assuming the individual is elected at the Annual Meeting.
(5) This amount includes 9,600 shares held by the Bank's Profit Sharing Plan and 9,600 shares
held by the Bank's Retirement Plan for which Directors Ulmer, Hill and Sandeen, as
trustees, are deemed to have shared voting and investment power.
</FN>
</TABLE>

1<PAGE>
<PAGE>
The principal occupation of each director of the Company
is set forth below. All directors have held their present
position for at least five years unless otherwise indicated.

Gary R. Hill has been a Director of the Bank since 1986,
and of the Company since its formation. He presently serves the
Bank and the Company as Executive Vice President, Secretary and
Treasurer. Mr. Hill has been with the Bank since 1981.

Carney D. Loucks has been a self-employed orthodontist in
Newton and Grinnell, Iowa for the past 15 years. He has been a
Director since 199.

Kevin D. Ulmer is President and Chief Executive Officer of
the Bank and the Company, positions he has held with the Bank
since January of 1990 and with the Company since its formation.
He joined the Bank in September of 1989 as Executive Vice
President. Prior to joining the Bank, Mr. Ulmer served as
President of First Federal Savings and Loan Association of York,
Nebraska from 1986 to 1989.

John E. Carl has served as a Director of the Bank since
1984, and of the Company since its formation. He is the majority
owner of Central Iowa Broadcasting, a company operating a radio
station located in Newton.

David E. Sandeen has been a Director of the Bank since
1985, and of the Company since its formation. He is the
President of Midwest Manufacturing Co., a manufacturer of auto
parts, headquartered in Kellogg, Iowa, and President of CREST
Engineering Co., a specialty machining shop, located in
Brookland Park, Minnesota.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

Meetings and Committees of the Company. Meetings of the
Company's Board of Directors are generally held on a monthly
basis. The Board of Directors met 21 times during the fiscal
year ended September 30, 1998. During the 1998 fiscal year, no
incumbent directors of the Company attended fewer than 75% of
the total number of Board meetings and committee meeting held by
the committees of the Board of Directors on which they served.
The Company's directors are not paid a fee for serving on the
Company's Board.

The Company has standing Executive, Audit and Stock Option
Committees.

The Executive Committee is composed of Directors Ulmer,
Carl and Sandeen. The Executive Committee meets, as necessary,
to consider matters of general importance to Mid-Iowa. All
decisions of the Executive Committee are ratified by the Board
of Directors. The Executive Committee did not meet during
fiscal 1998, as the full Board met sufficiently often to conduct
Company business.

The Audit Committee is composed of all non-employee
directors. The Audit Committee reviews audit reports and
related matters to ensure effective compliance with regulatory
and internal policies and procedures. This committee met two
times during fiscal 1998.

The entire Board of Directors acts as a nominating
committee for selecting nominees for election as directors.
Nominations of persons for election to the Board of Directors
may be made only by or at the direction of the Board of
Directors or by any stockholder entitled to vote for the
election of directors who complies with the notice procedures
set forth in the Bylaws of the Company. Pursuant to the
Company's Bylaws, nominations by stockholders must be delivered
in writing to the Secretary of the Company at least 30 days
prior to the date of the annual meeting.

2<PAGE>
<PAGE>
EXECUTIVE COMPENSATION

The Company has not paid any compensation to its executive
officers since its formation. The Company does not presently
anticipate paying any compensation to such persons.

Summary Compensation Table. The following table sets
forth information regarding compensation paid by the Bank to its
Chief Executive Officer. No other executive officer was paid in
excess of $100,000 during this period.

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------- ------------------- --------
NAME AND OTHER RESTRICTED SECURITIES
PRINCIPAL FISCAL ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS(#) PAYOUTS COMPENSATION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kevin D. Ulmer 1998 $89,125 $ 43,762 $ $ $ $ 16,078
President and Chief 1997 85,808 36,842 65,000 -- 14,921
Executive Officer 1996 82,980 22,426 -- -- -- -- 12,739
<FN>
(1) Includes the Bank's contribution of $3,908, $3,671 and $3,095 under the Bank's Profit
Sharing Plan and $11,724, $10,856 and $9,284 under the Bank's Retirement Plan for Mr. Ulmer
for fiscal 1998, 1997 and 1996, respectively. Also includes $446 and $453 in term life
insurance premiums paid by the Company during fiscal 1998 and 1997 on behalf of Mr. Ulmer.
</FN>
</TABLE>

Aggregated Option Exercises in Last Fiscal Year and Year-End
Option Values. The following table provides information
regarding options exercised and the value of the options held by
the Company's Chief Executive Officer on September 30, 1998.
Mr. Ulmer did not receive a grant of options during fiscal year
1998.
<TABLE>
<CAPTION>

NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END AT FISCAL YEAR-END
SHARES ACQUIRED VALUE (ALL IMMEDIATELY (ALL IMMEDIATELY
NAME ON EXERCISE REALIZED EXERCISABLE) EXERCISABLE) (1)
- ---- --------------- -------- ------------------- --------------------
<S> <C> <C> <C> <C>
Kevin D. Ulmer 12,000 $42,750 53,000 $318,000
<FN>
_______________
(1) Based on the difference between the fair market value of the underlying Common Stock of $
11.31 as quoted on the NASDAQ Small Cap exchange on September 30, 1998 and the exercise
price of $7.75 per share.
</FN>
</TABLE>

EMPLOYMENT AGREEMENT

In October 1992, the Bank entered into an employment
agreement with Kevin D. Ulmer for a three year term. The
employment agreement provides for an annual base salary as
determined by the Board of Directors, but not less than Mr.
Ulmer's salary immediately preceding the conversion of the Bank
from mutual to stock form. Salary increases are reviewed not
less often than annually thereafter, and are subject to the sole
discretion of the Board of Directors. The employment contract
provides for an automatic extension for one additional year upon
authorization by the Board of Directors at the end of each year.
On September 21, 1998, the employment agreement was extended for
one additional year, to renew the three-year contract. The
contract provides for termination upon the employee's death, for
cause or in certain events specified by Office of Thrift
Supervision regulations. The employment contract is terminable
by the employee upon 90 days' notice to the Bank. The
employment contract provides for payment to the employee in the
event there is a change in control of the Company or the Bank,
as defined in such agreement, where employment terminates
involuntarily in connection with such change in control or
within 12 months thereafter, of the employee's salary through
the end of the contract and an additional amount representing
the employee's salary for the immediately

3<PAGE>
<PAGE>

preceding year, provided that payments under the agreement may
not exceed an aggregate of 2.99 times the employee's average
taxable income for the five years preceding the change in
control. Such termination payment is also provided on a similar
basis in the event of a voluntary termination of employment in
connection with a change in control that was at any time opposed
by the Bank's or the Company's Board of Directors. Assuming a
change in control were to take place as of the date hereof, the
aggregate amount payable to Mr. Ulmer pursuant to this change in
control provision would be approximately $390,000. The contract
provides, among other things, for participation in an equitable
manner in employee benefits applicable to executive personnel.
See " -- PROPOSAL II -- APPROVAL OF THE $15.00 PER SHARE CASH
PURCHASE PRICE AND THE MERGER AGREEMENT -- Interest of Directors
and Officers in the Merger."

CERTAIN TRANSACTIONS

The Bank's current loan policy provides that no loans will
be made to officers and directors. Prior to the current loan
policy, the Bank did offer loans to its directors, officers, and
employees. During fiscal 1998, there was one outstanding loan to
a director that exceeded $60,000. The outstanding loan was made
in the ordinary course of business with the same collateral,
interest rates and underwriting criteria as those of comparable
transactions prevailing at the time and did not involve more
than the normal risk of collectibility or present other
unfavorable features.

PROPOSAL II -- APPROVAL OF THE $15.00 PER SHARE
CASH PURCHASE PRICE AND THE MERGER AGREEMENT

The following description of the Merger does not purport
to be complete and is qualified in its entirety by reference to
the Merger Agreement attached hereto as Appendix A. The
material terms and provisions of the Merger are discussed in
this Proxy Statement. Stockholders are urged to read this
document carefully.

GENERAL

On August 17, 1998, the Company, Bank, Bancorp and First
Federal entered into the Merger Agreement, which provides for
the acquisition of the Company and the Bank by First Federal by
means of the Merger, with First Federal surviving the Merger.
The Merger Agreement provides that the Merger is subject to the
receipt of all required regulatory approvals, the approval by
the holders of the Common Stock, completion of the Conversion
and the satisfaction or waiver of a number of other conditions
and that each outstanding share of the Common Stock, by virtue
of the Merger and without any further action by the holder
thereof, will be converted into the right to receive $15.00 in
cash. See " -- Description of the Merger."

The aggregate purchase price to be paid by First Federal
for the Common Stock in the Merger is approximately $28.1
million (including payment for issued options). First Federal
has represented that it will have sufficient funds at the
Effective Time of the Merger (the "Effective Time") to pay for
shares of the Common Stock pursuant to the Merger Agreement.

APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE
VOTE OF AT LEAST A MAJORITY OF ALL VOTES ENTITLED TO BE CAST BY
THE HOLDERS OF THE COMMON STOCK.

THE PARTIES TO THE MERGER AGREEMENT

Mid-Iowa Financial Corp. The Company was incorporated
under the laws of the State of Delaware in 1992 to become a
savings and loan holding company with the Bank as its sole
subsidiary. The Company's principal business is to act as the
holding company of the Bank.

The Company is classified as a unitary savings and loan
holding company subject to regulation by the OTS. Prior to its
acquisition of the capital stock of the Bank, the Company had no
assets and no liabilities and engaged in

4<PAGE>
<PAGE>
no business activities. Since the acquisition of the Bank's
capital stock, the primary business activities of the Company
has been acting as the holding company of the Bank. The Company,
through its wholly-owned subsidiary, Mid-Iowa Security
Corporation also offers real estate brokerage services and is
involved in the development of a residential subdivision located
in Newton, Iowa.

Mid-Iowa Savings Bank, FSB. The Bank is a federally
chartered stock savings bank headquartered in Newton, Iowa. The
Bank's primary market area of Jasper County and West Des Moines,
Iowa is serviced by its two offices in Newton and offices in
Baxter, Colfax, Monroe, Prairie City and West Des Moines. At
September 30, 1998, Mid-Iowa and the Bank on a consolidated
basis had assets of $147.5 million, deposits of $96.4 million
and stockholders' equity of $13.8 million.

The Bank offers a variety of financial services to meet
the needs of the families in the communities it serves. It
attracts retail deposits from the general public and uses such
deposits, together with borrowings and other funds, to invest in
primarily one- to four-family residential mortgage loans and
mortgage-backed and related securities, and to a lesser extent,
consumer, commercial real estate, and commercial business loans.
Most loans are presently originated in the Company's primary
market area, Jasper County and West Des Moines, Iowa; to a
lesser extent loans are also originated in other parts of Iowa.
The Bank also invests in U.S. Government and agency obligations
and other permissible investments and occasionally purchases
loan participations. The Bank, through its wholly-owned
subsidiary, Center of Iowa Investments, Limited, also offers
mutual funds, annuities, discount securities brokerage services,
credit reporting and collection services.

First Federal Bankshares, MHC. Bancorp is the
federally-chartered mutual holding company of First Federal.
Bancorp was formed in July 1992 as a result of the
reorganization of First Federal into a federally-chartered
mutual holding company structure. Bancorp's sole business
activity is holding 1,524,600 shares of First Federal's common
stock, which represents 53.6% of the outstanding shares, as well
as $310,000 in cash or cash equivalents and other assets of $1.5
million as of September 30, 1998. As part of the conversion,
Bancorp will merge into First Federal, with First Federal as the
surviving entity.

In connection with and prior to the Merger, and in order
to raise capital to facilitate the Merger, Bancorp will effect a
full conversion from a thrift mutual holding company to a thrift
stock holding company (the "Conversion") and will offer shares
(the "Conversion Shares") of its common stock, par value $.01
per share ("Bancorp Common Stock"), in a subscription and
community offering at $10.00 per share and in an exchange
offering to the existing public stockholders of First Federal.

First Federal Savings Bank of Siouxland. First Federal is a
federally-chartered stock savings bank headquartered in Sioux
City, Iowa. First Federal's deposits have been federally
insured since 1935. First Federal has been a member of the
Federal Home Loan Bank ("FHLB") of Des Moines since 1935. At
September 30, 1998, First Federal had total assets of $569.6
million, total deposits of $392.7 million, and total
stockholders' equity of $43.2 million.

The principal executive offices of Bancorp and First
Federal are located at 329 Pierce Street, Sioux City, Iowa
51101. Their telephone number at that address is (712) 277-
0200.

BACKGROUND OF THE MERGER

During mid to late 1997, management was aware of numerous
business combinations occurring in the banking and thrift
industry and the solid premiums being paid in those business
combinations. Indications from financial advisors further
verified these observations. This led management and the Board
of Directors to begin evaluating strategic alternatives.
Specifically noted were the strong prices which had been
achieved in several mid-western business combinations.

In September 1997, the Chairman of the Board and the
President of the Company met with a representative of a
financial advisory firm to evaluate the Company's strategic
alternatives.

The results of this research were shared with the Board of
Directors on October 20, 1997 and resulted in the Company
engaging a financial advisory firm in November 1997 to, among
other services, contact potential acquirers to determine their
interest in pursuing a business combination with the Company,
evaluate proposals received, and assist in structuring and
negotiating a possible business combination with the Company.

During the months of December 1997 and January 1998 this
firm contacted approximately 12 companies believed most likely
to be interested in acquiring the Company at a price acceptable
to the Company. First Federal was not included in the group of
companies contacted. In response to these contacts, three
parties, all bank holding companies, submitted formal
indications of interest indicating preliminary prices ranging
from $12.00 to $15.00 per share and involving both cash and
stock transactions. A fourth party verbally indicated a
preliminary indication of interest at $12.00 per share.

Following this analysis, the Board of the Company
authorized the Company's financial advisor to invite four
parties to conduct a due diligence examination of the Company.
One of the companies did not complete due diligence because
subsequent to its original proposal, it discovered it had an
accounting issue which would prevent pooling. Following
completion of due diligence, the parties submitted revised
indications of interest at prices of $12.00, $14.08 and $14.55,
respectively. The latter two expressions of interest
contemplated stock-for-stock exchanges.

The Board of Directors then met with the financial advisor
to review the preliminary proposals. The Board of Directors
considered the $14.55 offer to be the most favorable proposal
considering the following factors: (i) it represented the
highest price offered; (ii) it represented an all stock
transaction; and (iii) represented a stock which appeared to
have adequate liquidity in the market.

On the basis of the foregoing, the Board then authorized
management to proceed with negotiations with the company that
had submitted a preliminary indication of interest in acquiring
the company in a tax free exchange of stock at a per share price
of $14.55. In the several weeks which followed, management
engaged in negotiations with this bank holding company but the
parties were never able to reach an agreement over final pricing
terms, specifically including the mechanisms for protecting the
Company's stockholders in the event of a decline in the
prospective acquiror's stock price. On May 18, 1998, the
Company's Board, at the recommendation of the Chairman and
President, voted to suspend negotiations with the bank holding
company and to discuss a transaction with other potential
inquirers. During these May 18th deliberations and before
taking this action, the Board of Directors noted that in
addition to disagreement over the appropriate level of risk to
the Company resulting from a decline in the acquiror's stock
price, other issues included unacceptable restrictions on
lending and investment operations of Mid-Iowa. Therefore, the
Chairman of the Board and President were authorized to pursue
other prospects.
6<PAGE>
<PAGE>
On June 29, 1998, the Company terminated its agreement
with the financial advisor.

Between July 1, 1998 and July 31, 1998, management pursued
contacts with the party that had submitted an expression of
interest of $14.08 per share as well as with First Federal. The
company which had submitted the $14.08 per share offer, since it
was not publically traded, could not demonstrate that the stock
would have either adequate liquidity or a stable market price.

During the week of July 6, 1998, Kevin D. Ulmer, President
of the Company, was contacted by Steven L. Opsal, Executive Vice
President of First Federal, to discuss the Company's interest in
a possible business combination. On July 16, 1998, Mr. Ulmer
met with Barry Backhaus, Chairman and Chief Executive Officer of
First Federal, and Mr. Opsal. Mr. Backhaus expressed to Mr.
Ulmer the strong interest on the part of First Federal to pursue
an acquisition with Mid-Iowa. On July 17, 1998, Mr. Backhaus
met with both Chairman of the Board, David Sandeen and
President, Kevin Ulmer to discuss this matter further and again
indicated strong interest on the part of First Federal in
pursuing the acquisition.

First Federal submitted a written indication of interest
in a cash acquisition at a per share price of $15.00. At a
meeting of July 27, 1998, the Board authorized management to
proceed with negotiations of a definitive agreement with First
Federal. During its deliberations, the Directors noted that
during 1998 the Board has conducted extensive research on the
value of the Company and looked at a variety of potential
acquirers and the $15.00 price discussed was not only the best
price offered, but also was a cash offer, thereby eliminating
any uncertainties which existed in the financial markets.

On August 17, 1998, the Board of Directors of the Company
held a special meeting attended (telephonically) by
representatives of Prairie Capital and the Company's legal
counsel. The Prairie Capital representative provided detailed
information concerning the financial terms of the Merger. After
reviewing the information and certain other data regarding,
among other things, the valuation of the Company and the values
received in comparable transactions, the Prairie Capital
representative responded to questions from the directors. The
Prairie Capital representative then advised the Board that it
was the opinion of Prairie Capital that the proposed Merger was
fair to holders of the Common Stock from a financial point of
view. Following such presentation, legal counsel provided an
overview of the Merger Agreement. Legal counsel then conducted
an analysis of the Merger Agreement, responded to several
questions concerning the terms of the proposal, and discussed
certain procedural aspects of the Merger. After discussions and
further questions and answers, the Merger Agreement was
unanimously approved by the Board of Directors.

For a period following the adoption of its plan of
conversion, First Federal in its discretion, was willing to
furnish depositors of the Bank with a preference in the
community offering phase of the conversion stock offering. The
preference for depositors of the Bank was not the subject of
negotiations between the Company and First Federal nor was it
part of the Merger Agreement. The decision to provide Bank
depositors with this preference was a decision made by First
Federal after the execution of the Merger Agreement. As a
result of comments received from the staff of the SEC in its
review of First Federal's offering prospectus, First Federal
decided to remove this preference.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.

RECOMMENDATION OF THE BOARD OF DIRECTORS -- THE BOARD OF
DIRECTORS BELIEVES THAT THE $15.00 PER SHARE CASH PRICE IS FAIR
TO STOCKHOLDERS

The Board of Directors of the Company considered the
following factors in evaluating the Merger: (i) the value being
offered the Company's stockholders by First Federal in relation
to the market value (approximately 18.3% premium over August 16,
1998 market value), book value (205.3% price to book value
ratio), and earnings per share of Common Stock (price to
earnings multiple of 20.1); (ii) information concerning the
financial condition, results of operations and prospects of
First Federal and the Company; (iii) the competitive environment
for financial institutions generally; (iv) the ability of First
Federal to provide comprehensive financial services in relevant
markets; (v) the financial terms of other recent business
combinations in the local financial services industry; (vi) the
fact that First Federal has the financial resources to serve the
lending and deposit needs of the Company's customer base; (vii)
the opinion of the Company's financial advisor, Prairie Capital,
that the consideration to be received by the Company's
stockholders is fair to such stockholders from a financial point
of view; and (viii) the financial effect of the Company's
continued operation as an independent financial institution on
stockholders' value.

7<PAGE>
<PAGE>

With the understanding that the Merger is a cash
transaction, the Board of Directors considered that the receipt
of cash in connection with the Merger would be a recognition
event for federal income tax purposes, and that the amount of
cash received by a stockholder in excess of such stockholder's
original investment in the Common Stock (adjusted for stock
splits, stock dividends or other such transactions which may
have effected the value of the Common Stock) or for holders of
stock options in excess of the exercise price, would be taxable
at the capital gains rate.

The Board of Directors did not quantify or otherwise
attempt to assign relative weights to the foregoing factors
considered in making its determination and does not believe that
any single factor discussed above was given greater weight than
any other factor. Having considered all of the foregoing,
however, the Board of Directors determined that the Merger is in
the best interest of stockholders and unanimously recommends
that stockholders vote for the Merger.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.

OPINION OF FINANCIAL ADVISOR -- THE $15.00 PER SHARE CASH
PURCHASE PRICE IS FAIR TO STOCKHOLDERS ACCORDING TO INVESTMENT
BANKER PRAIRIE CAPITAL

General. The Mid-Iowa Board entered into an agreement
with Prairie Capital on August 5, 1998, to review the terms of
the proposed Merger and to render an opinion as to the fairness,
from a financial point of view, of the consideration to be
received by the stockholders of Mid-Iowa.

There were no limitations placed on the scope of Prairie
Capital's activities in obtaining and reviewing data, holding
discussions with Mid-Iowa and with First Federal and its
financial advisor, performing such analyses as it deemed
necessary in order to render a fairness opinion to the Mid-Iowa
Board. Prior to the proposed Merger, Prairie Capital has had no
financial advisory or other business relationship with Mid-Iowa
or the Bank in the last two years. Also, Prairie Capital did
not determine, or play any role in determining, the Merger
Consideration.

Background of Prairie Capital and Fee Arrangement.
Prairie Capital, as part of its investment banking business, is
engaged in the valuation of businesses, including banks and
thrifts, and securities in connection with mergers and
acquisitions, stock conversions, other public and private
financings and valuations for estate, corporate and other
purposes. Mid-Iowa selected Prairie Capital on the basis of the
reputations of its principals and their experience in evaluating
Midwestern financial institutions such as Mid-Iowa and First
Federal and Midwestern merger and acquisition transactions such
as the proposed Merger.

For its services in connection with rendering the fairness
opinion, Prairie Capital received a fee of $15,000. Prairie
Capital also received reimbursement for certain out-of-pocket
expenses and Mid-Iowa agreed to indemnify Prairie Capital
against certain liabilities, including liabilities which may
arise under the securities laws.

Fairness Opinion. On August 17, 1998, prior to the Mid-
Iowa Board approving the Merger Agreement, Prairie Capital met
with the Mid-Iowa Board, made an oral presentation of its
written report and provided the Mid-Iowa Board with a written
opinion, stating that the terms of the proposed Merger are fair,
from a financial point of view, to the Mid-Iowa stockholders.
On February 10, 1999, Prairie Capital delivered an updated
opinion to the Mid-Iowa Board to the same effect as the August
17, 1998 opinion. The full text of such opinion of Prairie
Capital, which sets forth certain assumptions made, matters
considered and specific reviews that were not undertaken, is
attached as Appendix B to this Proxy Statement and should be
read in its entirety in connection with this Proxy Statement.
The summary of the opinion of Prairie Capital set forth in this
Proxy Statement is qualified in its entirety by references to
the opinion.
8<PAGE>
<PAGE>
Assumptions and Due Diligence Review by Prairie Capital.
Prairie Capital assumed and relied upon, without independent
verification, the accuracy and completeness of the information
reviewed by it for the purposes of its opinion. Prairie Capital
did not make any independent valuation or appraisal of the
assets or liabilities of Mid-Iowa and First Federal, nor was
Prairie Capital furnished with any such appraisals. Prairie
Capital assumed, without independent verification, that the
aggregate allowances and reserves for loan and lease losses of
Mid-Iowa and First Federal were adequate to cover such losses.
Prairie Capital's opinion was necessarily based on economic,
market and other conditions in effect on, and the information
made available to it as of, the date of the opinion.

In arriving at its opinion as updated on February 10, 1999,
Prairie Capital reviewed and analyzed, among other data: (i)
the annual reports and audited financial statements of Mid-Iowa
for the fiscal years ended September 30, 1993 through 1998; (ii)
the annual report and Form 10-K for First Federal for the fiscal
years ended June 30, 1997-1998; (iii) First Federal's Form 10-Q
as of and for the nine months ended March 31, 1998 and its
quarterly reports to stockholders for the quarters ended
September 30, 1997, December 31, 1997 and March 31, 1998; (iv)
copies of the Agreement and Plan of Reorganization; (v) draft
copies of this Proxy Statement; (vi) other information Prairie
Capital deemed relevant; and (vii) other internal financial
and operating information which was provided to Prairie Capital
by Mid-Iowa. The internal and operating information relied upon
by Prairie Capital included the following: (i) details on
investment securities portfolios; (ii) discussions and
information related to the loan portfolio (including review of
and information on loan watch lists and information related to
nonperforming loans and loan concentrations); (iii)
discussions and information on asset/liability structure; (iv)
discussions and information on deposits and borrowings; (v)
discussions and information on facilities including the new
branch in West Des Moines; (vi) regulatory reports; and (vii)
discussions on any current and potential litigation,
environmental issues, Year 2000 preparations and any other
regulatory issues.
9<PAGE>
<PAGE>
Analysis of Iowa Bank and Thrift Mergers and Acquisition
Transactions. To assess the fairness of the Merger terms to
Mid-Iowa's stockholders, Prairie Capital gathered
information on nine bank and thrift merger and acquisition
transactions announced in 1997 and 1998 involving Iowa
institutions as sellers. These transactions are summarized in
the following table:

IOWA BANK AND THRIFT MERGER AND ACQUISITION TRANSACTIONS
1997-1998

Seller
ANN. DEAL PRICE/ PRICE/TANGIBLE PRICE/ EQUITY/
DATE SELLER/BUYER (1) AMOUNT CURRENCY BOOK VALUE BOOK VALUE EARNINGS ASSETS ASSETS ROA
- ---- ---------------- ------ -------- ---------- ---------- -------- ------ ------ ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Mid-Iowa Financial $27.7 cash 205.3% 205.3% 20.1x $135 9.9% 1.06%
Newton (T)
_____________________________________________________________________________________________________________

May-98 First Financial Bancorp $167.2 stock 274.0% 286.9% 23.7x $568 10.6% 1.24%
Iowa City (B)/
Mercantile, St. Louis
Feb-98 AmerUs Bank, $200.6 cash, notes 193.1% 196.7% 13.7x $1,369 7.6% 1.14%
Des Moines (T)/ & stock
Commercial Federal
Dec-97 Perpetual Midwest, $60.5 stock 166.9% 166.9% 37.1x $402 8.5% 0.55%
Cedar Rapids (T)/
Commercial Federal
Dec-97 BancSecurity Corp., $145.0 stock 261.9% 263.3% 20.5x $537 10.3% 1.37%
Marshalltown (B)/
F&M Bancorp, Wisc.
Oct-97 GFS Bancorp, Inc. $19.2 cash 165.6% 165.6% 20.8x $92 11.5% 0.99%
Grinnell (T)/
First FSB-Siouxland
Sep-97 Valley Financial $14.7 cash 192.7% 192.7% 20.5x $107 7.1% 1.11%
Burlington (B)/
North Central Bancshares
Aug -97 Liberty Financail, $108.6 stock 280.7% 284.3% NMF $604 6.4% 1.34%
West Des Moines (B)/
Commercial Federal
Jul-97 Rubio Savings Bank, $4.6 cash 152.4% 152.4% 18.0x $22 13.7% 1.18%
Brighton (T)/
Washington Bancorp,
Jul-97 Marshalltown $25.9 cash 124.5% 124.5% 60.4x $127 15.6% 0.73%
Financial (T)/
HMN Financial
<FN>
__________
(1) T= thrift/thrift holding company
B=bank holding company/Buyer
</FN>
</TABLE>

Of the nine transactions, four involved bank holding
companies and five involved thrifts as sellers. Four
transactions had stock as the consideration, four were for cash
and one involved a combination of cash, notes and stock.

10<PAGE>
<PAGE>
Three of the four stock transactions had bank holding
companies (First Financial, BancSecurity and Liberty Financial)
as sellers and were among the larger transactions. These three
transactions were also the highest valued in terms of price/book
value ratios at over 2 1/2 times. In Prairie Capital's opinion,
banks tend to command higher values generally because of their
lower cost of funds, more diversified and higher yielding
assets, higher amounts of noninterest income and resulting
higher profitability. That appeared to be the case in these
three transactions. Also, stock transactions will often command
higher market values because the common stocks used in the
transactions are valued high in relation to earnings and book
values. In addition, the buyer can often use "pooling-of-
interests" accounting and avoid the reduction in reported
earnings caused by amortization of goodwill incurred in
transactions accounted for as a purchase. The fourth
transaction with a bank as a seller (Valley Financial,
Burlington) was for cash. The price/book value ratio for this
transaction was slightly below the ratio for the proposed
Mid-Iowa transaction while the price/earnings ratio was just
about that for the Mid-Iowa transaction.

Five of the nine transactions had thrifts as sellers. The
sellers in these transactions were AmerUs Bank, Perpetual
Midwest, GFS Bancorp, Rubio Savings and Marshalltown Financial.
Three of the transactions had cash as the consideration, one had
stock and one was a combination of cash, stock and notes.
Prairie Capital calculated the average and median price/book
value ratios and average and median price/earnings ratios for
the five transactions. The average and median price/book value
ratios were 160.5% and 165.5% compared to 205.3% for the
proposed Mid-Iowa transaction. The median price/earnings ratio
was 20.8 times compared to 20.1 times for the proposed Merger.
(The average price/earnings ratio at 30.0 times was unduly
affected by two high price/earnings ratios for Perpetual Midwest
and Marshalltown Financial transactions which reflected
depressed earnings and below average profitability more
than high prices.)

Prairie Capital noted that in four of the five thrift
transactions the sellers - GFS Bancorp, Marshalltown Financial,
Rubio Savings and Perpetual Midwest -- had excess capital as did
the Company. Acquirers will often not pay a premium for
capital in excess of regulatory requirements in the acquired
company unless that premium is justified by earnings or other
factors. For the four transactions and for the proposed Merger,
Prairie Capital assumed that any capital in excess of an amount
equal to 7% of assets was excess capital. The excess capital
was deducted from the purchase price and from book value and
then the price/book value ratio was calculated. The resulting
price/book value ratios are usually higher because the excess
capital on which an acquiror would likely pay only
dollar-for-dollar is removed from the calculation. The four
transactions mentioned above had adjusted price/book value
ratios that ranged from 163.8% to 242.2% compared to an adjusted
ratio of 255.0% for the proposed Merger.

For all nine Iowa transactions, the average and median
price/book value ratios were 201.3% and 192.7%, respectively,
compared to 205.3% for the proposed Mid-Iowa transaction. The
average and median price/earnings ratios were 28.9 times and
20.7 times, compared to 20.1 times for Mid-Iowa.

Discounted Cash Flow Analysis. In this analysis, which is
set out in the table on the following page, Prairie Capital
assumed that Mid-Iowa would operate independently for five years
and then be sold at the end of the fifth year. Mid-Iowa
stockholders would receive cash dividends for five years and
cash from the sale at the end of the fifth year. Average assets
were assumed to grow 8% the first year, 7% the second year, 6%
the third year and 5% each year the fourth and fifth years.
These growth rates compare to Mid-Iowa's annual asset growth of
8.6% from fiscal 1993 through fiscal 1997. While the West Des
Moines branch will provide some growth, the overall growth rate
could slow down as it becomes more difficult to maintain the
growth rate from a larger base. In Prairie Capital's
experience, as financial institutions grow, it often becomes
more difficult to maintain a consistent percentage growth rate
over time because of increased competition in growth markets.
The return on average assets was assumed to be 1.05% in
the first year, 1.10% in the second year and 1.15% in the third
through fifth years. Over the five fiscal years through fiscal
1997, the highest return on average assets was 1.14%, adjusted
to exclude extraordinary items.

11<PAGE>
<PAGE>
The projected cash dividends for the five years were
assumed to be 50% of net income which was significantly above
the modest dividend payouts in the past. Prairie Capital noted
that in its projections Mid-Iowa would have an equity to assets
ratio at the end of five years of 10.1% compared to 9.9% as of
June 30, 1998, even after a 50% dividend payout. The projected
cash dividends were discounted back to present value at discount
rates of 10% and 12%. The sale price at the end of the fifth
year was assumed to be 2X book value, roughly a similar ratio to
the current sale price in relation to book value. The sale
price was also discounted back to present value at 10% and 12%
discount rates. The resulting values of cash dividends and sale
price were about $23.8 million and $25.9 million compared to the
$27.7 million of cash consideration in the proposed Mid-Iowa
Merger.
<TABLE>
<CAPTION>
Summary of Per Share Present Values of
Dividends and Sale Price Compared to the
Merger Consideration Per Share
Per Share
---------
<S> <C> <C>
1. Present Value - Per Share $14.07
Aggregate value - $25,925,000
Assumptions: cash dividend payout 50%
Sale price 2X book value
(5th year)
Discount rate 10%

II. Present Value -Per Share $12.97
Aggregate value $23,790,000
Assumptions: cash dividend payout 50%
Assumptions: Sale price 2X book value
Discount rate 12%

III. Proposed Merger Consideration - Per Share $15.00
Aggregate value - $27,720,000
</TABLE>

First Federal Second Step Conversion and Public Offering.
As a condition of the Merger, First Federal must simultaneous
with the Merger complete a second step conversion from a mutual
holding company to a stock holding company and effect a public
offering. To be assured of regulatory approval, First Federal
should have adequate tangible equity after the Merger, second
step conversion and public offering. Based on an offering price
25% below First Federal's recent stock price, Prairie Capital
noted that First Federal would raise in the public offering more
than double the amount of capital required under federal
regulatory requirements to have a leverage capital ratio after
the Merger of 5.5%.

Contacts and Discussions with prospective purchasers.
Prairie Capital also considered the fact that since October,
1997, Mid-Iowa management has had contacts with eleven financial
institutions in addition to First Federal regarding their
interest in negotiating a transaction with Mid-Iowa. Several of
these institutions conducted due diligence. Of the expressions
of interest received by Mid-Iowa, First Federal's was the
strongest.

Conclusion. Based on the foregoing, Prairie Capital
concluded that the terms of the proposed Merger are fair, from a
financial point of view, to the stockholders of Mid-Iowa.

The preparation of a fairness opinion is not necessarily
susceptible to partial analysis or summary description. Prairie
Capital believes that its analyses must be considered as a
whole. Prairie Capital may have given various analyses more or
less weight than other analyses and may have deemed various
assumptions more or less probable than other assumptions.

In performing its analyses, Prairie Capital made various
assumptions with respect to industry performance, general
business and economic conditions and other matters, many of
which are beyond the control of Mid-Iowa and First Federal.
Such analyses were prepared solely as part of Prairie Capital's
analysis of the fairness, from a financial

12<PAGE>
<PAGE>
point of view, of the consideration to be received by the
stockholders of Mid-Iowa in connection with the proposed Merger
and were provided to the Mid-Iowa Board in connection with the
delivery of Prairie Capital's opinion. The term "fair from a
financial point of view" is a standard phrase contained in the
fairness opinions of investment banks and refers to the fact
that Prairie Capital's opinion as to the fairness of the terms
of the Merger Agreement is addressed solely to the financial
attributes of the Merger Agreement.

VOTE REQUIRED -- 50.1% OF OUTSTANDING COMMON STOCK IS REQUIRED
TO APPROVE THE MERGER

Under Delaware law and the Company's Certificate of
Incorporation, approval of the Merger Agreement requires the
affirmative vote of at least a majority of the outstanding
shares of Common Stock of the Company. As of the Record Date,
directors and executive officers of the Company and their
affiliates were the beneficial owners of 367,592 shares, or
19.74% of the Common Stock outstanding at that date, including
301,904 shares, or 16.80%, of the Common Stock outstanding,
which directors of the Company had the power to vote. As of the
date hereof, the Company believes that directors and executive
officers and their affiliates will vote all their shares FOR
approval of the Merger Agreement.

DISSENTERS' RIGHTS

Section 262 of the DGCL (the "Appraisal Statute") entitles
any stockholder of record of the Company to an appraisal by the
Delaware Court of Chancery of the fair value of his or her
shares of Common Stock if he or she: (i) held shares of Common
Stock on the date of his or her demand for appraisal rights;
(ii) continuously held the shares through the effective date of
the Merger; (iii) has complied with all of the requirements to
obtain appraisal rights under the statute; and (iv) has not
voted in favor of the Merger nor consented to the Merger in
writing. A person having a beneficial interest in shares of the
Common Stock held of record in the name of another person, such
as a broker or nominee, must act promptly to cause the record
holder to follow the steps summarized below properly and in a
timely manner to perfect whatever appraisal rights the
beneficial owner may have. The following is a discussion of the
material information regarding dissenters rights under the
Appraisal Statute, but the discussion is not a complete
statement of the law pertaining to appraisal rights and is
qualified in its entirety by the full text of the Appraisal
Statute which is reprinted in its entirety as Appendix
C to this Proxy Statement.

A DISSENTING STOCKHOLDER ELECTING TO DEMAND THE APPRAISAL
OF HIS OR HER SHARES MUST DELIVER TO GARY R. HILL, SECRETARY OF
THE COMPANY, BEFORE THE TAKING OF THE VOTE ON THE MERGER, A
WRITTEN DEMAND FOR APPRAISAL OF HIS OR HER SHARES. The demand
must reasonably inform the Company of the identity of the
stockholder and that the stockholder intends to demand the
appraisal of his or her shares. In addition, the stockholder
must be the record holder of those shares on the date the
written demand is made and must hold the shares continuously
through the Effective Time and must not vote in favor of the
Merger Agreement. A STOCKHOLDER WHO RETURNS AN EXECUTED BLANK
PROXY WILL BE DEEMED TO HAVE VOTE IN FAVOR OF THE MERGER AND,
THEREFORE, TO HAVE WAIVED HIS OR HER DISSENTER'S RIGHTS OF
APPRAISAL. A proxy or vote against the Merger does not
constitute the written demand. Within 10 days after the
Effective Time of the Merger, the Company must notify
each stockholder who has complied with the provisions of the
Appraisal Statute and has not voted in favor of or consented to
the Merger that the Merger has become effective.

Within 120 days after the Effective Time, the Company or
any stockholder who has complied with the above requirements may
file a petition in the Delaware Court of Chancery demanding a
determination of the value of the stock. At any time within 60
days after the Effective Time, any stockholder has the right to
withdraw his demand for appraisal and accept the offer in the
Merger Agreement. Within 120 days after the Effective Time, any
stockholder who has complied with the above requirements, upon
written request, will be entitled to receive from the Company,
within 10 days of receipt of this request, a statement setting
forth the aggregate number of shares not voted in favor of the
Merger and with respect to which demands for appraisal have been
received and the aggregate number of holders of such shares.

13<PAGE>
<PAGE>
At the hearing on a petition by a stockholder to determine
the value of the stock, the Delaware Court of Chancery will
determine the stockholders who have complied with the above
provisions and who have become entitled to appraisal rights.
The Delaware Court of Chancery may require the stockholders who
have demanded an appraisal for their shares and who hold stock
represented by certificates to submit their certificates of
stock to the Register in Chancery for notation of the pendency
of the appraisal proceedings; and if any stockholder fails to
comply with such direction, the Court may dismiss the
proceedings as to such stockholder.

After determining the stockholders entitled to an
appraisal, the Court will appraise the shares, determining their
fair value exclusive of any element of value arising out of the
Merger, together with a rate of interest. In determining fair
value, the Court of Chancery will take into account all relevant
factors. The fair value determined by the Court of Chancery may
be more or less than the Merger Consideration. Any stockholder
whose name appears on a list containing the names and addresses
of all stockholders who have demanded payment for their shares,
which must be filed by the Company in the office of the Register
in Chancery, may participate fully in all proceedings until it
is finally determined that he is not entitled to appraisal
rights.

The Court will direct payment of the fair value of the
shares, together with interest, if any, by the Company to the
stockholder entitled thereto. The costs of the proceeding may
be determined by the Court and taxed upon the parties as the
Court deems equitable. Upon application of a stockholder, the
Court may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceedings,
including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against
the value of all shares entitled to an appraisal.

From and after the Effective Time, no stockholder who has
demanded appraisal rights is entitled to vote such stock for any
purpose or to receive payment of any dividends or other
distributions on the stock; provided, however, that if no
petition for an appraisal is filed with the allotted time or if
such stockholder withdraws his demand for appraisal within 60
days of the Effective Time or, thereafter, with written approval
of the Company, then the right of appraisal shall cease.

DESCRIPTION OF THE MERGER

Subject to the terms of the Merger Agreement, First Federal
will acquire the Company through the Merger in accordance with
the Merger Agreement and applicable provisions of Delaware law.
First Federal shall be the surviving entity resulting from the
Merger. The Merger will become effective and the separate
corporate existence of the Company shall cease at the Effective
Time. Each share of the Common Stock outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and
without any further action by the holder thereof, be canceled
and converted into and represent the right to receive $15.00 in
cash, subject to a possible increase in the event the closing of
the Merger ( the "Closing") does not occur on or before April
15, 1999 (the "Merger Consideration"). The possible increase in
the Merger Consideration will be equal to $3,700 for each day
from April 16, 1999 until the date immediately preceding the
Closing, divided by the number of shares of Common Stock
outstanding immediately prior to the Effective Time, rounded to
the nearest $.01. Following the Effective Time, there shall be
no further registration or transfer on the records of the
Company of shares of Common Stock which were outstanding
immediately prior to the Effective Time.

TREATMENT OF OUTSTANDING STOCK OPTIONS

The Merger Agreement provides that at the Effective Time,
the Company will terminate its 1992 and 1997 Stock Option Plans
(the "Company Option Plans") and each option outstanding
thereunder shall be converted into the right to receive the
amount by which the $15.00 purchase price (or such adjusted
purchase price as may result in the event the Closing does not
occur on or before April 15, 1999) exceeds the exercise price
per share of Common Stock under such option, reduced by any
applicable taxes that First Federal is required to withhold.

14<PAGE>
<PAGE>
EXCHANGE OF STOCK CERTIFICATES

At least twenty (20) days before the Effective Time, First
Federal will appoint an exchange agent (the "Exchange Agent"),
to make payment of the Merger Consideration to each holder of
shares of Common Stock who surrenders the certificate or
certificates representing such shares to the Exchange Agent,
together with a duly executed letter of transmittal (which the
Exchange Agent will mail not later than ten (10) business days
after the Effective Time to each holder of record of a
certificate or certificates which, immediately prior to the
Effective Time, represented issued and outstanding shares of
Common Stock). At the Effective Time, First Federal shall cause
to be deposited with the Exchange Agent an amount of immediately
available funds equal to the aggregate total Merger
Consideration.

Any shares of Common Stock as to which the holder has duly
demanded payment of the fair value pursuant to Section 262 of
the DGCL shall not be converted into the right to receive the
Merger Consideration, unless and until such stockholders shall
have failed to perfect or shall have effectively withdrawn or
lost their right of appraisal. See " -- Dissenters' Rights."
However, any shares of Common Stock held by a stockholder who
subsequently fails to perfect or withdraws or otherwise loses
such right of appraisal, shall thereafter be deemed to have been
converted into the right to receive and become exchangeable for,
at the Effective Time, the Merger Consideration.

After the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the
Company of the shares of Common Stock outstanding immediately
prior to the Effective Time and any such shares presented for
transfer after the Effective Time shall be canceled and
exchanged for the Merger Consideration. No interest shall
accrue on the Merger Consideration for the benefit of any holder
of shares of Common Stock after the Effective Time. In
addition, all shares of Common Stock which are held in the
treasury of the Company or the Bank by any direct or indirect
wholly-owned subsidiary of the Company and any shares of Common
Stock owned by First Federal or any direct or indirect
wholly-owned subsidiary or parent of First Federal shall
be canceled and no consideration shall be paid or delivered in
exchange.

PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME.

EFFECTIVE TIME

The Effective Time shall be on the date and at the time
when the articles of combination of the Merger are endorsed by
the OTS pursuant to applicable regulations. Assuming that the
Merger Agreement is approved by the Company's stockholders, the
Merger will remain subject to a number of conditions, including
the receipt of required regulatory approvals. See " --
Regulatory Approvals."

CONDITIONS TO THE MERGER

The obligations of the Company and the Bank and First
Federal to consummate the Merger are subject to the satisfaction
of a number of conditions on or before the Closing, including
the following (as used herein, the term "Party" shall mean the
Company and the Bank on the one hand and First Federal on the
other hand, and the term "Parties" shall mean the Company, the
Bank and First Federal): (i) the approval and adoption of the
Merger Agreement by the stockholders of the Company; (ii) the
approval of the OTS and any other regulatory agency having
authority to review and approve the transactions contemplated by
the Merger Agreement to the Merger and the transactions
contemplated by the Merger Agreement, the expiration of all
mandatory waiting periods, and the receipt of all appropriate
orders, consents, approvals and clearances required by
law for the consummation of the transactions contemplated by the
Merger Agreement in form and substance reasonably satisfactory
to First Federal and the Company, the terms of which permit the
effectuation of the Merger; (iii) no suit, action or proceeding
shall be pending or overtly threatened before any court or other
governmental agency by the federal or any state government in
which it is sought to restrain or prohibit the consummation of
the Merger and no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect;
(iv) prior to or on the date of the Closing,

15<PAGE>
<PAGE>
each Party shall have in all material respects performed all
material obligations and complied with all material covenants
required to be performed by it by the Closing and each Party
shall have delivered to the other certificates, signed by each
party's Chief Executive Officer and Chief Financial Officer,
dated as of the Closing; and (v) each Party shall have received
from counsel for the other Party the required legal opinion in
the form specified in the Merger Agreement. All action required
to be taken by, or on the part of the Parties to the Merger
Agreement, and the consummation of the transactions
contemplated thereby, shall have been duly and validly taken by
the Parties.

In addition, the obligations of the Company and the Bank
are contingent on: (i) each of the representations and
warranties of First Federal contained in this Merger Agreement
shall be true and correct in all material respects (or where any
statement in a representation or warranty expressly contains a
standard of materiality, such statement shall be true and
correct in all respects taking into consideration the standard
of materiality contained therein) at, or as of, the date of the
Merger Agreement and (except to the extent such representation
speaks as of an earlier date) and as of any date subsequent,
until and including the Closing date, except as otherwise
contemplated or permitted by the Merger Agreement); and (ii) all
action required to be taken by, or on the part of First Federal
and its holding company to authorize the execution, delivery and
performance of this Merger Agreement and the consummation of the
transactions contemplated by this Merger Agreement shall have
been duly and validly taken by them.

The obligations of First Federal are contingent upon: (i)
the Conversion and the offering of shares of Bancorp common
stock related thereto (the "Offering") shall have been completed
by Bancorp and First Federal; (ii) Each of the representations
and warranties of the Company contained in this Merger Agreement
shall be true and correct in all material respects (or where any
statement in a representation or warranty expressly contains a
standard of materiality, such statement shall be true and
correct in all respects taking into consideration the standard
of materiality contained therein) at, or as of, the date of the
Merger Agreement and (except to the extent such representation
speaks as of an earlier date) and as of any date subsequent,
until and including the Closing date, except as otherwise
contemplated or permitted by the Merger Agreement); (iii) the
absence of any material adverse change in the financial
condition, results of operations, or business of the Company or
the Bank and the Company's subsidiaries, taken as a whole, from
September 30, 1997, to the Closing date of the Merger, except
for general changes in generally accepted accounting principles;
changes in economic, financial, or market conditions, changes in
market interest rates; payments due under any employment
agreements or benefit plans; and the transactions contemplated
by the Merger Agreement, costs and expenses relating to and
contemplated by the Merger Agreement; (iv) on the Closing date,
no suit, action or proceeding shall be pending or overtly
threatened, and no liability or claim shall have been
asserted against the Company, the Bank or any Company Subsidiary
involving any of the assets, properties, business or operations
of the Company, the Bank or any Company Subsidiary that would
reasonably be expected to have a material adverse effect; (v)
First Federal shall have received the consent or approval of
each person or entity whose consent or approval shall be
required in order to permit consummation of the Merger under any
loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument to which the Company or the Bank
is a party or to which its respective property is subject,
except those for which failure to obtain such consents and
approvals would not, individually or in the aggregate, have a
material adverse effect on First Federal, whether prior to (if
applicable) or following the consummation of the transactions
contemplated by the Merger Agreement; (vi) neither the Board of
Directors of the Company nor the Bank nor any committee thereof
shall have amended, modified, rescinded or repealed the
resolutions adopted by such Board of Directors with respect to
this Merger Agreement or shall have adopted any other
resolutions in connection with the Merger Agreement and the
transactions contemplated thereby which are inconsistent with
such resolutions, except resolutions adopted consistent with the
express rights of the Bank under the Merger Agreement; and (vii)
immediately prior to the Closing, the Company's total
stockholders' equity account determined in accordance with
generally accepted accounting principles on a basis consistent
with the Company's audited financial statements, shall not be
less than $13.5 million, as reasonably determined by First
Federal's independent public accountant, in consultation with
the Company's independent public accountant (provided, however,
that for purposes of calculating total stockholders' equity, the
Company's expense associated with the severance payments due
under the employment agreements between the Bank and Messrs.
Kevin D. Ulmer and Gary Hill dated as of October 19, 1992, will
not be counted).
16<PAGE>
<PAGE>
CONDUCT OF BUSINESS PENDING THE MERGER

Under the Merger Agreement, the Company and the Bank have
agreed that unless the prior written consent of First Federal
shall have been obtained (which First Federal may not
unreasonably withhold) and except as otherwise contemplated by
the Merger Agreement, the Company and the Bank will:

(a) operate their business in the ordinary course in
accordance with past business practices;

(b) use their best efforts to (i) preserve intact their
business organization and assets, maintain their rights and
franchises, retain the services of their officers and key
employees (except that they shall have the right to terminate
the employment of any officer or key employee in accordance with
established employment procedures) and (ii) maintain their
relationships with customers;

(d) use their best efforts to maintain and keep their
properties in as good repair and condition as at present, except
for ordinary wear and tear;

(e) use their best efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of
coverage to that now maintained by them and, in the event that
the Bank is unable to keep such insurance and bonds in full
force and effect, to provide prompt notice of such failure to
First Federal;

(f) perform all obligations required to be performed by
them under all material contracts, leases, and documents
relating to or materially affecting their assets, properties,
and business;

(g) use their best efforts to comply with and perform in
all material respects all obligations and duties imposed upon
them by all applicable laws and regulations; and

(h) as soon as reasonably practicable, furnish First
Federal copies of all of reports and documents provided to
Company stockholders or filed with the OTS subsequent to the
date of the Merger Agreement.

The Merger Agreement also provides that except as
specifically contemplated thereby, from the date of the Merger
Agreement until the Effective Time, neither the Company nor the
Bank nor any Company subsidiary shall, without the prior written
consent of First Federal (which may not be unreasonably
withheld), do any of the following:

(a) incur any material liabilities or material
obligations, whether directly or by way of guaranty, including
any obligation for borrowed money whether or not evidenced by a
note, bond, debenture or similar instrument or enter into or
extend any material agreement or lease, except in the ordinary
course of business consistent with past business practices or in
connection with the transactions contemplated and permitted by
the Merger Agreement;

(b) (i) except as disclosed by the Company in the
disclosure schedule accompanying the Merger Agreement, grant any
bonus or increase in compensation to its directors or grant any
bonus or any increase in compensation to its officers and
employees, (ii) effect any change in retirement benefits to any
class of employees or officers (unless any such change is
required by applicable law) that would increase its retirement
benefit liabilities, (iii) adopt, enter into, amend or modify
any benefit plan except as required by law, (iv) enter into or
amend any employment, severance or similar agreements or
arrangements with any directors or officers (exclusive of
renewals in the ordinary course of business), (v) make any
additional awards under any stock bonus plan or stock option
plan, or (vi) make any additional contributions to any Company
benefit plans;

17<PAGE>
<PAGE>
(c) declare or pay any dividend on, or make any other
distribution in respect of, its outstanding shares of capital
stock, except for regular, quarterly cash dividends, paid on
normal dividend payment dates, in an amount no greater than the
dividend rate as of the date of the Merger Agreement;

(d) (i) redeem, purchase or otherwise acquire any shares
of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital
stock, or any options, warrants, conversion or other rights to
acquire any shares of its capital stock or any such securities
or obligations; (ii) merge with or into any other corporation,
savings institution or bank, permit any other corporation,
savings institution or bank to merge into it or consolidate with
any other corporation or bank, or effect any reorganization or
recapitalization; (iii) purchase or otherwise acquire any
assets, or shares of any class of stock, of any corporation,
savings institution, bank or other business; (iv) liquidate,
sell, dispose of, or encumber any assets or acquire any assets,
other than in the ordinary course of its business consistent
with past practices; or (v) split, combine or reclassify
any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock;

(e) except pursuant to the exercise of outstanding stock
options, issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any
shares of its capital stock of any class (including shares held
in treasury), any debt instrument having a right to vote or any
securities convertible into, or any rights, warrants or options
to acquire, any such shares, voting debt or convertible
securities;

(f) initiate, solicit or encourage, or take any other
action to facilitate, any inquiries or the making of any
proposal which constitutes a Superior Proposal, as defined in
the Merger Agreement, take any action in furtherance of such
inquiries or to obtain a Superior Proposal, or negotiate with
any person in, or agree to or endorse any Superior Proposal, or
authorize or permit any of its officers, directors or employees
or any investment banker, financial advisor, accountant or other
representative retained by it or any Company Subsidiary to take
any such action, except with respect to negotiations regarding,
and the endorsement of a Superior Proposal, as legally required
by the fiduciary duties of the Company's Board of Directors
under applicable law and as advised by counsel to the Company's
Board of Directors, and the Company shall promptly notify First
Federal orally and in writing of all of the relevant details
relating to all inquiries and proposals which it may receive
relating to any of such matters;

(g) propose or adopt any amendments to its charter or
by-laws, except such amendments as may be required to consummate
the transactions contemplated by the Merger Agreement;

(h) enter into an agreement in principle with respect to
any acquisition of a material amount of assets or securities or
any release or relinquishment of any material contract rights
not in the ordinary course of business;

(i) except in its fiduciary capacity, purchase any shares
of capital stock of First Federal;

(j) subject to the provisions of paragraph (f) above
regarding a Superior Proposal, willfully take action which would
or is reasonably likely to (i) adversely affect the ability of
either of First Federal, the Company or the Bank to obtain any
necessary approvals of governmental authorities required for the
transactions contemplated by the Merger Agreement; (ii)
adversely affect the Bank's or the Company's ability to perform
its covenants and agreements under the Merger Agreement; or
(iii) result in any of the conditions to the Merger not being
satisfied;

(k) change in any material respect the lending,
investment, deposit, asset and liability management and other
material policies concerning the business of the Bank or the
Company, unless required by law or regulation or, with respect
to lending or depository activities;

(l) file any applications or make any contract with
respect to branching by the Bank (whether de novo or by
purchase, sale or relocation);

18<PAGE>
<PAGE>
(m) form any new subsidiary or cause or permit a material
change in the activities presently conducted by any Company
subsidiary or make additional material investments in
subsidiaries or enter into or invest in any partnership, joint
venture or other business enterprise;

(n) purchase any derivative securities including CMO or
REMIC products;

(o) purchase any equity securities other than Federal Home
Loan Bank Stock;

(p) discharge or satisfy any lien or encumbrance or pay
any material obligation or liability (absolute or contingent)
other than at scheduled maturity or in the ordinary course of
business;

(q) sell or otherwise dispose of any loan, mortgage-backed
security or investment security except in the ordinary course of
business consistent with past practices and policies;

(r) modify or restructure the terms of any loan except in
the ordinary course of business consistent with prudent banking
practices and policies;

(s) make any capital expenditures in excess of $25,000
individually or $50,000 in the aggregate, other than pursuant to
binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good
repair;

(t) change its method of accounting in effect prior to the
Effective Time, except as required by changes in laws or
regulations or generally accepted accounting principles
concurred in by its and the Company's independent certified
public accountants, or change any of its methods of reporting
income and deductions for federal income tax purposes from those
employed in the preparation of its federal income tax returns
for the Company's last full taxable year, except as required by
changes in laws or regulations;

(u) acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or
entity;

(v) make, renew, increase, extend or purchase any loan
secured by commercial real estate or multifamily real estate,
any land acquisition or development loan, any commercial
business loan, or any residential loan in an amount in excess of
$300,000, except to the extent that the Bank is contractually
obligated to do so as of the date of the Merger Agreement;

(w) fail to keep in full force and effect its insurance
and bonds as now carried;

(x) fail to notify First Federal promptly of its receipt
of any letter, notice or other communication, whether written or
oral, from any regulatory authority advising that it is
contemplating issuing, requiring or requesting any agreement,
memoranda, understanding or similar undertaking, or order,
directive, or extraordinary supervisory letter;

(y) agree in writing or otherwise to do any of the
foregoing.

For purposes of the Merger Agreement, "Superior Proposal"
is defined as a bona fide proposal to acquire the entire equity
interest in the Company or the Bank or substantially all of the
assets of the Company or the Bank, which is expressly
conditioned upon the termination of the Merger Agreement and is
made by a third party on terms which a majority of the Board of
Directors of the Company determines pursuant to the exercise of
its fiduciary duty after consultation with legal counsel, to be
more favorable (from a financial point of view) to the holders
of Company Common Stock than the Merger and for which financing
is either then committed or not a condition precedent to the
consummation thereof.
19<PAGE>
<PAGE>

The Company and the Bank have also agreed: (a) to use their
best efforts to keep First Federal fully informed concerning all
developments of which they become aware that may have a material
effect upon the business, any properties or condition (either
financial or otherwise) of the Company (other than developments
affecting financial institutions generally); (b) in the event
they become aware of the impending or threatened occurrence of
any event or condition which would cause or constitute a
material breach (or would have caused or constituted a breach
had such event occurred or been known prior to the date of the
Merger Agreement) of any of their representations or agreements
contained or referred to in the Merger Agreement, give prompt
written notice thereof to First Federal and use their best
efforts to prevent or promptly remedy the same; (c) to promptly
supplement or amend the Company disclosure schedule with respect
to any matter arising after the date of the Merger Agreement
that, if existing or occurring at the date of the Merger
Agreement, would have been required to be set forth or described
in such disclosure schedule; (d) use their best efforts to
assist First Federal in obtaining the consents and approvals
necessary to complete the Merger; (e) to pay the expenses
of First Federal under the circumstances enumerated in the
Merger Agreement. See " -- Expenses" and " -- Termination Fee."

NO SOLICITATION

By the terms of the Merger Agreement, the Company and the
Bank may not initiate, solicit or encourage, or take any other
action to facilitate, any inquiries or the making of any
proposal which constitutes a Superior Proposal, take any action
in furtherance of such inquiries or to obtain a Superior
Proposal, or negotiate with any person in, or agree to or
endorse any Superior Proposal, or authorize or permit any of its
officers, directors or employees or any investment banker,
financial advisor, accountant or other representative retained
by it or any Company subsidiary to take any such action, except
with respect to negotiations regarding, and the endorsement of a
Superior Proposal, as legally required by the fiduciary duties
of the Company's Board of Directors under applicable law and as
advised by counsel to the Company's Board of Directors, and the
Company shall promptly notify First Federal orally and in
writing of all of the relevant details relating to all inquiries
and proposals which it may receive relating to any of such
matters.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE BANK

The Company and the Bank have made certain representations
and warranties to First Federal with respect to, among other
things, their organization and qualification, capitalization,
authority with respect to the Merger Agreement, reports and
financial statements, the absence of certain changes or events,
taxes, properties and assets, environmental hazards, litigation,
pending proceedings and compliance with laws, regulatory
compliance, employee benefit plans, insurance policies, material
agreements, breaches of agreements, allowances for loan losses
and real estate owned, agreements with insiders, affiliated
persons and affiliates, full disclosure and absence of
misrepresentations and information with respect to the Company
and the Bank contained in this Proxy Statement.

REPRESENTATIONS AND WARRANTIES AND COVENANTS OF FIRST FEDERAL

First Federal has made certain representations and
warranties to the Company and the Bank with respect to, among
other things, its organization and qualification, authority with
respect to the Merger Agreement, regulatory approvals, the
absence of certain material adverse changes in the financial
condition, results of operations, business or capitalization of
First Federal, First Federal's possession of sufficient funds to
pay the Merger Consideration; and the truth and accuracy of its
representations and warranties and the information and documents
furnished or to be furnished to the Company by First Federal in
connection with the Merger Agreement and for inclusion in this
Proxy Statement.

20<PAGE>
<PAGE>
First Federal has also agreed that it will:

(a) from the date of the Merger Agreement until the
Effective Time, furnish the Bank with copies of all of First
Federal's periodic reports on Forms 10-K, 10-Q and 8-K, all
proxy statements and all call reports filed with the OTS, or
provided to the stockholders of First Federal, subsequent to the
date of the Merger Agreement;

(b) in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would
cause or constitute a material breach (or would have caused or
constituted a breach had such event occurred or been known prior
to the date of the Merger Agreement) of any of its
representations or agreements contained or referred to herein,
give prompt written notice thereof to the Company and use its
best efforts to prevent or promptly remedy the same;

(c) use its best efforts promptly to and, in any
event, no later than December 31, 1998, prepare, submit, publish
and file (I) an application to the OTS seeking approval for its
acquisition of the Company and the Bank in connection with the
Merger; and (ii) any other applications, notices or statements
required to be filed in connection with the transactions
contemplated hereby;

(d) promptly supplement or amend its disclosure
schedule with respect to any matter hereafter arising after the
date of the Merger Agreement that, if existing or occurring at
the date of the Merger Agreement, would have been required to be
set forth or described in such disclosure schedule; and

(e) pay the expenses of the Company and the Bank
under the circumstances enumerated in the Merger Agreement (see
" -- Expenses" and " -- Termination Fee").

Further, First Federal has agreed that except as
specifically contemplated by the Merger Agreement, it will not,
and will not agree to, without the prior written consent of the
Bank, take action which would or is reasonably likely to (i)
adversely affect the ability of either First Federal or the
Company and the Bank to obtain any necessary approvals of
governmental authorities required for the transactions
contemplated by the Merger Agreement; (ii) adversely affect
First Federal's ability to perform its covenants and agreements
under the Merger Agreement; or (iii) result in any of the
conditions to the Merger not being satisfied.

TERMINATION OF THE MERGER AGREEMENT

The Merger Agreement will terminate on August 31, 1999 if
the Merger has not been consummated on or before that date, and
may be terminated at any time prior to the earlier of that date
or the Effective Time:

(a) by mutual written consent of the Board of Directors of
First Federal and the Board of Directors of the Company;

(b) by written notice from First Federal to the Company
if:

(i) any condition to First Federal's obligations
under the Merger Agreement shall have become impossible to
substantially satisfy at any time or has not been substantially
satisfied or waived in writing; or

(ii) any condition to all Parties' obligations under
the Merger Agreement shall have become impossible to
substantially satisfy at any time or has not been substantially
satisfied or waived in writing, provided, however, First Federal
shall not have the right to terminate the Merger Agreement on
this basis if any such condition was not met due to the failure
of First Federal to perform or observe the covenants and
agreements set forth in the Merger Agreement; or

(iii) any warranty or representation made by the
Company or the Bank shall be discovered to be or to have become
untrue or incorrect in any material respect, or where any
statement in a representation or warranty expressly includes a
standard of materiality, such statement shall be discovered to
be or to have become untrue or incorrect in any respect taking
into consideration the standard of materiality contained
therein, in either case where any such breach has not been cured
within thirty (30) days following receipt by the Company or the
Bank of notice of such discovery; or

21<PAGE>
<PAGE>
(iv) the Company or the Bank shall have breached one
or more provisions of the Merger Agreement in any material
respect considering all such breaches in the aggregate, where
such breach has not been cured within thirty (30) days following
receipt by the Company or the Bank of notice of such breach; or

(v) the Board of Directors of Bancorp and First
Federal shall have determined in their sole discretion,
exercised in good faith, that the Conversion has become
inadvisable or impractical by reason of (A) the issuance of any
order, decree or letter of a regulatory authority containing
conditions or requirements reasonably deemed objectionable to
Bancorp or First Federal or (B) unfavorable market conditions
(in the event of termination on this basis, then the Company
shall be reimbursed for its reasonable out-of-pocket expenses
incurred by it or on its behalf in connection with the
consummation of the transactions contemplated by the Merger
Agreement, in an amount not to exceed $250,000); or

(i) any condition to the Company's obligations under
the Merger Agreement shall have become impossible to
substantially satisfy at any time or has not been substantially
satisfied or waived in writing; or

(ii) any condition to all Parties' obligations under
the Merger Agreement shall have become impossible to
substantially satisfy at any time or has not been substantially
satisfied or waived in writing; provided, however, the Company
shall not have the right to terminate the Merger Agreement on
this basis if any such condition was not met due to the failure
of the Company or the Bank to perform or observe the covenants
and agreements set forth in the Merger Agreement; or

(iii) any warranty or representation made by First
Federal shall be discovered to be or to have become untrue or
incorrect in any material respect, or where any statement in a
representation or warranty expressly includes a standard of
materiality, such statement shall be discovered to be or to have
become untrue or incorrect in any respect taking into
consideration the standard of materiality contained therein, in
either case where any such breach has not been cured within
thirty (30) days following receipt by First Federal of notice of
such discovery; or

(iv) First Federal shall have breached one or more
provisions of the Merger Agreement in any material respect
considering all such breaches in the aggregate, where such
breach has not been cured within thirty (30) days following
receipt by First Federal of notice of such breach.

(d) by the Board of Directors of First Federal if the
Board of Directors of the Company shall not recommend, or shall
withdraw or modify in a manner adverse to First Federal, its
recommendation to the holders of Common Stock to approve the
Merger Agreement;

(e) by the Board of Directors of First Federal or the
Company at any time after the Annual Meeting if the stockholders
of the Company have not approved the Merger Agreement by the
requisite affirmative vote;

(f) by the Board of Directors of First Federal or the
Company if the Merger has not been consummated on or before
August 31, 1999.
22<PAGE>
<PAGE>
In the event of termination of the Merger Agreement, the
Merger Agreement will become void and have no further effect
except for certain specified sections of the Merger Agreement
dealing with expenses, access to records and confidentiality,
and payment of termination fees. Upon termination, there shall
be no further liability by reason of the Merger Agreement, or
the termination thereof, on the part of any of the Parties or
their respective directors, officers, employees, agents or
stockholders except that: (i) the obligation of the Company and
the Bank to pay to First Federal certain specified expenses and
damages under the circumstances described in " -- Expenses" and
" -- Termination Fee" herein will survive the termination of the
Merger Agreement; and (ii) the mutual covenants with respect to
the confidentiality and use of non-public information will
survive the termination of the Merger Agreement.

ADDITIONAL AGREEMENTS OF THE PARTIES

The Parties have also agreed that:

(i) the Company shall call the Annual Meeting and take
certain actions in connection therewith, including using its
best efforts to obtain stockholder approval of the Merger
Agreement;

(ii) the Company will prepare a proxy statement satisfying
all requirements under the federal securities laws;

(iii) each Party will cooperate in the preparation and
submission of such applications, petitions, and other documents
and materials as either Party deem necessary or desirable to the
OTS, the FDIC, the Department of Justice, other regulatory
authorities, and other persons for purposes of obtaining
approvals or consents necessary to consummate the Merger
Agreement, as well as each Party having the right to review and
comment and receive a copy of such applications, petitions and
other filings of the other Party;

(iv) the Company and the Bank, prior to the Effective Time
of the Merger, will prepare and file all required Bank's
regulatory reports, that will comply with all applicable
statutes, rules, and regulatory requirements, with such report
containing the Company Financial Statements which are prepared
in accordance with generally accepted accounting principals and
practices utilized by the Company on a consistent basis, and the
reports fairly present the consolidated financial condition and
the consolidated results of operations and cash flows for the
specified periods; and in the case of interim fiscal periods,
all adjustments consisting of only normal recurring items;

(v) all of the Parties agree to use all reasonable efforts
to take, or cause to be taken, all action necessary, proper, or
advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated by the Merger
Agreement, including the period of time following the Effective
Date if any further action is necessary or desirable to carry
out the purposes of the Merger Agreement or to vest First
Federal with full title to all properties, assets, rights,
approvals, immunities, and franchises of the Company or the
Bank;

(vi) each Party will consult with the other prior to making
any public announcement with respect to the transactions
contemplated by the Merger Agreement, and will use its best
efforts to either agree upon the text of a proposed joint
announcement by both parties or to obtain the other's approval
(which approval shall not be unreasonably withheld) of the text
of an announcement to be made solely on behalf of such party;

(vii) Messrs. David E. Sandeen, John E. Carol and Carney D.
Loucks, each a current director of the Company, shall be
entitled to serve on the Central Iowa Advisory Board to the
Board of Directors of First Federal for a period of one year
following the Effective Time, subject to reappointment at the
discretion of First Federal;

(viii) the Company and the Bank will permit First
Federal and its representatives, including its financial
advisors, reasonable access to properties, and will disclose and
make available to them all necessary documentation as indicated
in the Merger Agreement;
23<PAGE>
<PAGE>
(ix) all information furnished in connection with the
transactions contemplated by the Merger Agreement will be
treated as the sole property of the Party furnishing the
information until consummation of the Merger, and if the Merger
does not occur, the Party receiving the information shall, upon
request, return to the other Party which furnished the
information all documentation and other materials; then, each
Party will use its best efforts to keep confidential and not
take competitive or commercial advantage of all such information
for a period of one year from the date the Merger was abandoned,
except for (A) that information already in possession of the
Party before it was furnished, information generally known to
the public or became known to the public by no fault of the
receiving party; and (B) any disclosures pursuant to legal
requirement or in accordance with a court order of competent
jurisdiction; and

(x) at the request of First Federal and prior to the
Effective Time, the Company shall, (A) establish and take such
reserves and accruals as First Federal shall reasonably request
to conform, on a mutually satisfactory basis, the Company's
loan, real estate, accrual and reserve policies to First
Federal's policies, and (B) establish and take such accruals,
reserves and charges in order to implement such policies in
respect of severance costs, write-off or write-down of various
assets and other appropriate accounting adjustments, and to
recognize for financial accounting purposes such expenses
incurred in connection with the Reorganization, provided that
such action by the Bank shall not be taken until First Federal
specifies its request in writing delivered to the Company , and
acknowledges that all conditions to the obligations of First
Federal to consummate the Reorganization set forth in the Merger
Agreement have been waived or satisfied and the Company and the
Bank acknowledge that the conditions to its obligation to
consummate the Merger set forth in the Merger Agreement have
been waived or satisfied (the representations, warranties and
covenants of the Company and the Bank contained the Merger
Agreement shall not be deemed to be untrue or breached in
any respect for any purpose as a consequence of any action
undertaken on account of this provision of the Merger Agreement
and shall not constitute grounds for termination of the Merger
Agreement by First Federal).

WAIVER AND AMENDMENT

Each Party to the Merger Agreement may in writing waive the
obligations to it of any other Party under the Merger Agreement.
In addition, the Merger Agreement may be amended by a written
document signed by all parties to the Merger Agreement.
However, after the Company's stockholders have approved the
Merger Agreement, the Merger Agreement may only be amended if,
in the opinion of the Company's Board of Directors, such
amendment would not have a material adverse effect on the
benefits intended to be conferred under the Merger Agreement for
the Company's stockholders and would not require resolicitation
of the proxies sought thereby.

EXPENSES

Generally, all expenses incurred by First Federal and the
Company in connection with or related to the authorization,
preparation and execution of the Merger Agreement, the
solicitation of stockholder approvals and all other matters
related to the closing of the transactions contemplated thereby
will be borne by the Party that has incurred them. The Parties
have agreed, however, to pay the other Party's reasonable
out-of-pocket expenses, in an amount not to exceed $250,000, in
the event the Merger Agreement is terminated as a result of a
willful breach in which (i) any warranty or representation of
the breaching Party becomes untrue or incorrect in any material
respect and such breach is not cured within thirty (30) days
following receipt of notice of the breach, or (ii) one or more
provisions of the Merger Agreement is breached in any material
respect considering all such breaches in the aggregate, where
such breach has not been cured within thirty (30) days following
receipt of notice of the breach.

First Federal has also agreed to reimburse the Company and
the Bank for their reasonable out-of-pocket expenses, in an
amount not to exceed $250,000, in the event the Merger Agreement
is terminated by Bancorp and First Federal based on their
determination that the Conversion has become inadvisable or
impracticable by reason of (A) the issuance of any order, decree
or letter of a regulatory authority containing conditions or
requirements reasonably deemed objectionable to Bancorp or First
Federal or (B) unfavorable market conditions.

24<PAGE>
<PAGE>
TERMINATION FEE

In order to induce First Federal to enter into the Merger
Agreement and as a means of compensating First Federal for the
substantial direct and indirect monetary and other costs
incurred and to be incurred in connection with the Merger
Agreement and the transactions contemplated thereby, the Company
and the Bank have agreed pursuant to the Merger Agreement that
the Bank shall pay to First Federal a fee of $1.4 million upon
the occurrence of any of the following events on or before the
earlier of the date the Merger Agreement is terminated or August
31, 1999:

(i) if the Board of Directors of the Company
recommends a Superior Proposal and thereafter (A) the Annual
Meeting shall not have been held or shall have been postponed,
delayed or enjoined prior to termination of the Merger Agreement
or (B) the Company's stockholders do not approve the Merger
Agreement;

(ii) if the Board of Directors of the Company
withdraws or modifies its recommendation of approval of the
Merger Agreement, and thereafter (A) the Annual Meeting shall
not have been held or shall have been postponed, delayed or
enjoined prior to termination of the Merger Agreement or (B) the
Company's stockholders do not approve the Merger Agreement;

(iii) if the Company's stockholders do not approve the
Merger Agreement after a Superior Proposal is made and within
twelve (12) months thereafter the Company enters into a
definitive agreement to be merged into or acquired by another
entity (provided, however, that the Bank shall pay all
reasonable out-of-pocket expenses of First Federal incurred by
it in connection with the Merger Agreement, in an amount not to
exceed $250,000, within five business days following rejection
of the Merger Agreement by Company stockholders);

(iv) if the Company or the Bank enters into an
agreement to be acquired by any other party; or

(v) if the Company both (1) fails to receive the
opinion of its financial advisor that the Merger is fair to the
Company's stockholders from a financial point of view, and such
failure occurs after a Superior Proposal is made, and (2) the
Merger is not consummated.

With the exception of the payment under subparagraph
(iii) above, which shall be paid within five business days
following the Company's execution of a definitive agreement of
merger or acquisition (except that the expenses of First Federal
shall be paid as provided in (iii) above), such payment shall be
made to First Federal in immediately available funds within five
business days after the occurrence of an event set forth above.

EFFECT ON EMPLOYEES AND CERTAIN EMPLOYEE BENEFIT PLANS

Employment Arrangements. The Merger Agreement provides
that, to the extent practicable, First Federal will give
consideration to the retention after the Closing of employees of
the Bank in their current or comparable positions within First
Federal (provided that the Merger Agreement shall not, except as
otherwise provided therein, provide any contractual right to
employees of such employment).

Employee Benefit Plans. Employees of the Bank who
continue employment with First Federal on or after the Effective
Time ("Continuing Employees") shall be eligible to participate
in such employee benefit plans as may be in effect generally for
employees of First Federal from time to time (the "First Federal
Plans"), if such Continuing Employee shall be eligible or
selected for participation therein. Generally, Continuing
Employees will be entitled to participate on the same basis as
similarly situated employees of First Federal, except that
Continuing Employees shall be entitled to full credit for each
year of prior service (in which 1,000 hours of service are
performed) with the Bank for purposes of determining eligibility
for participation and vesting, but not for benefit accruals, in
the First Federal Plans, subject to applicable break in service
rules. Notwithstanding the foregoing, First Federal may
determine to continue any of the Bank's benefit plans for
Continuing Employees in lieu of offering participation
in one or more First Federal plans providing similar benefits
(e.g., medical and hospitalization benefits or 401(k) or defined

25<PAGE>
<PAGE>
contribution plan benefits), to terminate any of the Bank's
benefit plans or to merge any such plans with similar First
Federal plans. The Bank shall have the right, however, on or
before the Effective Time (i) to terminate both its Defined
Contribution Plan and Trust and its 401(k) Profit Sharing Plan
and Trust (together, the "Plans and Trusts") as of any date
before the Effective Time, (ii) to apply to the Internal Revenue
Service for a determination letter on the tax-qualified status
of the Plans and Trusts on termination and on any amendments
made to them in connection with the termination (provided that
any amendments so made, other than amendments required by law,
shall first be approved by First Federal), and (iii) to
distribute the assets of the Plans and Trusts only after receipt
of such determination letter.

Participation by Continuing Employees in employee benefit
plans of First Federal with respect to which eligibility and
participation is at the discretion of the employer, such as
non-qualified deferred compensation plans, stock option plans,
stock bonus plans, restricted stock plans, and other such
similar plans, (but not including employee benefit plans
generally available to all full-time employees of First Federal)
shall be discretionary with First Federal.

INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER

Certain members of the Board of Directors and management of
the Company and the Bank may be deemed to have certain interests
in the Merger in addition to their interests as stockholders of
the Company generally. The Board of Directors of the Company
was aware of these interests and considered them, among other
matters, in unanimously approving the Merger Agreement and the
transactions contemplated thereby. See " -- Recommendation of
the Board of Directors -- The Board of Directors Believes that
the $15.00 Per Share Cash Price is Fair to Stockholders."

Change in Control Payments. Messrs. Kevin D. Ulmer and
Gary R. Hill are parties to employment and severance agreements
with the Bank that provide for severance upon the occurrence of
certain events, including termination of their employment under
such agreements following a change in control of the Company or
the Bank. It is currently anticipated that in connection with
the Merger, Messrs. Ulmer and Hill will receive approximately
$390,000 and $271,000, respectively, as of the Effective Time in
connection with their separation of employment in the Merger.
The payments received by Messrs. Ulmer and Hill may be reduced
in order to comply with certain regulations of the Internal
Revenue Service, if such payments under the severance agreements
exceed the aggregate of 2.99 times the employee's average
taxable income for the five years preceding the change in
control.

26<PAGE>
<PAGE>
Stock Options. For a discussion of the treatment of
outstanding Company stock options under the Merger Agreement,
see " -- Treatment of Outstanding Stock Options." Set forth
below are the number and value of stock options currently held
by the Company's executive officers and directors.
<TABLE>
<CAPTION>

NUMBER OF NET REALIZABLE
SHARES UNDERLYING VALUE OF
NAME POSITION ISSUED OPTIONS ISSUED OPTIONS(1)
- ---- -------- -------------- -----------------
<S> <C> <C> <C>
John E. Carl Director 12,896 $121,256
Gary R. Hill Executive Vice President
and Director 0 0
Carney Loucks Director 8,000 58,000
David E. Sandeen Director 20,792 206,263
Kevin D. Ulmer President and Chief
Executive Officer
and Director 24,000 174,000
<FN>
___________
(1) The dollar value in this column also reflects the amount that each director
will receive upon the cancellation and cash-out of their options as a result
of the Merger. The dollar value excludes amounts withheld for applicable
taxes.
</FN>
</TABLE>

Insurance; Indemnification. First Federal has agreed
that, for a period of four (4) years following the Effective
Time, it will indemnify the employees, agents, directors or
officers of the Company and the Bank to the extent they are
indemnified under the Company's Certificate of Incorporation and
Bylaws in the form in effect at the date of the Merger Agreement
or arising by operation of law. First Federal has also agreed
to use its best efforts to cause the Company's directors and
officers to be covered under individual directors' and officers'
liability insurance policies for the duration of any applicable
statute of limitations.

Advisory Board. Pursuant to the Merger Agreement, Company
Directors David E. Sandeen, John E. Carol and Carney D. Loucks
shall be entitled to serve on the Central Iowa Advisory Board to
the Board of Directors of First Federal for a period of one year
following the Effective Time, subject to reappointment at the
discretion of First Federal. Such advisory board members shall
receive an annual fee of at least $2,000 plus $200 per meeting
attended.

FEDERAL INCOME TAX CONSEQUENCES -- THE $15.00 PER SHARE PURCHASE
PRICE IS TAXABLE TO COMPANY STOCKHOLDERS

THE FOLLOWING IS A SUMMARY OF THE MATERIAL FEDERAL INCOME
TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS OF THE COMPANY.
THE TAX DISCUSSION SET FORTH BELOW DOES NOT CONSIDER THE FACTS
AND CIRCUMSTANCES OF THE SITUATION OF EACH OF THE COMPANY'S
STOCKHOLDERS. EACH STOCKHOLDER OF THE COMPANY IS URGED TO
CONSULT HIS OR HER OWN TAX AND FINANCIAL ADVISORS AS TO THE
MATTERS DESCRIBED HEREIN AND ALSO AS TO ANY STATE, LOCAL,
FOREIGN OR OTHER TAX CONSEQUENCES ARISING OUT OF THE MERGER.

For federal income tax purposes, the receipt of cash by a
stockholder of the Company in exchange for shares of the Common
Stock pursuant to the Merger will constitute a taxable
transaction to such stockholder. In general, a stockholder who
receives cash in the Merger in exchange for such stockholder's
shares of Common Stock will recognize gain or loss equal to the
difference, if any, between (i) the sum of the cash payment of
$15.00 per share received from First Federal in exchange for the
shares of the Common Stock and (ii) the stockholder's tax basis
in such Common Stock. Any gain or loss will be treated as
capital gain or loss if the Common Stock exchanged was held as a
capital asset in the hands of the stockholder.

The cash payments due to the holders of the Common Stock
upon the exchange thereof pursuant to the Merger (other than
certain exempt entities and persons), will be subject to a
backup withholding tax at the rate of 31% unless certain
requirements are met. Generally, the Exchange Agent will be
required to deduct and withhold the tax if: (i) the stockholder
fails to furnish a taxpayer identification number ("TIN") to the
Exchange Agent or fails to certify under

27<PAGE>
<PAGE>
penalty of perjury that such TIN is correct; (ii) the Internal
Revenue Service ("IRS") notifies the Exchange Agent that the TIN
furnished by the stockholder is incorrect; (iii) the IRS
notifies the Exchange Agent that the stockholder has failed
to report interest, dividends or original issue discount in the
past; or (iv) there has been a failure by the stockholder to
certify under penalty of perjury that such stockholder is not
subject to the backup withholding tax. Any amounts withheld by
the Exchange Agent in collection of the backup withholding tax
will reduce the federal income tax liability of the stockholders
from whom such tax was withheld. The TIN of an individual
stockholder is that stockholder's Social Security number.

No ruling has been or will be requested from the IRS as to
any of the tax effects of any of the transactions discussed in
this Proxy Statement to stockholders of the Company, and no
opinion of counsel has been or will be rendered to the Company's
stockholders with respect to any of the tax effects of the
Merger to the Company's stockholders.

ACCOUNTING TREATMENT

The Company has been advised by First Federal that the
transaction will be accounted for utilizing purchase accounting
as required by Accounting Principles Board Opinion No. 16
Business Combinations.

REGULATORY APPROVALS

The Merger is subject to the approval of the OTS. First
Federal has filed an application with the OTS for approval of
the Merger. First Federal has also filed application with the
OTS for approval of the Conversion. As of the date of this
Proxy Statement, the approvals of the OTS have not been
received. There can be no assurance as to the timing of such
approvals, if given, or as to the conditions, if any, on which
the approvals will be given. In addition, the approvals, if and
when granted, may contain conditions which First Federal may
find unduly burdensome. When such approvals are received,
material changes to the Merger Agreement, material conditions,
or other changes of a material nature may be imposed by
regulatory authorities in connection therewith which could
require a resolicitation of the Company's stockholders for
approval. Following OTS approval of the Merger, the U.S.
Department of Justice may review the Merger and raise
objections on antitrust grounds, though objections on such
grounds are not expected. If the required regulatory approvals
are not obtained, the Merger Agreement will be terminated, and
the Merger will not occur.

PROPOSAL III - ADJOURNMENT OF THE ANNUAL MEETING

Approval of the Merger Agreement requires the affirmative
vote of at least a majority of the votes entitled to be cast by
the holders of the Common Stock. In the event there is an
insufficient number of shares present in person or by proxy at
the Annual Meeting to approve the Merger Agreement, the Board of
Directors intends to adjourn the Annual Meeting to a later date.
The place and date to which the Annual Meeting would be
adjourned would be announced at the Annual Meeting, but would in
no event be more than 30 days after the date of the Annual
Meeting.

The effect of any such adjournment would be to permit the
Company to solicit additional proxies for approval of the Merger
Agreement. While such an adjournment would not invalidate any
proxies previously filed, including those filed by stockholders
voting against the Merger Agreement, it would give the Company
the opportunity to solicit additional proxies in favor of the
Merger Agreement.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE ADJOURNMENT UNDER THE CIRCUMSTANCES DESCRIBED HEREIN.
APPROVAL OF THE ADJOURNMENT REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN
PERSON OR BY PROXY AT THE ANNUAL MEETING.

28<PAGE>
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of the Record Date,
certain information as to those persons who were beneficial
owners of more than five percent (5%) of the Common Stock and as
to the shares of the Common Stock beneficially owned by each of
the Company's directors and executive officers required to be
named in a summary compensation table and by all executive
officers and directors of the Company as a group. Persons and
groups owning in excess of 5% of the Common Stock are required
to file certain reports regarding such ownership pursuant to the
Exchange Act. Based upon such reports, management knows of no
persons, other than those set forth below, who owned more than
5% of the outstanding shares of the Common Stock as of the
Record Date.
<TABLE>
<CAPTION>

Shares Beneficially Percent of
Beneficial Owner Owned Class
- ---------------- ------------------- ----------
<S> <C> <C>
Kevin D. Ulmer
123 West Second Street North
Newton, Iowa 50208(1) 169,136 9.29%

Gary R. Hill
123 West Second Street North
Newton, Iowa 50208(2) 122,558 6.82%

I.S.B. Bancorporation, Inc.
L.B.T. Bancorporation
First Liberty Bancorp
Winnebago County Bancorporation
4201 Westown Parkway, Suite 320
West Des Moines, Iowa 50266(3) 121,000 6.73%

Directors and executive officers
of Mid-Iowa and the Bank
as a group (5 persons)(4) 367,592 19.74%
<FN>
______________
(1) Includes 117,976 shares held directly, 4,844 shares held by Mr. Ulmer's
spouse and 3,616 shares held by Mr. Ulmer's minor children, with respect to
which shares Mr. Ulmer may be deemed to have sole or shared voting and
investment power. The amount includes 24,000 shares underlying immediately
exercisable options granted under the Company's 1997 Stock Option Plan (the
"1997 Option Plan") at an exercise price of $7.75. The amount reported also
includes 9,600 shares of Common Stock held by the Bank's Profit Sharing Plan and
9,600 shares of Common Stock held by the Bank's Retirement Plan.
Mr. Ulmer is one of three trustees for both plans.
(2) Includes 73,511 shares held directly, 27,447 shares held by Mr. Hill's spouse
and 2,400 shares held by Mr. Hill's children, with respect to which Mr. Hill may
be deemed to have sole or shared voting and investment power. The amount
reported also includes 9,600 shares of Common Stock held by the Bank's
Profit Sharing Plan and 9,600 shares of Common Stock held by the Bank's
Retirement Plan. Mr. Hill is one of three trustees for both plans.
(3) Beneficial owners represent four one-bank holding companies which beneficially
own 83,000, 2,000, 30,000 and 6,000 shares, respectively. The companies report
joint ownership of these shares due to their existing management and ownership
structures.
(4) Includes shares held directly, as well as jointly with family members or held by
trust, with respect to which shares the listed individuals or group members may
be deemed to have sole or shared voting and investment powers. This amount
includes 9,600 shares held by the Bank's Profit Sharing Plan and 9,600
shares held by the Bank's Retirement Plan over which each of three directors are
deemed to have shared voting and investment power as a result of their positions
as trustees of both plans. The amount reported above also includes options to
purchase 9,600 shares of Common Stock granted to directors and executive
officers under the 1992 Option Plan at an exercise price of $2.08 and 1997
Option Plan at an exercise price of $7.75, which options are currently
exercisable. The amount reflected above excludes shares held by family members
that do not live in the same household as such officers and directors, with
respect to which beneficial ownership is expressly disclaimed.
</FN>
</TABLE>

29<PAGE>
<PAGE>
INDEPENDENT AUDITORS

The Board of Directors has renewed the Company's arrangement
for KPMG Peat Marwick LLP to be its auditors for the 1999 fiscal
year. A representative of KPMG Peat Marwick LLP is expected to
attend the Annual Meeting to respond to appropriate questions
and will have an opportunity to make a statement if he or she so
desires.

MARKET FOR THE COMMON STOCK

The Common Stock is traded over-the-counter and is listed on
the Nasdaq "Small Cap" Market under the symbol "MIFC." At
February 2, 1999, there were 1,796,732 shares of Common Stock
issued and outstanding and there were approximately 200 holders
of record and approximately 600 beneficial holders. The sale
price of the Common Stock on August 16, 1998, the last trading
date on which the Common Stock was traded before the Agreement
was signed, was $12.25 per share. Upon consummation of the
Merger, the Common Stock will no longer be traded
over-the-counter market or quoted on Nasdaq.

BENEFICIAL OWNERSHIP REPORTS

Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") requires the Company's directors
and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file
with the SEC initial reports of ownership and reports of changes
in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than 10% stockholders
are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations
that no other reports were required during the fiscal year ended
September 30, 1998, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10
percent beneficial owners were complied with.

STOCKHOLDER PROPOSALS

Under the Company's Bylaws, stockholder proposals must be
submitted in writing to the Secretary of the Company and
delivered or mailed to and received at the address stated in the
following sentence not less than 30 days prior to the date of
the annual meeting; provided, however, that if less than 40
days' notice prior public disclosure of the meeting is given or
made to stockholders, such written notice by the stockholder
shall be received not later than the close of business on the
tenth day following the day on which notice of the meeting was
mailed to stockholders. In order to be eligible for inclusion
in the Company's proxy materials for the next Annual Meeting of
Stockholders, any stockholder proposal to take action at such
meeting must be received at the Company's main office, 123 West
Second Street North, Newton, Iowa no later than August 15, 1999.
Any such proposal shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934,
as amended.

OTHER MATTERS

The Board of Directors is not aware of any business to
come before the Annual Meeting other than those matters
described above in this Proxy Statement. However, if any other
matter should properly come before the Annual Meeting, it is
intended that holders of the proxies will act in accordance with
their best judgment.

30<PAGE>
<PAGE>
The cost of solicitation of proxies will be borne by the
Company. In addition to solicitations by mail, directors,
officers and regular employees of the Company may solicit
proxies personally or by telegraph or telephone without
additional compensation. The Company will reimburse brokerage
firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to
solicitation by mail, directors, officers and regular employees
of the Company and/or the Bank may solicit proxies personally or
by telegraph or telephone without additional compensation.

BY ORDER OF THE BOARD OF DIRECTORS

Kevin D. Ulmer
President and Chief Executive Officer

Newton, Iowa
February 10, 1999

31
<PAGE>
<PAGE>
APPENDIX A
<PAGE>
<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

FIRST FEDERAL BANKSHARES, M.H.C.

FIRST FEDERAL SAVINGS BANK OF SIOUXLAND

MID-IOWA FINANCIAL CORP.

AND

MID-IOWA SAVINGS BANK, FSB

Dated: August 17, 1998

<PAGE>
<PAGE>
TABLE OF CONTENTS
Page No.

ARTICLE I. . . . . . . . . . . . . . . . . . . . . . 2
THE REORGANIZATION . . . . . . . . . . . . . . . . 2
1.1. THE REORGANIZATION.. . . . . . . . . . . 2
1.2. ADOPTION AND EXECUTION AND DELIVERY
OF DOCUMENTS PROVIDING FOR
THE REORGANIZATION. . . . . . . . . . . 3
1.3. EFFECTIVE TIME AND CLOSING OF THE
REORGANIZATION. . . . . . . . . . . . . 3
1.4. MODIFICATION OF STRUCTURE.. . . . . . . . 3

ARTICLE II.. . . . . . . . . . . . . . . . . . . . . 4
EFFECT OF THE REORGANIZATION; CERTAIN ACTIONS
IN CONNECTION THEREWITH. . . . . . . . . . . . . 4
2.1. EFFECT OF THE REORGANIZATION. . . . . . . 4
2.2. EFFECT ON COMMON STOCK OF THE COMPANY
AND FIRST FEDERAL. . . . . . . . . . . . 4
2.3. FIRST FEDERAL TO MAKE CASH AVAILABLE. . . 5
2.4. PAYMENT OF CASH.. . . . . . . . . . . . . 5
2.5. RECAPITALIZATION OR STOCK DIVIDENDS.. . . 6
2.6. COMPANY STOCK OPTIONS . . . . . . . . . . 6

ARTICLE III. . . . . . . . . . . . . . . . . . . . . 7
REPRESENTATIONS AND WARRANTIES OF MID-IOWA
AND THE COMPANY. . . . . . . . . . . . . . . . . 7
3.1. CORPORATE ORGANIZATION. . . . . . . . . . 7
3.2. CAPITALIZATION. . . . . . . . . . . . . . 8
3.3. AUTHORIZATION.. . . . . . . . . . . . . . 9
3.4. NO VIOLATION. . . . . . . . . . . . . . . 9
3.5. REPORTS AND CONSOLIDATED FINANCIAL
STATEMENTS. . . . . . . . . . . . . . .10
3.6. CONSENTS AND APPROVALS. . . . . . . . . .11
3.7. ABSENCE OF CERTAIN CHANGES. . . . . . . .11
3.8. EMPLOYEE AND EMPLOYEE BENEFITS MATTERS. .12
3.9. LITIGATION. . . . . . . . . . . . . . . .14
3.10. TAX MATTERS.. . . . . . . . . . . . . . .14
3.11. INFORMATION IN THE COMPANY PROXY
STATEMENT. . . . . . . . . . . . . . .15
3.12. ENVIRONMENTAL MATTERS.. . . . . . . . . .16
3.13. INSURANCE.. . . . . . . . . . . . . . . .17
3.14. COMPLIANCE WITH LAWS AND ORDERS.. . . . .18
3.15. GOVERNMENTAL REGULATION.. . . . . . . . .18
3.16. CONTRACTS AND COMMITMENTS.. . . . . . . .18
3.17. AGREEMENTS WITH DIRECTORS, OFFICERS AND
STOCKHOLDERS. . . . . . . . . . . . . . .19
3.18. ACCURACY OF INFORMATION.. . . . . . . . .19
3.19. ALLOWANCES FOR LOSSES AND REAL ESTATE
OWNED . . . . . . . . . . . . . . . . .19
3.20. TITLE TO ASSETS; LEASES . . . . . . . . .20
3.21. BUSINESS OF MID-IOWA. . . . . . . . . . .20
3.22. TAX MATTERS.. . . . . . . . . . . . . . .21

<PAGE>
<PAGE>
3.23 CERTAIN INFORMATION.. . . . . . . . . . .21

ARTICLE IV.. . . . . . . . . . . . . . . . . . . . .21
REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL. .21
4.1. CORPORATE ORGANIZATION. . . . . . . . . .21
4.2. AUTHORIZATION.. . . . . . . . . . . . . .21
4.3. NO VIOLATION. . . . . . . . . . . . . . .22
4.4. CONSENTS AND APPROVALS. . . . . . . . . .22
4.5. INFORMATION SUPPLIED FOR INCLUSION IN
THE COMPANY PROXY STATEMENT.. . . . . .22
4.6. ACCURACY OF INFORMATION.. . . . . . . . .22
4.7. REGULATORY APPROVALS AND NO ADVERSE
CHANGE. . . . . . . . . . . . . . . . .22

ARTICLE V. . . . . . . . . . . . . . . . . . . . . .23
COVENANTS OF FIRST FEDERAL . . . . . . . . . . . .23
5.1. AFFIRMATIVE COVENANTS.. . . . . . . . . .23
5.2. NEGATIVE COVENANTS. . . . . . . . . . . .23
5.3. BREACHES. . . . . . . . . . . . . . . . .23
5.4. FILING OF APPLICATIONS. . . . . . . . . .23
5.5. SUPPLEMENT TO FIRST FEDERAL DISCLOSURE
SCHEDULE. . . . . . . . . . . . . . . .24
5.6. EXPENSES. . . . . . . . . . . . . . . . .24

ARTICLE VI.. . . . . . . . . . . . . . . . . . . . .24
COVENANTS OF THE COMPANY AND MID-IOWA. . . . . . .24
6.1. AFFIRMATIVE COVENANTS.. . . . . . . . . .24
6.2. NEGATIVE COVENANTS. . . . . . . . . . . .25
6.3. REPORT TO FIRST FEDERAL.. . . . . . . . .28
6.4. BREACHES. . . . . . . . . . . . . . . . .28
6.5. SUPPLEMENT TO DISCLOSURE SCHEDULE.. . . .28
6.6. CONSENTS AND APPROVALS. . . . . . . . . .28
6.7. EXPENSES. . . . . . . . . . . . . . . . .28

ARTICLE VII. . . . . . . . . . . . . . . . . . . . .29
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . .29
7.1. COMPANY SHAREHOLDERS' MEETING.. . . . . .29
7.2. PROXY STATEMENT FOR COMPANY
SHAREHOLDERS' MEETING . . . . . . . . .29
7.3. COOPERATION; REGULATORY APPROVALS.. . . .29
7.4. REPORTS.. . . . . . . . . . . . . . . . .30
7.5. BROKERS OR FINDERS. . . . . . . . . . . .30
7.6. ADDITIONAL AGREEMENTS; REASONABLE
EFFORTS . . . . . . . . . . . . . . . .30
7.7. RELEASE OF INFORMATION. . . . . . . . . .30
7.8. ADVISORY DIRECTORS. . . . . . . . . . . .31
7.9. ACCESS TO PROPERTIES AND RECORDS;
CONFIDENTIALITY . . . . . . . . . . . .31
7.10. CERTAIN POLICIES. . . . . . . . . . . . .32
7.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT
ARRANGEMENTS. . . . . . . . . . . . . .32
7.12. D&O INDEMNIFICATION AND INSURANCE . . . .33

<PAGE>
<PAGE>
7.13 CONVERSION AND OFFERING . . . . . . . . .34

ARTICLE VIII.. . . . . . . . . . . . . . . . . . . .35
CONDITIONS TO THE OBLIGATIONS OF FIRST FEDERAL . .35
8.1. NO MATERIAL ADVERSE CHANGE. . . . . . . .35
8.2. REPRESENTATIONS AND WARRANTIES. . . . . .35
8.3. PERFORMANCE AND COMPLIANCE. . . . . . . .35
8.4. NO PROCEEDING OR LITIGATION.. . . . . . .35
8.5. CONSENTS UNDER AGREEMENTS.. . . . . . . .36
8.6. NO AMENDMENTS TO RESOLUTIONS. . . . . . .36
8.7. CERTIFICATE OF MID-IOWA OFFICERS. . . . .36
8.8. CORPORATE PROCEEDINGS.. . . . . . . . . .36
8.9. LEGAL OPINION.. . . . . . . . . . . . . .36
8.10. CLOSING BOOK VALUE. . . . . . . . . . . .36
8.11. CONVERSION. . . . . . . . . . . . . . . .36
8.12 NON-COMPETITION AGREEMENTS. . . . . . . .37

ARTICLE IX.. . . . . . . . . . . . . . . . . . . . .37
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
AND MID-IOWA37
9.1. REPRESENTATIONS AND WARRANTIES. . . . . .37
9.2. PERFORMANCE AND COMPLIANCE. . . . . . . .37
9.3 CORPORATE PROCEEDINGS.. . . . . . . . . .37
9.4. CERTIFICATE OF FIRST FEDERAL OFFICERS.. .37
9.5. LEGAL OPINION . . . . . . . . . . . . . .37
9.6. OPINION OF FINANCIAL ADVISOR. . . . . . .37

ARTICLE X. . . . . . . . . . . . . . . . . . . . . .38
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES . . .38
10.1. GOVERNMENTAL APPROVALS. . . . . . . . . .38
10.2. NO INJUNCTIONS OR RESTRAINTS. . . . . . .38
10.3. STOCKHOLDER APPROVAL. . . . . . . . . . .38
10.4 CORPORATE PROCEEDINGS.. . . . . . . . . .38

ARTICLE XI.. . . . . . . . . . . . . . . . . . . . .39
TERMINATION. . . . . . . . . . . . . . . . . . . .39
11.1. REASONS FOR TERMINATION.. . . . . . . . .39
11.2. EFFECT OF TERMINATION.. . . . . . . . . .41

ARTICLE XII. . . . . . . . . . . . . . . . . . . . .41
MISCELLANEOUS. . . . . . . . . . . . . . . . . . .41
12.1. NONSURVIVAL OF REPRESENTATIONS,
WARRANTIES AND AGREEMENTS. . . . . . .41
12.2. EXPENSES AND TERMINATION FEE. . . . . . .41
12.3. WAIVERS; AMENDMENTS.. . . . . . . . . . .42
12.4. ASSIGNMENT; PARTIES IN INTEREST.. . . . .42
12.5. ENTIRE AGREEMENT. . . . . . . . . . . . .42<PAGE>
<PAGE>
12.6. CAPTIONS AND COUNTERPARTS.. . . . . . . .43
12.7. CERTAIN DEFINITIONS.. . . . . . . . . . .43
12.8. ENFORCEMENT OF THIS AGREEMENT.. . . . . .43
12.9. GOVERNING LAW.. . . . . . . . . . . . . .44
12.10.NOTICES . . . . . . . . . . . . . . . . .44

SCHEDULES

Schedule 2.6
Schedule 3.1(a)
Schedule 3.2(c)
Schedule 3.2(d)
Schedule 3.4
Schedule 3.5
Schedule 3.6
Schedule 3.7
Schedule 3.8(a)
Schedule 3.8(b)
Schedule 3.8(c)
Schedule 3.8(e)
Schedule 3.9
Schedule 3.10
Schedule 3.12(f)
Schedule 3.13
Schedule 3.14
Schedule 3.15
Schedule 3.16
Schedule 3.17
Schedule 3.20(b)
Schedule 3.21(b)
Schedule 6.2(b)
Schedule 7.5
Schedule 7.11(c)
Schedule 7.11(f)
Schedule 7.12

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization, dated as of
August 17, 1998 (the "Agreement"), is entered into by and among
First Federal Bankshares, M.H.C. ("Bancorp"), First Federal
Savings Bank of Siouxland ("First Federal"), Mid-Iowa Financial
Corp. (the "Company") and Mid-Iowa Savings Bank, FSB ("Mid-
Iowa").

R E C I T A L S:

WHEREAS, First Federal is a federally-chartered stock
savings bank headquartered in Sioux City, Iowa, 53.8% of the
issued and outstanding capital stock of which is owned by
Bancorp, a federally-chartered mutual holding company;

WHEREAS, the Company is a company organized under the laws
of the State of Delaware, is registered with the Office of
Thrift Supervision as a unitary savings and loan holding
company, and owns 100% of the issued and outstanding common
stock of Mid-Iowa;

WHEREAS, Mid-Iowa is a federally-chartered savings bank
headquartered in Newton, Iowa;

WHEREAS, the parties desire to provide for First Federal's
acquisition of Mid-Iowa pursuant to the transactions set forth
in this Agreement on or after the Effective Time (as defined in
Section 1.3 hereof);

WHEREAS, in connection with the Reorganization, as defined
herein, the outstanding capital stock of the Company will be
converted into the right to receive cash;

WHEREAS, it is intended that First Federal and Mid-Iowa
will be merged such that First Federal will be the surviving
bank and that the resulting savings institution will expand its
market area and achieve certain economies of scale and
efficiencies as a result of the Reorganization, as defined
herein;

WHEREAS, in connection with the Reorganization, it is
intended that Bancorp will convert from a mutual holding company
to a stock holding company (the "Conversion") and conduct an
offering of shares of its common stock in a subscription and
community offering, and in an exchange offering to the existing
public shareholders of First Federal (the "Offering").

NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations, warranties, and agreements
herein contained, and in order to set forth the conditions upon
which the foregoing Reorganization, as defined herein, will be
carried out, the parties, intending to be legally bound, hereby
agree as follows:
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ARTICLE I.

THE REORGANIZATION

1.1. THE REORGANIZATION. Subject to the terms and
conditions of this Agreement, and in accordance with the
provisions of Section 18(c) of the Federal Deposit Insurance Act
(12 U.S.C. 1828(c)), as amended (the "Bank Merger Act"), the
Home Owners' Loan Act (the "HOLA"), and the rules and
regulations promulgated thereunder including 12 C.F.R. 563.22
and 574.3(a) (the "Thrift Regulations"), at the Effective Time,
the parties hereby agree that the following corporate
transactions (collectively referred to herein as the
"Reorganization") shall occur substantially concurrently in the
order set forth below in accordance with applicable laws and
regulations and the provisions of this Agreement:

(a) Pursuant to the Agreement of Merger, attached hereto
as Exhibit A, among First Federal, the Company, and a to-be-
formed Delaware corporation which is to be wholly owned by First
Federal, such to-be-formed corporation shall be merged with and
into the Company (the "Company Merger") and, in connection
therewith, and subject to the rights of dissenting stockholders
which have been asserted and duly perfected in accordance with
the provisions of Section 262 of the Delaware General
Corporation Law, each share of common stock, $.01 par value per
share, of the Company ("Company Common Stock") and each option
to purchase such stock granted pursuant to the Company's stock
option plans, as identified herein, outstanding immediately
prior to the effective time of the Company Merger shall be
canceled in exchange for the right to receive the cash payments
specified in such Agreement of Merger, with the result that the
Company will become a wholly owned subsidiary of First Federal.

(b) Pursuant to the Plan of Complete Liquidation and
Dissolution (the "Plan"), attached hereto as Exhibit B, the
Company shall be liquidated into First Federal, immediately
following consummation of the transactions referred to in
Section 1.1(a) hereof, with the result that First Federal will
acquire all of the assets and liabilities of the Company and the
Company shall cease to exist.

(c) Pursuant to the Agreement of Merger, attached hereto
as Exhibit C, between Mid-Iowa and First Federal, Mid-Iowa shall
merge with and into First Federal (the "Bank Merger")
immediately following consummation of the transactions referred
to in Section 1.1(b) hereof, with the result that First Federal
will acquire all of the assets and liabilities of Mid-Iowa and
Mid-Iowa shall cease to exist.

(d) Upon the consummation of the Reorganization, the
separate existence of the Company and Mid-Iowa shall cease, and
First Federal shall continue as the surviving institution in the
Bank Merger.
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1.2 ADOPTION AND EXECUTION AND DELIVERY OF
DOCUMENTS PROVIDING FOR THE REORGANIZATION. Promptly following
the formation of the to-be-formed corporation referred to in
Section 1.1(a) hereof, the Company shall execute and deliver the
Agreement of Merger included as Exhibit A hereto and First
Federal and such to-be-formed corporation shall execute and
deliver such Agreement of Merger, as applicable. Promptly upon
consummation of the transactions contemplated in Section 1.1(a)
hereof, First Federal shall adopt the Plan included as Exhibit B
hereto in its capacity as sole stockholder of the Company.
Promptly upon consummation of the transactions contemplated by
Sections 1.1(a) and (b) hereof, First Federal and Mid-Iowa shall
execute and deliver the Agreement of Merger included as Exhibit
C hereto and First Federal shall adopt such agreement in its
capacity as the sole stockholder of Mid-Iowa.

1.3. EFFECTIVE TIME AND CLOSING OF THE
REORGANIZATION. As soon as practicable after each of the
conditions set forth in Articles VIII, IX and X hereof have been
satisfied or waived, First Federal and Mid-Iowa will file, or
cause to be filed, articles of combination with the Office of
Thrift Supervision (the "OTS"), which articles of combination
shall be in the form required by and executed in accordance with
the Thrift Regulations. The Bank Merger shall become effective
at the time the articles of combination for such merger are
endorsed by the OTS pursuant to Section 552.13(k) of the Thrift
Regulations (the "Effective Time"). If (a) this Agreement and
the transactions contemplated hereby have been duly approved as
required by the stockholders of the Company, and (b) all
relevant conditions of this Agreement have been satisfied or
waived and all applicable waiting periods have expired, the
closing (the "Closing") shall take place within thirty (30)
business days thereafter, on such date as First Federal and Mid-
Iowa shall agree, at the executive offices of First Federal or
at such other time and at such other location mutually
acceptable to First Federal and Mid-Iowa. At the Closing, the
parties hereto will exchange certificates, letters and other
documents as required hereby and will cause the filing described
in this Section 1.3 with respect to the Bank Merger to be made.
The date on which the Closing occurs is hereinafter referred to
as the "Closing Date."

1.4 MODIFICATION OF STRUCTURE. Notwithstanding
any provision of this Agreement to the contrary, First Federal
may elect, subject to the filing of all necessary applications
and the receipt of all required regulatory approvals, to modify
the structure of the transactions contemplated hereby so long as
(i) there are no material adverse federal income tax
consequences to the stockholders of the Company as a result of
such modification, (ii) the consideration to be paid to holders
of Company Common Stock under this Agreement is not thereby
changed in kind or reduced in amount because of such
modification, and (iii) such modification will not be likely to
materially delay or jeopardize receipt of any required
regulatory approvals required hereunder, or otherwise impede the
consummation of the transactions contemplated hereby.
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ARTICLE II.

EFFECT OF THE REORGANIZATION; CERTAIN ACTIONS IN CONNECTION
THEREWITH

2.1. EFFECT OF THE REORGANIZATION.

(a) First Federal, as the surviving institution in
the Bank Merger, shall possess all of the properties and rights
and be subject to all of the liabilities and obligations of
Mid-Iowa, all as more fully described in the Merger Agreement
and the Thrift Regulations. The name of First Federal, as the
surviving institution in the Bank Merger, will be "First Federal
Savings Bank of Siouxland" or such other name as determined by
the Board of Directors of First Federal, subject to any required
regulatory approval.

(b) At the Effective Time, each share of capital
stock of the Company issued and outstanding immediately prior
thereto (except shares as to which the holders have perfected
dissenters' rights in accordance with Section 262 of the
Delaware General Corporation Law) shall, by virtue of the
Reorganization, be canceled. No new shares of the capital stock
or other securities or obligations of First Federal shall be
issued or be deemed issued with respect to or in exchange for
such canceled shares, and such canceled shares of capital stock
shall not be converted into any shares or other securities or
obligations of First Federal.

(c) The Charter and Bylaws of First Federal, as in
effect immediately prior to the Effective Time, shall be the
Charter and Bylaws of First Federal, as the surviving
institution of the Bank Merger.

(d) Except as otherwise contemplated hereby, the
directors and officers of First Federal immediately prior to the
Effective Time shall be the directors and officers of First
Federal, as the surviving institution of the Bank Merger, and
shall continue in office until their successors are duly elected
or otherwise duly selected.

(e) All deposit accounts of Mid-Iowa existing
immediately prior to the Bank Merger shall, upon consummation of
the Bank Merger, remain insured by the Federal Deposit Insurance
Corporation ("FDIC") to the fullest extent permitted by law and
regulation.

2.2. EFFECT ON COMMON STOCK OF THE COMPANY AND FIRST
FEDERAL.

(a) As of the Effective Time, by virtue of the
Reorganization and without any action except as specified herein
on the part of the holders of shares of common stock, $.01 par
value, of the Company, each issued and outstanding share of
Company Common Stock (except with respect to the rights of
dissenting shareholders of the Company) shall be converted into
the right to receive $15.00 in cash (the "Purchase Price"), and
all outstanding certificates representing Company Common Stock
shall thereafter represent solely the right to receive the
Purchase Price. Any holders of dissenting shares

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shall be entitled to payment for such shares only to the extent
permitted by and in accordance with the provisions of Section
262 of the Delaware General Corporation Law, with funds provided
by First Federal. The Company shall give First Federal prompt
notice of any written demand for the payment of the fair value
of any shares of Company Common Stock, withdrawals of such
demands, and any other instruments served pursuant to the
Delaware General Corporation Law and received by the Company.
The Company shall give First Federal the opportunity to
participate in all negotiations and proceedings with respect to
such demands, and shall not voluntarily make any payment with
respect to any demands for payment of fair value or settle or
offer to settle any such demands. All shares of Company Common
Stock which are held in the treasury of the Company or Mid-Iowa
or by any direct or indirect wholly-owned subsidiary of the
Company and any shares of Company Common Stock owned by First
Federal or any direct or indirect wholly-owned subsidiary or
parent of First Federal shall be canceled and no consideration
shall be paid or delivered in exchange therefor. At the
Effective Time, the stock transfer books of the Company shall be
closed and no transfer of Company Common Stock by any holder
thereof shall thereafter be made or recognized.

(b) In the event the Closing has not occurred by April
15, 1999, then the aggregate Purchase Price payable under
Section 2.2(a) shall be increased by $3,700 per day for each day
from April 16, 1999 to the date immediately preceding the
Closing (the "Purchase Price Adjustment"). The per share
Purchase Price shall be increased by an amount equal to the
Purchase Price adjustment divided by the number of shares of
Company Common Stock outstanding immediately prior to the
Effective Time, rounded to the nearest $.01.

2.3. FIRST FEDERAL TO MAKE CASH AVAILABLE. At the
Effective Time, First Federal shall make available to the
Exchange Agent (as defined in Section 2.4(a) hereof) hereof, the
aggregate amount of cash payable pursuant to Section 2.2
hereof.

2.4. PAYMENT OF CASH.

(a) At least twenty (20) days before the Effective
Time, First Federal shall designate an exchange agent (the
"Exchange Agent") in connection with the Reorganization. As
soon as practicable after the Effective Time, but in no event
later than ten (10) days thereafter, the Exchange Agent shall
send a notice and form of letter of transmittal to each holder
of record of Company Common Stock at the Effective Time advising
such stockholder of the effectiveness of the Reorganization and
the procedures for surrendering to the Exchange Agent
outstanding certificates formerly evidencing shares of Company
Common Stock. Each holder of shares of Company Common Stock who
thereafter delivers his or her certificate or certificates
representing such shares to the Exchange Agent shall be mailed a
check for an amount, without interest, equal to the number of
shares represented by the certificate or certificates so
surrendered to the Exchange Agent multiplied by the Purchase
Price. Upon surrender, each certificate evidencing Company
Common Stock shall be canceled. Until so surrendered, each
outstanding certificate which prior to the Effective Time
evidenced shares of Company Common Stock will be deemed for all
purposes (except as otherwise provided in Section 2.2 hereof) to
evidence the right to receive cash, without interest, equal to
number of shares represented by the certificate or certificates
multiplied by the Purchase Price. After the

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Effective Time, there shall be no further registration of
transfers on the records of the Company of shares of Company
Common Stock and, if a certificate evidencing such shares is
presented for transfer, it shall be canceled in exchange for a
check (except as otherwise provided in Section 2.2 hereof) in
the appropriate amount as calculated above. Notwithstanding any
provision of this Agreement, neither the Exchange Agent nor any
person, firm or entity shall be liable or obligated to any
former holder of any share of Company Common Stock (or to anyone
claiming through any such former holder) with respect to amounts
to which any such holder would have been entitled as a
consequence of the Reorganization, if such amounts have been
paid, or are payable, to any public official pursuant to any
abandoned property, escheat or similar laws.

(b) If delivery of all or any part of the cash to be
paid in connection with the Reorganization is to be paid to a
person other than the person in whose name the certificate
surrendered in exchange therefor is registered, it shall be a
condition to such delivery that the certificate surrendered in
exchange shall be properly endorsed and otherwise in proper form
for transfer and that the person requesting such a delivery pay
to the Exchange Agent any transfer or other taxes required by
reason of such delivery in any name other than that of the
registered holder of the certificate surrendered or establish to
the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.

(c) In the event any certificate for Company Common
Stock shall have been lost, stolen or destroyed, the Exchange
Agent shall deliver (except as otherwise provided in Section 2.2
hereof) in exchange for such lost, stolen or destroyed
certificate, upon the making of an affidavit of that fact by the
holder thereof, the cash to be paid in the Reorganization as
provided for herein; provided, however, that First Federal may,
in its sole discretion and as a condition precedent to the
delivery thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such reasonable sum
as First Federal may direct as indemnity against any claim that
may be made against First Federal, the Company, the Exchange
Agent or any other party with respect to the certificate alleged
to have been lost, stolen or destroyed.

2.5. RECAPITALIZATION OR STOCK DIVIDENDS. If between
the date of this Agreement and the Effective Time, a share of
Company Common Stock shall be changed into a different number of
shares of Company Common Stock or a different class of shares by
reason of reclassification, recapitalization, split-up, exchange
of shares or readjustment, or if a stock dividend shall be
declared with a record date within such period, then the
Purchase Price shall be appropriately and proportionately
adjusted.

2.6. COMPANY STOCK OPTIONS. Effective as of the
Effective Time, the Company shall terminate its 1992 and 1997
Stock Option Plans (the "Company Option Plans") and each of the
200,296 outstanding options (individually, an "Option") granted
under the Company Option Plan shall be converted to the right to
receive the amount by which the Purchase Price exceeds the
exercise price per share of Company Common Stock under such
Option. The amount received by each option holder will be
reduced by any applicable taxes that First Federal is required
to withhold. The Company shall use its best efforts to receive,
by no later than the Effective Time, a cancellation agreement
from each holder (the "Cancellation Agreements") acknowledging
such cancellation and termination of the Option

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as of the Effective Time. In consideration of the foregoing,
First Federal or the Company shall make such cash payment to the
holder of each Option at the later of: (i) the receipt from
such holder of a Cancellation Agreement, or (ii) the Effective
Time. The number of shares of Company Common Stock which are
issuable upon exercise of Options and the holders thereof as of
the date hereof are set forth in Schedule 2.6 of the Company
Disclosure Schedules which are attached hereto and incorporated
herein (the "Company Disclosure Schedule"). The terms of each
Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split,
stock dividend, recapitalization or other similar transaction
with respect to Company Common Stock subsequent to the date
hereof.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF MID-IOWA AND THE COMPANY

Mid-Iowa and the Company hereby represent and warrant
to First Federal as follows:

3.1. CORPORATE ORGANIZATION.

(a) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware. The
Company has the full corporate power and authority to own or
lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the
operations, assets, or financial condition of the Company and
its subsidiaries taken as a whole. The Company is duly
registered with the OTS under the HOLA as a unitary savings
and loan holding company. Other than as set forth in Company
Disclosure Schedule 3.1(a) and shares of capital stock in
Mid-Iowa and its subsidiaries, as identified below
(collectively, the "Company Subsidiaries") the Company does not
own or control or have the right to acquire, directly or
indirectly, an equity interest in any corporation, company,
association, partnership, joint venture or other entity.

(b) Mid-Iowa is a stock savings bank organized, validly
existing and in good standing under the laws of the United
States, has the full corporate power and authority to own or
lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the
operations, assets, or financial condition of the Company and
the Company Subsidiaries taken as a whole. All eligible
accounts of depositors in Mid-Iowa are insured by the Savings
Association Insurance Fund ("SAIF") administered by the FDIC

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to the fullest extent permitted by law. Mid-Iowa is a member
of the Federal Home Loan Bank of Des Moines.

(c) The Company has heretofore delivered to First Federal
true and complete copies of the certificate of incorporation,
charter, organization certificate or other chartering instrument
and bylaws of the Company, Mid-Iowa, and each Company Subsidiary
in effect on the date hereof. The minute books of the Company
and each Company Subsidiary contain accurate minutes of all
meetings and accurate consents in lieu of meetings of the board
of directors (and any committee thereof) and of the
stockholder(s) of the Company and each Company Subsidiary
recorded therein, and as of the Effective Time such minute books
will contain accurate minutes of all such meetings and such
consents in lieu of meetings respectively held or executed prior
thereto. These minute books accurately reflect all transactions
referred to in such minutes and consents in lieu of meetings and
disclose all material corporate actions of the stockholder(s)
and boards of directors of the Company and the Company
Subsidiaries and all committees thereof. Except as reflected in
such minute books, there are no minutes of meetings or consents
in lieu of meetings of the boards of directors (or any committee
thereof) or of the stockholder(s) of the Company or any Company
Subsidiary.

3.2. CAPITALIZATION.

(a) The authorized capital stock of the Company
consists of 2,000,000 shares of Company Common Stock, par value
$.01 per share and 500,000 shares of preferred stock, par value
$.01 per share. As of the date of this Agreement, there were
issued and outstanding 1,734,548 shares of Company Common Stock
and no shares of preferred stock. On such date, there were no
shares of Company Common Stock held by the Company as treasury
stock. All of such issued and outstanding shares of Company
Common Stock are validly issued, fully paid and nonassessable
and not issued in violation of any preemptive rights. As of the
date hereof, no shares of serial preferred stock were issued and
outstanding. Except pursuant to its stock option plans, the
Company does not have any arrangements or commitments obligating
it to issue or sell or otherwise dispose of, or to purchase or
redeem, shares of its capital stock or any securities
convertible into or having the right to purchase shares of its
capital stock. There are no agreements, understandings or
commitments relating to the right of the Company to vote or to
dispose of shares of the capital stock or other ownership
interests of any subsidiary of the Company.

(b) All of the outstanding shares of capital stock
or other ownership interests of each Company Subsidiary have
been duly authorized and validly issued, are fully paid and
nonassessable and are owned, directly or indirectly, by the
Company or Mid-Iowa, as the case may be, free and clear of any
liens, encumbrances, charges, restrictions or rights of third
parties of any kind whatsoever. Mid-Iowa does not have any
arrangements or commitments obligating it to issue or sell or
otherwise dispose of, or to purchase or redeem, shares of its
capital stock or any securities convertible into or having the
right to purchase shares of its capital stock. There are no
agreements, understandings or commitments relating to the right
or obligation of Mid-Iowa to issue, to vote or to dispose of
shares of its capital stock or the shares of capital stock of
any Company Subsidiary.

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(c) Schedule 3.2(c) of the Company Disclosure
Schedule sets forth a complete and accurate list of all options
to purchase Company Common Stock that have been granted and
which remain unexercised, including the dates of grant, exercise
prices, dates of vesting, dates of termination and shares
subject to option
for each grant.

(d) To the best of the Company's knowledge, no person
or group (as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act"), other than
as set forth at Schedule 3.2(d) of the Company Disclosure
Schedule, is the beneficial owner of more than 5% of the
outstanding Company Common Stock.

3.3. AUTHORIZATION.

(a) The Company has full corporate power and authority to
execute and deliver this Agreement and the Agreement of Merger
included as Exhibit A hereto and, subject to the consents and
approvals of federal and state regulatory authorities referred
to in Section 3.6 hereof and the approval of the stockholders of
the Company, to consummate the Company Merger and to carry out
its obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Agreement of Merger included
as Exhibit A hereto and the consummation of the Reorganization
by the Company have been duly authorized by the board of
directors of the Company and, except for the approval of the
stockholders of the Company, no other corporate proceedings on
the part of the Company are necessary to consummate the
transactions so contemplated. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a
valid and legally binding obligation of the Company enforceable
in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies (including,
without limitation, specific performance) is within the
discretion of the appropriate court.

(b) Promptly following formation of the to-be-formed
corporation referred to in Section 1.1(a) hereof, the Agreement
of Merger included as Exhibit A hereto will be duly and validly
executed by the Company and, upon such execution and delivery
and the execution and delivery thereof by the other parties
thereto, will constitute a valid and legally binding obligation
of the Company enforceable in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of
equitable remedies (including, without limitation, specific
performance) is within the discretion of the appropriate court.

3.4. NO VIOLATION. None of the execution and delivery
of this Agreement and the agreements included as Exhibits A and
B hereto by the Company and Mid-Iowa, as applicable, nor the
consummation by the Company and Mid-Iowa of the transactions
contemplated hereby and thereby and the Plan in accordance with
their respective terms, as applicable, nor compliance by the
Company or Mid-Iowa with any of their respective terms, as
applicable, will (i) violate any provision of the Company's or
Mid-Iowa's certificate of incorporation, charter or other
chartering instrument or bylaws, (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction

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applicable to the Company, Mid-Iowa, or any Company Subsidiary
or any of their properties or assets, or (iii) except as set
forth at Schedule 3.4, violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default), under, result in the termination or cancellation of,
accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other
encumbrance upon any of the respective properties or assets of
the Company, Mid-Iowa, or any Company Subsidiary under the
terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company, Mid-Iowa, or any
Company Subsidiary is a party, or by which they or any of their
respective properties or assets may be bound or affected,
except, with respect to clause (iii) above, such as individually
or in the aggregate will not have a material adverse effect on
the operations, assets, or financial condition of the Company
and the Company Subsidiaries taken as a whole and which will not
prevent or delay the consummation of the transactions
contemplated by this Agreement.

3.5. REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS.
(a) The Company and Mid-Iowa have previously furnished First
Federal with true and complete copies of (a) all annual reports,
quarterly reports, proxy statements, financial statements, or
any other documents or material provided by the Company to its
stockholders since January 1, 1994, (b) all call reports and
other reports filed by Mid-Iowa with the OTS since January 1,
1994, and (c) the audited financial statements of the Company
for the fiscal years ended September 30, 1995, 1996 and 1997.
As of their respective dates, such reports and statements did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim
financial statements of the Company, including any financial
statements included in such reports or otherwise delivered to
First Federal (collectively referred to herein as the "Company
Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes
thereto) and fairly present the financial position of the
Company or Mid-Iowa, as the case may be, as of the dates thereof
and the results of their operations and changes in financial
position for the periods then ended, subject, in the case of the
unaudited interim financial statements, to normal year-end audit
adjustments, any other adjustments described therein, and the
absence of certain footnotes. Except as set forth in Schedule
3.5 to the Company Disclosure Schedule, since September
30, 1997 neither the Company or Mid-Iowa, or any Company
Subsidiary, has suffered a Material Adverse Effect (as that term
is defined in Section 12.7 hereof) and the Company is not aware
of any event or circumstance, or series of events and
circumstances, which is reasonably likely to result in a
Material Adverse Effect to the Company or Mid-Iowa. The books
and records of the Company and Mid-Iowa have been, and are
being, maintained in accordance with applicable legal and
accounting requirements and reflect only actual transactions.
Except and to the extent reflected, disclosed or provided for in
the Company Financial Statements, neither the Company, nor
Mid-Iowa nor any Company Subsidiary had, as of the date of the
Company Financial Statements, any liabilities, whether
absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of the
Company.

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(b) Mid-Iowa has filed all reports, together with any
amendments required to be made with respect thereto, that were
required to be filed since January 1, 1994 to the date of this
Agreement with (i) the OTS; (ii) the FDIC; and (iii) any state
banking commission or other banking authority, and has paid all
fees and assessments due and payable in connection therewith.

3.6. Consents and Approvals. Other than as set forth
in Schedule 3.6 to the Company Disclosure Schedule and other
than the receipt of approvals required by the HOLA, the Bank
Merger Act, the Thrift Regulations, and applicable federal
securities and state laws, and the approval of the holders of
Company Common Stock as described in Section 7.1 hereof, no
filing or registration with, no notice to and no permit,
authorization, consent or approval of any third party or any
public or governmental body or authority is necessary for the
consummation by the Company or Mid-Iowa of the transactions
contemplated by this Agreement, except where the failure to make
such filing or obtain such permit, authorization, consent or
approval will not in the aggregate have a Material Adverse
Effect. The Company knows of no reason (including those
relating to fair lending laws or other laws relating to
discrimination, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act and the Home Mortgage Disclosure Act, and
anti-trust or consumer disclosure laws and regulations) why the
regulatory approvals should not be obtained, and is aware of no
reason to believe that such approvals would include any term,
condition or requirement that, individually or in the aggregate,
would have a Material Adverse Effect on the results, business,
operations, assets, or financial condition of the Company.

3.7. ABSENCE OF CERTAIN CHANGES. Since September 30,
1997, and except as otherwise permitted by this Agreement,
neither the Company, Mid-Iowa or any Company Subsidiary has,
except as set forth in Schedule 3.7 to the Company Disclosure
Schedule, (a) issued or sold any corporate debt securities; (b)
granted any option for the purchase of its capital stock; (c)
declared or set aside or paid any dividend or other distribution
in respect of its capital stock; (d) incurred any material
obligation or liability (absolute or contingent), except
obligations or liabilities incurred in the ordinary course of
business consistent with past practices; (e) mortgaged, pledged
or subjected to lien or encumbrance (other than statutory liens
for taxes not yet delinquent and landlord liens) any of its
material assets or properties except pledges to secure
government or other deposits and in connection with repurchase
or reverse repurchase agreements; (f) discharged or satisfied
any material lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current
liabilities included in the Company's consolidated balance sheet
as of September 30, 1997, and current liabilities incurred since
the date thereof in the ordinary course of business consistent
with past practices; (g) sold, exchanged or otherwise disposed
of any of its material capital assets other than in the ordinary
course of business consistent with past practices; (h) made any
wage or salary increase or entered into or modified any
employment contract with any officer or salaried employee or
instituted any employee welfare, bonus, stock option, profit
sharing, retirement or similar plan or arrangement, whether tax-
qualified or non tax-qualified (other than salary increases
reflected in the salary schedule set forth at Schedule 3.7); (i)
suffered any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting its business,
property or assets or waived any rights of value that are
material in the aggregate, considering its business taken as a
whole; (j) except in the ordinary course of business consistent
with past practices, entered, or agreed to enter, into any
agreement or

11<PAGE>
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arrangement granting any preferential right to purchase any of
its assets, properties or rights or requiring the consent of any
party to the transfer or assignment of any such assets,
properties or rights; (k) entered into any material transaction
outside the ordinary course of its business consistent with past
practices, except as expressly contemplated by this Agreement;
or (1) except in the ordinary course of business consistent with
past practices or as reflected in the Company Financial
Statements, sold or otherwise disposed of any of its material
investment securities.

3.8. EMPLOYEE AND EMPLOYEE BENEFITS MATTERS. (a)
Schedule 3.8(a) to the Company Disclosure Schedule lists (i)
each pension, profit sharing, stock bonus, thrift, savings,
employee stock ownership or other plan, program or arrangement,
which constitutes an "employee pension plan" within the meaning
of Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is maintained by the
Company, Mid-Iowa or any Company Subsidiary or to which the
Company, Mid-Iowa or any Company Subsidiary contributes or is
maintained for the benefit of any current or former employee,
officer, director, consultant or agent; (ii) each plan, program
or arrangement for the provision of medical, surgical, or
hospital care or benefits, benefits in the event of sickness,
accident, disability, death, unemployment, severance, vacation,
apprenticeship, day care, scholarship, prepaid legal services or
other benefits which constitute an "employee welfare benefit
plan" within the meaning of Section 3(1) of ERISA, which is
maintained by the Company, Mid-Iowa or any Company Subsidiary or
to which the Company or any Company Subsidiary contributes for
the benefit of any current or former employee, officer,
director, consultant or agent or dependent of any such person;
and (iii) every other retirement or deferred compensation plan,
bonus or incentive compensation plan or arrangement, stock
option plan, stock purchase plan, stock bonus plan or stock
grant plan, severance or vacation pay arrangement, or other
fringe benefit plan, program or arrangement through which
the Company, Mid-Iowa or any Company Subsidiary provides
benefits for or on behalf of any current or former employee,
officer, director, consultant or agent. The plans, programs or
arrangements described in this Section 3.8 or listed in Schedule
3.8(a) of the Company Disclosure Schedule are hereinafter
referred to as the "Mid-Iowa Benefit Plans." Mid-Iowa has
delivered or made available to First Federal a true and correct
copy of (a) each Mid-Iowa Benefit Plan, including amendments
thereto, (b) the most recent annual report (Form 5500) filed
with the Internal Revenue Service ("IRS") with respect to each
Mid-Iowa Benefit Plan, if applicable, (c) each trust agreement
and group annuity contract, if any, relating to such Mid-Iowa
Benefit Plan, (d) the most recent actuarial report or valuation
relating to a Mid-Iowa Benefit Plan subject to Title IV of ERISA
and (e) all rulings and determination letters and any open
requests for rulings or letters that pertain to any Mid-Iowa
Benefit Plan.

(b) All of the Mid-Iowa Benefit Plans that are
subject to ERISA and the Internal Revenue Code (the "Code") are
in compliance with all applicable requirements of ERISA and the
Code and all other applicable federal and state laws, including,
without limitation, the reporting and disclosure requirements of
Part I of Title I of ERISA. Each of the Mid-Iowa Benefit Plans
that is intended to be a pension, profit sharing, stock bonus,
thrift, savings or employee stock ownership plan that is
qualified under Section 401(a) of the Code satisfies the
applicable requirements of such provision and there exist no
circumstances that would adversely affect the qualified status
of any such plan under that section, except with respect to any
required retroactive amendment for which the remedial

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amendment period has not yet expired. Except as set forth in
Schedule 3.8(b) to the Company Disclosure Schedule, there is no
pending or, to the best knowledge of Mid-Iowa, threatened
litigation, claim, action, governmental proceeding or
investigation against or relating to any Mid-Iowa Benefit Plan
which could give rise to any material liability, and there is no
reasonable basis for any material litigation, claims, actions or
proceedings against any such Mid-Iowa Benefit Plan, and there
are not any facts that could give rise to any material liability
in the event of such litigation, claim, action, investigation,
or proceeding. No Mid-Iowa Benefit Plan (or Mid-Iowa Benefit
Plan fiduciary) has engaged in a non-exempt "Prohibited
Transaction" (as defined in Section 406 of ERISA and Section
4975(c) of the Code) since the date on which said sections
became applicable to such plan. There have been no acts or
omissions by the Company, Mid-Iowa or any Company Subsidiary
that have given rise to any fines, penalties, taxes or related
charges under Sections 502(c), 502(i) or 4071 of ERISA or
Chapter 43 of the Code, or that may give rise to any material
fines, penalties, taxes or related damages under such laws for
which the Company, Mid-Iowa or any Company Subsidiary may be
liable. No liability under Title IV of ERISA has been incurred
by the Company, Mid-Iowa, any Company Subsidiary, any former
Affiliate (as such term is defined in Section 12.7 hereof)
of the Company, Mid-Iowa or the Mid-Iowa Benefit Plans since the
effective date of ERISA that has not been satisfied in full, and
no condition exists that presents a material risk of incurring a
liability under such Title, other than liability for premiums
due the Pension Benefit Guaranty Corporation ("PBGC"), which
payments have been made or will be made when due. With respect
to each of the Mid-Iowa Benefit Plans which is subject to Title
IV of ERISA, the present value of accrued benefits under such
plan or plans, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by
such plan's actuary with respect to such plan, did not, as of
its latest valuation date, exceed the then current value of the
assets of such plan allocable to such accrued benefits and
Mid-Iowa is not aware of any facts or circumstances that would
materially change the funded status of any such ERISA plan.
None of the Mid-Iowa Benefit Plans is a "multiemployer pension
plan" as such term is defined in section 3(37) of ERISA. None
of the Company, Mid-Iowa or any Company Subsidiary has
participated in or agreed to participate in a multiemployer plan
as defined in Section 3(37) of ERISA. Except as listed on
Schedule 3.8(b) to the Company Disclosure Schedule, no employee
of the Company, Mid-Iowa or any Company Subsidiary will be
entitled to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any Mid-Iowa
Benefit Plan as a result of the transactions contemplated by
this Agreement. Other than current or contingent liabilities
previously disclosed on Schedule 3.8(b) to the Company
Disclosure Schedule, neither the Company, Mid-Iowa or any
Company Subsidiary or any Mid-Iowa Benefit Plan will have any
material current or contingent liability with respect to any
plan. The funding under each Mid-Iowa Benefit Plan which is an
"employee welfare benefit plan" as defined in Section 3(1) of
ERISA does not exceed the limitations under Section 419A(b) or
419A(c) of the Code. All group health plans of the Company,
Mid-Iowa and any Company Subsidiary, including any plans of
current and former Affiliates of the Company, Mid-Iowa or any
Company Subsidiary that must be taken into account under Section
4980B of the Code or Section 601 of ERISA or the requirements of
any similar state law regarding insurance continuation, have
been operated in material compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code
and Section 601 of ERISA to the extent such requirements are
applicable. All payments due from any Mid-Iowa Benefit Plan (or
from the Company, Mid-Iowa or any Company Subsidiary with
respect to any Mid-Iowa Benefit Plan) have been made, and all
amounts properly

13<PAGE>
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accrued to date as liabilities of the Company, Mid-Iowa or any
Company Subsidiary that have not yet been paid have been
properly recorded on the books of the Company, Mid- Iowa or any
Company Subsidiary.

(c) Except in all cases as set forth on Schedule
3.8(c), none of Company, Mid-Iowa or any Company Subsidiary is a
party to any employment contract, management or consulting
agreement not terminable at the option of Company, Mid- Iowa or
said Company Subsidiary without liability.

(d) No amounts payable under the Mid-Iowa Benefit
Plans, or any employment, severance or termination agreement
between or among the Company, Mid-Iowa, any Company Subsidiary
and any employee, officer or shareholder will fail to be
deductible for federal income tax purposes by virtue of section
280G of the Code. No compensation payable by the Company,
Mid-Iowa or any Company Subsidiary to any of their employees
under any existing contract, plan or other employment
arrangement (including by reason of the transactions
contemplated hereby) will be subject to disallowance under
section 162(m) of the Code.

(e) Schedule 3.8(e) identifies each corporate owned
life insurance policy, including any key man insurance policy
and policy insuring the life of any director or employee of the
Company, Mid-Iowa, or any Company Subsidiary, and indicates for
each such policy, the face amount of coverage, cash surrender
value, if any, and annual premiums.

3.9. LITIGATION. Except as set forth in Schedule
3.9to the Company Disclosure Schedule, no claims have been
asserted and no relief has been sought against the Company,
Mid-Iowa or any Company Subsidiary in any pending litigation or
governmental proceedings or otherwise that would be reasonably
expected to result in damages or other relief which would have a
Material Adverse Effect on the Company and Mid-Iowa, taken as a
whole. To the best knowledge of the Company and Mid-Iowa, there
are no circumstances, conditions, events or arrangements,
contractual or otherwise, which may hereafter give rise to any
proceedings, claims, actions or government investigations
involving the Company, Mid-Iowa or any Company Subsidiary that
would reasonably be expected to result in damages or other
relief that would have a Material Adverse Effect, nor, to the
knowledge of the Company and Mid-Iowa, are any such proceedings,
claims, actions or government investigations threatened. Except
as set forth in Schedule 3.9 to the Company Disclosure Schedule,
neither the Company, Mid-Iowa or any Company Subsidiary is a
party to any order, judgment or decree that would reasonably be
expected to have a Material Adverse Effect on the Company and
Mid-Iowa, taken as a whole, and neither the Company, Mid-Iowa or
any Company Subsidiary (a) is the subject of any cease and
desist order, or other formal or informal enforcement action by
any regulatory authority or (b) has made any commitment to or
entered into any agreement with any regulatory authority that
restricts or adversely affects its operations or financial
condition.

3.10. TAX MATTERS. The Company, Mid-Iowa and the
Company Subsidiaries have timely filed (inclusive of applicable
extension periods) with the appropriate governmental agencies
all

14<PAGE>
<PAGE>
material federal, state and local income, employment, franchise,
excise, sales, use, real and personal property and other tax
returns and reports (including information returns and reports)
that are required to be filed, and neither the Company, Mid-Iowa
or any Company Subsidiary is materially delinquent in the
payment of any taxes shown on such returns or reports or on any
assessments for any such taxes received by the Company, Mid-Iowa
or any Company Subsidiary. There are included in the Company
Financial Statements adequate reserves for the payment of all
accrued but unpaid federal, state and local taxes of the
Company, Mid-Iowa and each Company Subsidiary, including
interest and penalties, whether or not disputed for such fiscal
years as reflected therein and all fiscal years prior thereto.
Neither the Company, Mid-Iowa or any Company Subsidiary has
executed or filed with the Internal Revenue Service ("IRS") or
any state tax authority any agreement extending the period for
assessment and collection of any federal or state tax, nor is
the Company, Mid-Iowa or any Company Subsidiary a party
to any action or proceeding by any governmental authority for
assessment or collection of taxes, except tax liens or levies
against customers of any Company Subsidiary. There is no
outstanding material assessment or claim for collection of taxes
against the Company, Mid-Iowa or any Company Subsidiary. Except
as set forth in Schedule 3.10 to the Company Disclosure
Schedule, the federal income tax returns of the Company,
Mid-Iowa and each Company Subsidiary have been examined by the
IRS (or are closed to examination due to the expiration of the
applicable statute of limitations) and no deficiencies were
asserted as a result of such examinations that have not been
resolved and paid in full or for which adequate reserves or
accruals established in accordance with generally accepted
accounting principles have been taken with respect thereto.

Neither the Company, Mid-Iowa or any Company
Subsidiary has, during the past five (5) years, except as
disclosed in Schedule 3.10 to the Company Disclosure Schedule,
received any notice of deficiency, proposed deficiency or
assessment from the IRS or any other governmental agency, with
respect to any federal, state, county or local taxes. No
federal or state tax return of the Company, Mid-Iowa or any
Company Subsidiary is currently the subject of any audit by the
IRS or any other governmental agency. During the past five (5)
years, no material deficiencies have been asserted in connection
with the federal and state income tax returns of each of the
Company, Mid-Iowa and the Company Subsidiaries and the Company
has no reason to believe that any material deficiency would be
asserted relating thereto. Except as disclosed in Schedule 3.10
to the Company Disclosure Schedule, neither the Company,
Mid-Iowa or any Company Subsidiary is a party to any agreement
providing for allocation or sharing of taxes. Neither the
Company, Mid-Iowa or any Company Subsidiary has ever been a
member of an "affiliated group of corporations" (within the
meaning of Section 1504(a) of the Code) filing consolidated
returns, other than the affiliated group of which the Company is
or was the common parent.

3.11. INFORMATION IN THE COMPANY PROXY STATEMENT. The
Company represents and warrants that the Company Proxy Statement
(as defined in Section 7.2 hereof) will not, either at the time
it is mailed to the stockholders of the Company in connection
with the Company Shareholders' Meeting (as defined in Section
7.1 hereof) or at the time of the Company Shareholders' Meeting,
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading; provided, however, that
none of the representations and warranties in this Section

15<PAGE>
<PAGE>
3.11 shall apply to statements in or omissions from the Company
Proxy Statement made in reliance upon and in conformity with
information about or furnished by Bancorp or First Federal for
use in the Company Proxy Statement.

3.12. ENVIRONMENTAL MATTERS. For purposes of this
Section 3.12, the following terms shall have the indicated
meaning:

"Environmental Law" means any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree,
injunction or agreement with any governmental entity relating to
(1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural
resource), and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of Materials of Environmental
Concern. The term Environmental Law includes without limitation
(1) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601, et seq; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6901, et seq; the Clean Air Act, as amended, 42 U.S.C.
Section 7401, et seq; the Federal Water Pollution Control Act,
as amended, 33 U.S.C. Section 1251, et seq; the Toxic Substances
Control Act, as amended, 15 U.S.C. Section 9601, et seq; the
Emergency Planning and Community Right to Know Act, 42 U.S.C.
Section 11001, et seq; the Safe Drinking Water Act, 42 U.S.C.
Section 300f, et seq; and all comparable state and local laws,
and (2) any common law (including without limitation common law
that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Materials of
Environmental Concern.

"Environmental Claim" means any written notice from any
governmental authority or third party alleging potential
liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response
costs, natural resources damages, property damages, personal
injuries or penalties) arising out of, based on, or resulting
from the presence, or release into the environment, of any
Materials of Environmental Concern.

"Materials of Environmental Concern" means pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum
products and any other materials regulated under Environmental
Laws.

"Loan Portfolio Properties and Other Properties Owned"
means those properties owned, leased or operated by the Company,
Mid-Iowa or any Company Subsidiary, including those properties
serving as collateral for any loans made and retained by
Mid-Iowa or any Company Subsidiary or for which Mid-Iowa or any
Company Subsidiary serves in a trust relationship for the loans
retained in portfolio.

(a) To the knowledge of the Company and Mid-Iowa and
each Company Subsidiary, the Company, Mid-Iowa and each Company
Subsidiary is in compliance with all Environmental Laws, except
for any violations of any Environmental Law which would not,
singly or in the aggregate, have a material adverse effect on
the operations, assets, or financial condition of the Company
and the
16<PAGE>
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Company Subsidiaries taken as a whole. Neither the Company,
Mid-Iowa or any Company Subsidiary has received any
communication alleging that the Company, Mid-Iowa or any Company
Subsidiary is not in such compliance and, to the knowledge of
the Company and Mid-Iowa, there are no present circumstances
that would prevent or interfere with the continuation of such
compliance.

(b) To the knowledge of the Company and Mid-Iowa and
each Company Subsidiary, neither the Company, Mid-Iowa or any
Company Subsidiary has been or is in violation of or liable
under any Environmental Law, except any such violations or
liabilities that would not singly or in the aggregate have a
material adverse effect on the business, operations, assets or
financial condition of the Company and the Company Subsidiaries
taken as a whole.

(c) To the knowledge of the Company, Mid-Iowa and
each Company Subsidiary, none of the Loan Portfolio Properties
and Other Properties Owned by them has been or is in violation
of or liable under any Environmental Law, except any such
violations or liabilities that singly or in the aggregate would
not have a material adverse effect on the business, operations,
assets or financial condition of the Company and the Company
Subsidiaries taken as a whole.

(d) To the knowledge of the Company, Mid-Iowa and
each Company Subsidiary, there are no actions, suits, demands,
notices, claims, investigations or proceedings pending or
threatened relating to the liability of the Loan Portfolio
Properties and Other Properties Owned under any Environmental
Law, including without limitation any notices, demand letters or
requests for information from any federal or state environmental
agency relating to any such liabilities under or violations of
Environmental Law, except such which would not have or result in
a material adverse effect on the business, operations, assets or
financial condition of the Company and the Company Subsidiaries
taken as a whole.

(e) To the knowledge of the Company, Mid-Iowa and
each Company Subsidiary, there are no past or present actions,
activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could
result in the imposition of any liability arising under any
Environmental Law against the Company, Mid-Iowa or any Company
Subsidiary or against any person or entity whose liability for
any Environmental Claim the Company, Mid-Iowa or any Company
Subsidiary has or may have retained or assumed either
contractually or by operation of law, except such which would
not have a material adverse effect on the operations, assets, or
financial condition of the Company and the Company Subsidiaries
taken as a whole.

(f) The Company has set forth on Schedule 3.12(f) any
environmental studies conducted by it, Mid-Iowa or any Company
Subsidiary during the past five years with respect to any
properties owned by it as of the date hereof.

3.13. INSURANCE. Mid-Iowa or the Company has
delivered to First Federal as part of Schedule 3.13 to the
Company Disclosure Schedule true, accurate and complete copies
of all insurance policies and fidelity bonds of the Company,
Mid-Iowa and the Company Subsidiaries. Each such

17<PAGE>
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policy is in full force and effect, with all premiums due
thereon on or prior to the Closing Date having been paid as and
when due. The Company, Mid-Iowa and the Company Subsidiaries
have not been notified that their fidelity or insurance coverage
will not be renewed by their carrier(s) on substantially the
same terms as their existing coverage. All such policies (i)
are sufficient for compliance by the Company, Mid-Iowa and each
Company Subsidiary with all requirements of law and all
agreements to which the Company, Mid-Iowa or any Company
Subsidiary is a party, and (ii) will not, due to action or
inaction by the Company or Mid-Iowa, terminate or lapse prior to
the Effective Time without similar policies being obtained that
would continue until the Effective Time.

3.14. COMPLIANCE WITH LAWS AND ORDERS. Except as
set forth in Schedule 3.14 to the Company Disclosure Schedule,
neither the Company, Mid-Iowa or any Company Subsidiary has
received notice of any violation or alleged material violation
of, or, to the knowledge of the Company or Mid-Iowa, is subject
to any liability (whether accrued, absolute, contingent, direct
or indirect) for past or continuing material violations of, any
law, statute or regulation. Neither the Company, Mid-Iowa or
any Company Subsidiary is in default under, and no event has
occurred that, with the lapse of time or the giving of notice by
a third party or both, could result in a default under the terms
of any judgment, decree, order, writ, rule or regulation of any
governmental authority or court, whether federal, state or local
and whether at law or in equity, where the failure to be in full
compliance would reasonably be expected to result alone or in
the aggregate in damages, which would be reasonably likely to
have a Material Adverse Effect.

3.15. GOVERNMENTAL REGULATION. Each of the
Company, Mid-Iowa and the Company Subsidiaries holds all
material licenses, certificates, permits, franchises and rights
from all appropriate federal, state and other public authorities
necessary for the conduct of its business; and, between the date
hereof and the Closing Date, the Company and Mid-Iowa will, and
the Company will cause each Company Subsidiary to maintain all
such licenses, certificates, permits, franchises and rights in
effect. Except as set forth in Schedule 3.15 to the Company
Disclosure Schedule, neither the Company, Mid-Iowa or any
Company Subsidiary is a party or subject to any agreements,
directives, orders or similar arrangements between or involving
the Company, Mid-Iowa or any Company Subsidiary and any federal
savings institution regulatory authority.

3.16. CONTRACTS AND COMMITMENTS. Except as set
forth in Schedule 3.16 to the Company Disclosure Schedule,
neither the Company, Mid-Iowa or any Company Subsidiary is a
party to or bound by any (a) material lease or license with
respect to any property, real or personal; (b) material contract
or commitment for capital expenditures; (c) material contract or
commitment for total expenses for the purchase of materials,
supplies or for the performance of services by third parties for
a period of more than 60 days from the date of this Agreement;
(d) material contract or option for the purchase or sale of any
real or personal property other than in the ordinary course of
business; (e) agreement, arrangement or understanding relating
to the employment, election, retention in office or severance of
any present or former director or officer of the Company,
Mid-Iowa or any Company Subsidiary; or (f) interest-rate swaps,
caps, floors, and option agreements, or other similar interest
rate risk management agreements. To their knowledge, the
Company, Mid-Iowa and the Company Subsidiaries have performed in
all material respects all obligations required to be performed
by them

18<PAGE>
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to date and are not in default under, and no event has occurred
which, with the lapse of time or action by a third party or
both, could result in a default resulting in material damages or
other material default under any outstanding mortgage, lease,
contract, commitment or agreement to which the Company, Mid-Iowa
or any Company Subsidiary is a party or by which the Company,
Mid-Iowa or any Company Subsidiary is bound or under any
provision of their respective charters or bylaws. Each such
outstanding material mortgage, lease, contract, commitment or
agreement is a valid and legally binding obligation of the
Company, Mid-Iowa or the Company Subsidiary subject to (x) all
applicable bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors rights generally or
the rights of creditors of savings institutions the accounts of
which are insured by the FDIC, and (y) the application of
equitable principles if equitable remedies are sought.

3.17. AGREEMENTS WITH DIRECTORS, OFFICERS AND
STOCKHOLDERS. Except as set forth in Schedule 3.17 to the
Company Disclosure Schedule, no director, executive officer, or
beneficial owner of five percent (5.0%) or more of the
outstanding capital stock of the Company or any associate of any
such person (hereinafter sometimes referred to as a "Company
Principal") (a) is or has during the period subsequent to
September 30, 1997, been a party (other than as a depositor) to
any transaction with the Company or Mid-Iowa, whether as a
borrower or otherwise, that (i) was made other than in the
ordinary course of business, (ii) was made on other than
substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable
transactions with other persons, or (iii) involves more than
the normal risk of collectability or presents other unfavorable
features; or (b) is a party to any material loan or loan
commitment, whether written or oral. Except as disclosed in
Schedule 3.17 to the Company Disclosure Schedule, no director,
executive officer (or any associate of such person) and, to the
knowledge of the Company, no beneficial owner of five percent
(5.0%) or more of the outstanding capital stock of the Company
or any associate of such person holds any position with or owns
more than five percent (5.0%) of the outstanding shares of any
class of voting stock of any depository organization, or holding
company therefor, other than the Company. For the purposes of
this Section 3.17, the term "depository organization" means a
commercial bank (including a private bank), a savings bank, a
trust company, a savings and loan association, a homestead
association, a cooperative bank, an industrial bank, a credit
union, or a depository holding company.

3.18. ACCURACY OF INFORMATION. The statements
made by the Company and Mid-Iowa in this Agreement and in any
other written documents executed and/or delivered by or on
behalf of the Company or Mid-Iowa pursuant to the terms of this
Agreement are true and correct in all material respects. The
statements contained in such other documents specifically
referred to in this Agreement will be deemed to constitute
representations and warranties of the Company and Mid-Iowa under
this Agreement to the same extent as if set forth herein in
full.

3.19 ALLOWANCES FOR LOSSES AND REAL ESTATE OWNED.
Each of the allowance for loan losses, and the reserve for
losses on Real Estate Owned reflected on the consolidated
balance sheets included in the Company's Financial Statements
referred to in Section 3.5 hereof is, or will be in the case of
subsequently delivered Company Financial Statements, as the case
may be, adequate in all material respects as of their respective
dates under the requirements of generally accepted accounting
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principles to provide for reasonably anticipated losses on
outstanding loans net of recoveries and foreclosed real estate,
respectively.

3.20 TITLE TO ASSETS; LEASES

(a) Except for (i) liens and encumbrances
specifically disclosed in any of the Company Financial
Statements referred to in Section 3.5 hereof, (ii) landlords' or
statutory liens or other liens incurred in the ordinary course
of business and not securing indebtedness for borrowed money and
not yet delinquent, and (iii) liens and encumbrances which are
not material in amount and do not materially impair the value of
any property subject thereto or the use of such property for the
purposes for which it is presently used or intended to be used,
the Company, Mid-Iowa and each Company Subsidiary has good and
marketable title, free and clear of all security interests,
encumbrances, trust agreements, liens or other adverse claims,
to all its assets and property, real and personal, reflected in
the Company Financial Statements referred to in Section 3.5
hereof or acquired thereafter, which includes all property and
assets used by the Company, Mid-Iowa and each Company Subsidiary
that are material to the conduct of their respective businesses,
except for assets and property disposed of in the ordinary
course of business after September 30, 1997.

(b) The Company, Mid-Iowa and each Company Subsidiary
as lessee has the right under valid and existing leases to
occupy, use, and possess all property leased by it in all
material respects as presently occupied, used, and possessed by
the Company, Mid-Iowa or any Company Subsidiary and such leases
will not terminate or lapse prior to the Effective Time or be
affected in any material respect by consummation of the
transactions contemplated hereby. Schedule 3.20(b) contains an
accurate listing of each lease pursuant to which the Company,
Mid-Iowa or any Company Subsidiary acts as lessor or lessee,
including the expiration date and the terms of any renewal
options which relate to the same, as well as a listing of each
material real property owned by the Company, Mid-Iowa or any
Company Subsidiary and used in the conduct of its respective
business.

(c) All material real and personal property owned by
the Company, Mid-Iowa or any Company Subsidiary or presently
used by any of them are in an adequate condition (ordinary wear
and tear excepted) and are in all material respects sufficient
to carry on the business of the Company, Mid-Iowa and each
Company Subsidiary in the manner conducted currently by them.

3.21. BUSINESS OF MID-IOWA. Since September 30,
1997, Mid-Iowa has conducted its business in the ordinary
course. For purposes of the foregoing, Mid-Iowa has not, since
September 30, 1997, controlled expenses through the (i)
elimination of employee benefits; (ii) deferral of routine
maintenance of real property or leased premises; (iii)
elimination of reserves where the liability related to such
reserve has remained; (iv) reduction of capital improvements
from previous levels; (v) failure to depreciate capital assets
in accordance with past practice or to eliminate capital assets
no longer used in Mid-Iowa's business; (vi) capitalization of
loan production expenses other than in accordance with SFAS No.
91, or (vii) extraordinary reduction or deferral of ordinary or
necessary expenses.

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3.22. TAX MATTERS. Neither the Company or any
Company Subsidiary has taken or agreed to take any action or has
any knowledge of any fact or circumstance that would (i) prevent
the transactions contemplated hereby from qualifying as a
reorganization within the meaning of Section 368 of the Code, or
(ii) materially impede or delay receipt of any approval from any
regulatory authority or the consummation of the transactions
contemplated by this Agreement.

3.23 CERTAIN INFORMATION. None of the information
relating to the Company, Mid-Iowa or any Company Subsidiary
supplied or to be supplied for inclusion or incorporation by
reference in the Prospectus to be prepared by Bancorp and First
Federal as described in Section 7.13 hereof, will, at the time
the Prospectus is mailed to subscribers (and at the time the
related Registration Statement on Form S-1 or, other applicable
form, and any amendment thereto becomes effective under the
Securities Act) up to and including the date of the closing of
the offering, contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL

First Federal hereby represents and warrants to the
Company and Mid-Iowa as follows:

4.1. CORPORATE ORGANIZATION. First Federal is a stock
savings bank duly organized, validly existing and in good
standing under the laws of the United States. As of the date
hereof, Bancorp is a mutual holding company duly organized,
validly existing and in good standing under the laws of the
United States. Upon consummation of the Conversion, Bancorp
will become a stock holding company, duly organized, validly
existing and in good standing under the laws of the state of its
incorporation. All eligible accounts issued by First Federal
are insured by the FDIC to the maximum extent permitted under
applicable law. Each of First Federal and Bancorp has all
requisite corporate power and authority to own, operate and
lease its properties as presently owned, operated and leased and
to engage in the activities and business now being conducted by
it.

4.2. AUTHORIZATION. The Board of Directors of First
Federal has approved this Agreement and the transactions
contemplated hereby and has authorized the execution, delivery
and performance by First Federal of this Agreement. No
corporate proceeding on the part of First Federal is necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby, and First Federal has full corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby subject to the consents and
approvals of federal and state regulatory authorities referred
to in Section 4.4 hereof and the approval of the Conversion by
the members of Bancorp and the stockholders of First Federal.
This Agreement has been duly and validly executed and delivered
by First Federal and constitutes the valid and binding
obligation of First Federal, enforceable against it in
accordance with its terms, subject to (a) all applicable
bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and
(b) the application of equitable principles if equitable
remedies are sought.

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4.3. NO VIOLATION. Neither the execution and delivery
of this Agreement or, subject to the receipt of the consents and
approvals contemplated by Section 4.4 hereof and the member and
shareholder approvals contemplated hereby, the consummation of
the transactions contemplated herein will, (a) conflict with,
result in the breach of, constitute a violation of, constitute a
default under or accelerate the performance of the terms of any
government regulation, judgment, order or decree of any court or
other governmental agency to which First Federal or Bancorp may
be subject, or any contract, agreement or instrument to which
First Federal or Bancorp is a party or by which First Federal or
Bancorp are bound or committed, or the Charter or Bylaws of
First Federal or Bancorp, or any law, or any rule or regulation
of any governmental agency or authority, or (b) constitute an
event that with the lapse of time or action by a third party
could result in a default under any of the foregoing, or (c)
result in the creation of any lien, charge or encumbrance upon
any of the assets or properties of First Federal or Bancorp.

4.4. CONSENTS AND APPROVALS. Other than the receipt
of approvals required by the HOLA, the Thrift Regulations, and
the Bank Merger Act, in connection with the Reorganization, and
other than the approvals required to accomplish the Conversion
and the Offering from the OTS, the Securities and Exchange
Commission and state securities authorities, no filing or
registration with, no notice to and no permit, authorization,
consent or approval of any public or governmental body or
authority is necessary for the consummation by First Federal of
the transactions contemplated by this Agreement. First Federal
knows of no reason (including those relating to fair lending
laws or other laws relating to discrimination, including,
without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home
Mortgage Disclosure Act, and anti-trust or consumer disclosure
laws and regulations) why the regulatory approvals should not be
obtained in a reasonably timely manner.

4.5. INFORMATION SUPPLIED FOR INCLUSION IN THE COMPANY
PROXY STATEMENT. Any information regarding First Federal,
Bancorp or any subsidiary of First Federal supplied by First
Federal or Bancorp to the Company specifically for inclusion in
the Company Proxy Statement (as defined in Section 7.2 hereof)
will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
therein, in light of the circumstances in which they were made,
not misleading.

4.6. ACCURACY OF INFORMATION. The statements made by
First Federal and with respect to Bancorp in this Agreement and
in any other written documents executed and/or delivered by or
on behalf of Bancorp and First Federal pursuant to the terms of
this Agreement are true and correct in all material respects.
The statements contained in such other documents specifically
referred to in this Agreement will be deemed to constitute
representations and warranties of First Federal under this
Agreement to the same extent as if set forth herein in full.

4.7. REGULATORY APPROVALS AND NO ADVERSE CHANGE.
First Federal is aware of no reason that it cannot obtain any of
the approvals of regulatory authorities necessary to consummate
the Merger or the Conversion and First Federal has received no
advice or information from any regulatory authority indicating
that such approvals will be denied or are doubtful. There has
not been any adverse

22<PAGE>
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change in the business or financial condition, operations,
properties or capitalization of First Federal since the end of
its most recently completed fiscal year that is reasonably
likely to have a material adverse effect upon its ability to
consummate the transactions contemplated by this Agreement and
as of the date of this Agreement, no event, occurrence or
development of any nature is existing or, to the knowledge of
First Federal, threatened, which would reasonably be expected to
have such an effect on First Federal's ability to consummate
such transactions.

ARTICLE V.

COVENANTS OF FIRST FEDERAL

First Federal hereby agree that from the date of this
Agreement until the Effective Time:

5.1. AFFIRMATIVE COVENANTS. As soon as reasonably
practicable, First Federal shall furnish Mid-Iowa with copies of
all of First Federal's periodic reports on Forms 10-K, 10-Q and
8-K, all proxy statements and all call reports filed with the
OTS, or provided to the stockholders of First Federal,
subsequent to the date hereof.

5.2. NEGATIVE COVENANTS. Except as specifically
contemplated by this Agreement, First Federal shall not do, or
agree or commit to do, without the prior written consent of Mid-
Iowa any of the following:

(a) take action which would or is reasonably likely
to (i) adversely affect the ability of either First Federal or
the Company and Mid-Iowa to obtain any necessary approvals of
governmental authorities required for the transactions
contemplated hereby; (ii) adversely affect First Federal's
ability to perform its covenants and agreements under this
Agreement; or (iii) result in any of the conditions to the
Reorganization set forth in Articles IX and X not being
satisfied; or

(b) agree in writing or otherwise to do any of the
foregoing.

5.3. BREACHES. First Federal shall, in the event it
becomes aware of the impending or threatened occurrence of any
event or condition which would cause or constitute a material
breach (or would have caused or constituted a breach had such
event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to
herein, give prompt written notice thereof to the Company and
use its best efforts to prevent or promptly remedy the same.

5.4. FILING OF APPLICATIONS. First Federal shall use
its best efforts promptly to and, in any event, no later than
December 31, 1998, shall, prepare, submit, publish and file (a)
an application to the OTS pursuant to 12 C.F.R. Part 574; and
(b) any other applications, notices or statements required to
be filed in connection with the transactions contemplated
hereby.
23<PAGE>
<PAGE>
5.5. SUPPLEMENT TO FIRST FEDERAL DISCLOSURE SCHEDULE.
First Federal will promptly supplement or amend the First
Federal Disclosure Schedule with respect to any matter hereafter
arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described
in the First Federal Disclosure Schedule. No supplement or
amendment to the First Federal Disclosure Schedule will have any
effect for the purpose of determining satisfaction of the
condition set forth in Section 9.1 hereof as to the accuracy of
representations made as of the date of this Agreement.

5.6. EXPENSES. First Federal hereby agrees that if
this Agreement or the transactions contemplated hereby are
terminated pursuant to Sections 11.1 (c)(iii) or 11.1 (c)(iv) as
a result of a willful breach by First Federal, First Federal
shall promptly (and in any event within ten (10) business days
after such termination) pay all reasonable Expenses of Mid-Iowa
in an amount not to exceed $250,000. For purposes of this
Section 5.6, the "Expenses of Mid-Iowa" shall include all
reasonable out-of-pocket expenses of Mid-Iowa (including all
fees and expenses of counsel, accountants, financial advisors,
experts and consultants to Mid-Iowa and its Affiliates) incurred
by it or on its behalf in connection with the consummation of
the transactions contemplated by this Agreement.

ARTICLE VI.

COVENANTS OF THE COMPANY AND MID-IOWA

The Company and Mid-Iowa hereby agree that from the
date of this Agreement until the Effective Time:

6.1. AFFIRMATIVE COVENANTS. Unless the prior written
consent of First Federal shall have been obtained (which shall
not be unreasonably withheld) and except as otherwise
contemplated herein, the Company and Mid-Iowa will:

(a) operate their business in the ordinary course in
accordance with past business practices;

(b) use their best efforts to (i) preserve intact
their business organization and assets, maintain their rights
and franchises, retain the services of their officers and key
employees (except that they shall have the right to terminate
the employment of any officer or key employee in accordance with
established employment procedures) and (ii) maintain their
relationships with customers:

(c) maintain their corporate existence in good
standing and file all required Mid-Iowa Reports (as defined in
such Section 12.7(c) hereof);

(d) use their best efforts to maintain and keep their
properties in as good repair and condition as at present, except
for ordinary wear and tear;

24<PAGE>
<PAGE>
(e) use their best efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of
coverage to that now maintained by them and, in the event that
Mid-Iowa is unable to keep such insurance and bonds in full
force and effect, to provide prompt notice of such failure to
First Federal;

(f) perform all obligations required to be performed
by them under all material contracts, leases, and documents
relating to or materially affecting their assets, properties,
and business;

(g) use their best efforts to comply with and perform
in all material respects all obligations and duties imposed upon
them by all applicable laws and regulations; and

(h) as soon as reasonably practicable, furnish First
Federal copies of all of Mid-Iowa's reports and documents
provided to Company stockholders or filed with the OTS
subsequent to the date hereof.

6.2. NEGATIVE COVENANTS. Except as specifically
contemplated by this Agreement, from the date hereof until the
Effective Time, neither the Company nor Mid-Iowa shall, or shall
any Company Subsidiary be permitted to, without the prior
written consent of First Federal (which shall not be
unreasonably withheld), do any of the following:

(b) (i) Except as set forth on Schedule 6.2(b) of the
Company Disclosure Schedule, grant any bonus or increase in
compensation to its directors or grant any bonus or any increase
in compensation to its officers and employees, (ii) effect any
change in retirement benefits to any class of employees or
officers (unless any such change shall be required by applicable
law) that would increase its retirement benefit liabilities,
(iii) adopt, enter into, amend or modify any Mid-Iowa Benefit
Plan except as required by law, (iv) enter into or amend any
employment, severance or similar agreements or arrangements with
any directors or officers (exclusive of renewals in the ordinary
course of business), (v) make any additional awards under any
Mid-Iowa stock bonus plan or Mid-Iowa stock option plan, or (vi)
except as set forth at Schedule 6.2(b) make any additional
contributions to any Mid-Iowa Benefit Plans;

(c) declare or pay any dividend on, or make any other
distribution in respect of, its outstanding shares of capital
stock, except for regular, quarterly cash dividends, paid on
normal dividend payment dates, in an amount no greater than the
dividend rate as of the date hereof.

(d) (i) redeem, purchase or otherwise acquire any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital
stock, or any

25<PAGE>
<PAGE>
options, warrants, conversion or other rights to acquire any
shares of its capital stock or any such securities or
obligations; (ii) merge with or into any other corporation,
savings institution or bank, permit any other corporation,
savings institution or bank to merge into it or consolidate with
any other corporation or bank, or effect any reorganization or
recapitalization; (iii) purchase or otherwise acquire any
assets, or shares of any class of stock, of any corporation,
savings institution, bank or other business; (iv) liquidate,
sell, dispose of, or encumber any assets or acquire any assets,
other than in the ordinary course of its business consistent
with past practices; or (v) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock;

(e) except pursuant to the exercise of outstanding
stock options, issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or
sale of, any shares of its capital stock of any class (including
shares held in treasury), any debt instrument having a right to
vote or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting debt or
convertible securities;

(f) initiate, solicit or encourage, or take any other
action to facilitate, any inquiries or the making of any
proposal which constitutes a Superior Proposal (as defined in
Section 7.1hereof), take any action in furtherance of such
inquiries or to obtain a Superior Proposal, or negotiate with
any person in, or agree to or endorse any Superior Proposal, or
authorize or permit any of its officers, directors or employees
or any investment banker, financial advisor, accountant or other
representative retained by it or any Company Subsidiary to take
any such action, except with respect to negotiations regarding,
and the endorsement of a Superior Proposal, as legally required
by the fiduciary duties of the Company's Board of Directors
under applicable law and as advised by counsel to the Company's
Board of Directors, and the Company shall promptly notify First
Federal orally and in writing of all of the relevant details
relating to all inquiries and proposals which it may receive
relating to any of such matters;

(g) propose or adopt any amendments to its charter
or by-laws, except such amendments as may be required to
consummate the transactions contemplated by this Agreement;

(h) enter into an agreement in principle with respect
to any acquisition of a material amount of assets or securities
or any release or relinquishment of any material contract rights
not in the ordinary course of business;

(i) except in its fiduciary capacity, purchase any
shares of capital stock of First Federal;

(j) subject to the provisions of Section 7.1 hereof
(and provisions of this Agreement related thereto) regarding a
Superior Proposal, willfully take action which would or is
reasonably likely to (i) adversely affect the ability of either
of First Federal, the Company or Mid-Iowa to obtain any
necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect
Mid-Iowa's or the Company's ability to perform its covenants and
agreements under

26<PAGE>
<PAGE>
this Agreement; or (iii) result in any of the conditions to the
Reorganization set forth in Articles VIII and X not being
satisfied;

(k) change in any material respect the lending,
investment, deposit, asset and liability management and other
material policies concerning the business of Mid-Iowa or the
Company, unless required by law or regulation or, with respect
to lending or depository activities;

(l) file any applications or make any contract with
respect to branching by Mid-Iowa (whether de novo or by
purchase, sale or relocation);

(m) form any new subsidiary or cause or permit a
material change in the activities presently conducted by any
Company Subsidiary or make additional material investments in
subsidiaries or enter into or invest in any partnership, joint
venture or other business enterprise;

(n) purchase any derivative securities including CMO
or REMIC products;

(o) purchase any equity securities other than Federal
Home Loan Bank Stock;

(p) discharge or satisfy any lien or encumbrance or
pay any material obligation or liability (absolute or
contingent) other than at scheduled maturity or in the ordinary
course of business;

(q) sell or otherwise dispose of any loan, mortgage-
backed security or investment security except in the ordinary
course of business consistent with past practices and policies;

(r) modify or restructure the terms of any loan
except in the ordinary course of business consistent with
prudent
banking practices and policies;

(s) make any capital expenditures in excess of
$25,000 individually or $50,000 in the aggregate, other than
pursuant to binding commitments existing on the date hereof and
other than expenditures necessary to maintain existing assets in
good repair;

(t) change its method of accounting in effect prior
to the Effective Time, except as required by changes in laws or
regulations or generally accepted accounting principles
concurred in by its and the Company's independent certified
public accountants, or change any of its methods of reporting
income and deductions for federal income tax purposes from those
employed in the preparation of its federal income tax returns
for the Company's last full taxable year, except as required by
changes in laws or regulations;

(u) acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or
entity; or

(v) make, renew, increase, extend or purchase any
loan secured by commercial real estate or multifamily real
estate, any land acquisition or development loan, any commercial
business

27<PAGE>
<PAGE>
loan, or any residential loan in an amount in excess of
$300,000, except to the extent that Mid-Iowa is contractually
obligated to do so as of the date hereof;

(w) fail to keep in full force and effect its
insurance and bonds as now carried;

(x) fail to notify First Federal promptly of its
receipt of any letter, notice or other communication, whether
written or oral, from any regulatory authority advising that it
is contemplating issuing, requiring or requesting any agreement,
memoranda, understanding or similar undertaking, or order,
directive, or extraordinary supervisory letter;

(y) agree in writing or otherwise to do any of the
foregoing.

6.3. REPORT TO FIRST FEDERAL. The Company and Mid-
Iowa will use its best efforts to keep First Federal fully
informed concerning all developments of which it becomes aware
that may have a material effect upon the business, any
properties or condition (either financial or otherwise) of the
Company (other than developments affecting financial
institutions generally).

6.4. BREACHES. The Company and Mid-Iowa shall, in the
event they become aware of the impending or threatened
occurrence of any event or condition which would cause or
constitute a material breach (or would have caused or
constituted a breach had such event occurred or been known prior
to the date hereof) of any of their representations or
agreements contained or referred to herein, give prompt written
notice thereof to First Federal and use their best efforts to
prevent or promptly remedy the same.

6.5. SUPPLEMENT TO DISCLOSURE SCHEDULE. The Company
will promptly supplement or amend the Company Disclosure
Schedule with respect to any matter hereafter arising that, if
existing or occurring at the date of this Agreement, would have
been required to be set forth or described in the Company
Disclosure Schedule. No supplement or amendment to the Company
Disclosure Schedule will have any effect for the purpose of
determining satisfaction of the condition set forth in Section
8.2 hereof as to the accuracy of representations made as of the
date of this Agreement.

6.6. CONSENTS AND APPROVALS. The Company and Mid-Iowa
shall use their best efforts to assist First Federal in
obtaining the consents and approvals referenced in Section 8.5
hereof.

6.7. EXPENSES. Mid-Iowa hereby agrees that if this
Agreement or the transactions contemplated hereby are terminated
pursuant to Sections 11.1 (b)(iii) or 11.1 (b)(iv) as a result
of a willful breach by Mid-Iowa or the Company, Mid-Iowa shall
promptly (and in any event within ten (10) business days after
such termination) pay all reasonable Expenses of First Federal
in an amount not to exceed $250,000. For purposes of this
Section 6.7, the "Expenses of First Federal" shall include all
reasonable out-of-pocket expenses of First Federal (including
all fees and expenses of counsel, accountants, financial
advisors, experts and consultants to First Federal and its
Affiliates) incurred by it or on its behalf in connection with
the consummation of the transactions contemplated by this
Agreement.
28<PAGE>
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ARTICLE VII.

ADDITIONAL AGREEMENTS

7.1. COMPANY SHAREHOLDERS' MEETING. The Company
shall, as soon as is reasonably practicable, call and hold a
meeting of its stockholders (the "Company Shareholders'
Meeting") to submit for stockholder approval this Agreement.
Subject to receipt of a fairness opinion from Prairie Capital
Services, Inc. updated as of a date within five days of mailing
of the Company Proxy Statement, the Board of Directors of the
Company will recommend that holders of Company Common Stock vote
in favor of and approve this Agreement at the Company
Shareholders' Meeting; provided, however, that nothing contained
in this Section 7.1 shall prohibit the Board of Directors of the
Company from failing to recommend approval of the transactions
contemplated hereby, if necessary to comply with its fiduciary
duties as determined in consultation with legal counsel in the
context of a Superior Proposal (as hereinafter defined). For
purposes of this Agreement, "Superior Proposal" means a bona
fide proposal to acquire the entire equity interest in the
Company or Mid-Iowa or substantially all of the assets of the
Company or Mid-Iowa, which is expressly conditioned upon the
termination of this Agreement and is made by a third party on
terms which a majority of the Board of Directors of the Company
determines pursuant to the exercise of its fiduciary duty after
consultation with legal counsel, to be more favorable (from a
financial point of view) to the holders of Company Common
Stock than the Reorganization and for which financing is either
then committed or not a condition precedent to the consummation
thereof.

7.2. PROXY STATEMENT FOR COMPANY SHAREHOLDERS'
MEETING. For the purposes of holding the Company Shareholders'
Meeting, the Company shall prepare a proxy statement satisfying
all requirements under applicable securities laws (said proxy
statement, together with any and all amendments or supplements
thereto, being herein referred to as the "Company Proxy
Statement"). First Federal shall review and comment on the
Company Proxy Statement prior to its distribution to the
Company's stockholders.

7.3. COOPERATION; REGULATORY APPROVALS. The parties
shall cooperate, and shall cause each of their affiliates and
subsidiaries to cooperate, in the preparation and submission by
them, as promptly as reasonably practicable, of such
applications, petitions, and other documents and materials as
any of them may reasonably deem necessary or desirable to the
OTS, the FDIC, the Department of Justice, other regulatory
authorities, and any other persons for the purpose of obtaining
any approvals or consents necessary to consummate the
transactions contemplated by this Agreement. Each party will
have the right to review and comment on such applications,
petitions and other documents and materials and shall furnish to
the other copies thereof promptly after filing or submission
thereof. At the date hereof, none of the parties is aware of
any reason that the regulatory approvals required to be
obtained by it would not be obtained. The obligation to take
action as provided in this Section 7.3 shall not be construed as
including an obligation to accept any terms of or conditions to
a consent, authorization, order or approval of, or any exemption
by, any party that are unduly burdensome as reasonably
determined by the Boards of Directors of First Federal or
Mid-Iowa.

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In the event of a restraining order or injunction which prevents
the Closing by reason of the operation of Section 10.2 hereof,
each of the parties hereto shall use its respective best efforts
to cause such order or injunction to be lifted and the Closing
to be consummated as soon as reasonably practicable.

7.4. REPORTS. Prior to the Effective Time, the
Company and Mid-Iowa shall prepare and file as and when required
all Mid-Iowa Reports. Mid-Iowa shall prepare such Mid-Iowa
Reports so that (a) they comply in all material respects with
all of the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they are
filed and do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading,
and (b) with respect to any Mid-Iowa Reports containing Company
Financial Statements, the financial information (i) is prepared
in accordance with generally accepted accounting principles and
practices as utilized in the Company Financial Statements
applied on a consistent basis, (ii) presents fairly the
consolidated financial condition of Mid-Iowa at the dates, and
the consolidated results of operations and cash flows for the
periods, stated therein and (iii) in the case of interim
fiscal periods, reflects all adjustments, consisting only of
normal recurring items, subject to year-end audit adjustments.
All Mid-Iowa Reports shall be provided to First Federal promptly
following the filing of such reports with the respective
regulatory authority.

7.5. BROKERS OR FINDERS. Except as set forth on
Schedule 7.5, each of First Federal, the Company and Mid-Iowa
represents that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this
Agreement.

7.6. ADDITIONAL AGREEMENTS; REASONABLE EFFORTS.
Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the
transactions contemplated by this Agreement, subject to the
appropriate vote of the stockholders of the Company described in
Section 7.1 hereof, including cooperating fully with the other
party. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of
this Agreement or to vest First Federal with full title to all
properties, assets, rights, approvals, immunities and franchises
of the Company, Mid-Iowa or the Company Subsidiaries, the proper
officers and directors of each party to this Agreement shall
take all such necessary action.

7.7. RELEASE OF INFORMATION. The Company, Mid-Iowa
and First Federal agree that prior to making any public
announcement with respect to the transactions contemplated by
this Agreement, each party will consult with the other and will
use its best efforts either to agree upon the text of the
proposed joint announcement to be made by both parties or to
obtain the other's approval (which approval shall not be
unreasonably withheld) of the text of an announcement to be made
solely on behalf of such party. In the event that the parties
do not ultimately agree on the text of any proposed public
announcement, no such disclosure shall be made unless the party
seeking to make an

30<PAGE>
<PAGE>
announcement is advised by counsel that its failure to do so
would be reasonably likely to constitute a violation of law.

7.8. ADVISORY DIRECTORS. Messrs. David E. Sandeen,
John E. Carl and Carney D. Loucks, each a current director of
the Company, shall be entitled to serve on the Central Iowa
Advisory Board to the Board of Directors of First Federal (the
other members of which shall be the current members of the
Grinnell Advisory Board), for a period of one year following the
Effective Time, subject to reappointment at the sole discretion
of First Federal and such Advisory Board members shall meet
monthly during the first year following the Effective Time.
Thereafter, to the extent such Advisory Board is continued, such
Advisory Board members will meet as frequently as requested by
the Board of Directors of First Federal, but no less frequently
than quarterly. Such Advisory Board members shall receive an
annual fee of at least $2,000 plus $200 per meeting attended.

7.9. ACCESS TO PROPERTIES AND RECORDS;
CONFIDENTIALITY. (a) Each of the Company, Mid-Iowa and each
Company Subsidiary shall permit First Federal and its
representatives, including financial advisors, reasonable access
to its properties, and shall disclose and make available to them
all books, papers and records relating to the assets, stock
ownership, properties, operations, obligations and liabilities
of the Company, Mid-Iowa and each Company Subsidiary, including,
but not limited to, all books of account (including the general
ledger), tax records, minute books of meetings of boards of
directors (and any committees thereof) (except portions thereof
relating to this Agreement, the Reorganization and matters
relating thereto, including competing transactions) and
stockholders, organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files (other than attorney
work product or materials protected by any attorney-client
privilege), plans affecting employees, and any other business
activities or prospects in which the Company or Mid-Iowa may
have a reasonable interest. The Company and Mid-Iowa and each
Company Subsidiary shall make their respective officers,
employees and agents and authorized representatives (including
counsel and independent public accountants) available to confer
with First Federal and its representatives.

(b) All information furnished previously in
connection with the transactions contemplated by this Agreement
or pursuant hereto shall be treated as the sole property of the
party furnishing the information until consummation of the
transactions contemplated hereby and, if such transactions shall
not occur, the party receiving the information shall, upon
request, return to the party which furnished such information
all documents or other materials containing, reflecting or
referring to such information, shall use its best efforts to
keep confidential all such information, and shall not directly
or indirectly use such information for any competitive or other
commercial purposes. The obligation to keep such information
confidential shall continue for one year from the date the
proposed transactions are abandoned but shall not apply to (i)
any information which (x) the party receiving the information
can establish by convincing evidence was already in its
possession prior to the disclosure thereof by the party
furnishing the information; (y) was then generally known to
the public; or (z) became known to the public through no fault
of the party receiving the information; or (ii) disclosures
pursuant to a legal requirement or in accordance with an order
of a court of competent jurisdiction,

31<PAGE>
<PAGE>
provided that the party which is the subject of any such legal
requirement or order shall use its best efforts to give the
other party at least ten business days prior notice thereof.

7.10. CERTAIN POLICIES. At the request of First
Federal, the Company shall, prior to the Effective Time, (i)
establish and take such reserves and accruals as First Federal
shall reasonably request to conform, on a mutually satisfactory
basis, the Company's loan, real estate, accrual and reserve
policies to First Federal's policies and (ii) establish and take
such accruals, reserves and charges in order to implement such
policies in respect of severance costs, write-off or write-down
of various assets and other appropriate accounting adjustments,
and to recognize for financial accounting purposes such expenses
incurred in connection with the Reorganization, provided,
however, that Mid-Iowa shall not be obligated to take any such
action pursuant to this Section 7.10 unless and until (x) First
Federal specifies its request in a writing delivered to the
Company, and acknowledges that all conditions to the obligations
of First Federal to consummate the Reorganization set forth in
Articles VIIIand X have been waived (if available) or satisfied
and (y) the Company and Mid-Iowa acknowledge that the conditions
to its obligation to consummate the Reorganization set forth in
Articles IX and X have been waived (if available) or satisfied.
The Company and Mid-Iowa shall not be required to take any such
action that is not consistent with generally accepted accounting
principles or any requirement applicable to either of them by
any bank regulatory agency. The representations, warranties and
covenants of the Company and Mid-Iowa contained in this
Agreement shall not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any action
undertaken on account of this Section 7.10 and shall not
constitute grounds for termination of this Agreement by First
Federal.

7.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT
ARRANGEMENTS.

(a) To the extent practicable, First Federal will
give consideration to the retention after the Closing Date of
employees of Mid-Iowa in their current or comparable positions
within First Federal as the surviving institution, subject to
the provisions in this Section 7.11 and provided that this
Agreement shall not, except as otherwise provided herein,
provide any contractual right to such employees of such
employment. Employees of Mid-Iowa who continue employment with
First Federal on or after the Effective Time (all such persons
are referred to herein as "Continuing Employees") shall be
eligible to participate in such employee benefit plans as may be
in effect generally for employees of First Federal from time to
time (the "First Federal Plans"), if such Continuing Employee
shall be eligible or selected for participation therein. Except
as specifically set forth in this Section 7.11 and as otherwise
prohibited by law, Continuing Employees shall be entitled to
participate on the same basis as similarly situated employees of
First Federal, except that Continuing Employees shall be
entitled to full credit for each year of prior service (in which
1,000 hours of service are performed) with Mid-Iowa for purposes
of determining eligibility for participation and vesting, but
not for benefit accruals, in the First Federal Plans, subject to
applicable break in service rules. Notwithstanding the
foregoing, First Federal may determine to continue any of the
Mid-Iowa Benefit Plans for Continuing Employees in lieu of
offering participation in one or more First Federal
Plans providing similar benefits (e.g., medical and
hospitalization benefits or 401(k) or defined contribution plan
benefits) to terminate any of the Mid-Iowa Benefit Plans or to
merge any such benefit plans with similar First Federal Plans,
provided, however, Mid-Iowa shall have the right on or before
the Effective Time (i) to terminate both its Defined

32<PAGE>
<PAGE>
Contribution Plan and Trust and its 401(k) Profit Sharing Plan
and Trust (together, the "Plans and Trusts") as of any date
before the Effective Time, (ii) to apply to the Internal Revenue
Service for a determination letter on the tax-qualified status
of the Plans and Trusts on termination and on any amendments
made to them in connection with the termination (provided that
any amendments so made, other than amendments required by law,
shall first be approved by First Federal), and (iii) to
distribute the assets of the Plans and Trusts only after
receipt of the aforementioned determination letter.
Notwithstanding anything in this Section 7.11(a) to the
contrary, participation by Continuing Employees in employee
benefit plans of First Federal with respect to which eligibility
and participation is at the discretion of the employer, such as
non-qualified deferred compensation plans, stock option plans,
stock bonus plans, restricted stock plans, and other such
similar plans, (but not including employee benefit plans
generally available to all full-time employees of First Federal)
shall be discretionary with First Federal. The Company,
Mid-Iowa and any Company Subsidiary agrees to cooperate with
First Federal in implementing any decision made by First Federal
with respect to employee benefit plans and to provide First
Federal on or before the Effective Time a schedule of service
credit for prospective Continuing Employees.

(b) With respect to Continuing Employees and
dependents covered under the Iowa Bankers' Group Health Plan
maintained by Mid-Iowa, which plan is concurrently maintained by
First Federal, there shall be no waiting period or preexisting
condition exclusions applicable to such persons, amounts
previously paid by such persons towards satisfaction of the
required deductible will count towards satisfaction of the
deductible under the plan maintained by First Federal and the
benefits previously received by such persons will count toward
the maximum benefit coverages provided by First Federal.

(c) Following the Effective Time, First Federal shall
honor in accordance with their terms the employment, severance
and other compensation contracts set forth on Schedule 7.11(c)
between the Company, any of the Company Subsidiaries, and any
current or former director, officer or employee thereof, and all
provisions for vested benefits or other vested amounts earned or
accrued through the Effective Time under the Company employee
benefit plans. Notwithstanding the foregoing, First Federal or
the Company shall be obligated at the Effective Time to make
payments with respect to the separation from employment in
connection with a change of control of the Company under
employment and severance contracts between the Company and its
subsidiaries and Kevin Ulmer and Gary Hill in the respective
amounts of $390,350 and $270,758, subject to the limitations set
forth in Section 3.8(d) hereof.

7.12. D&O INDEMNIFICATION AND INSURANCE. For a
period of four (4) years following the Effective Time, First
Federal shall indemnify the employees, agents, directors or
officers of the Company and Mid-Iowa to the extent they are
indemnified under the Company's Certificate of Incorporation and
Bylaws in the form in effect at the date of this Agreement or
arising by operation of law. First Federal shall use its best
efforts to cause the directors and officers listed in Schedule
7.12 of the Company Disclosure Schedule to be covered under
individual directors' and officers' liability insurance
policies, which coverage is available in the form of tail
coverage under the Company's existing directors' and officers'
liability policy for the duration of any applicable statute of
limitations.

33<PAGE>
<PAGE>
7.13 CONVERSION AND OFFERING. Commencing promptly
after the date of this Agreement, Bancorp and First Federal will
take all reasonable steps necessary to effect the Conversion and
Offering and Bancorp and First Federal sh all use their best
efforts to satisfy the conditions to closing set forth in
Section 8.11. Without limiting the generality of the foregoing,
Bancorp shall cause the following to be done:

(a) Bancorp shall duly call, give notice of, convene
and hold a special meeting of its Board of Directors as soon as
practicable for the purpose of approving the Conversion and
Offering.

(b) Bancorp and First Federal will use all reasonable
efforts to prepare and file all required regulatory applications
required in connection with the Conversion and Offering,
including, without limitation, filing applications with the OTS.

(c) Bancorp shall prepare as promptly as practicable,
and the Company shall co-operate in the preparation of, a
prospectus (the "Prospectus") meeting all requirements of
applicable federal and state securities and banking laws and
regulations. Bancorp shall incorporate such Prospectus into a
Registration Statement on Form S-1, or other applicable form,
("Form S-1") satisfying all applicable requirements of the
Securities Act of 1933, and the rules and regulations
thereunder. Bancorp shall file the Form S-1 (or other applicable
form) with the SEC, and shall use its reasonable best efforts to
have the Form S-1 declared effective under the Securities Act of
1933 as promptly as practicable after such filing.

(d) The Company shall provide Bancorp with any
information concerning it that Bancorp may reasonably request in
connection with the Prospectus, and the Company shall promptly
notify Bancorp if at any time it becomes aware that the
Prospectus or the Form S-1 contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were
made, not misleading. In such event, the Company and Bancorp
shall cooperate in the preparation of a supplement or amendment
to such Prospectus, which corrects such misstatement or
omission, and shall cause an amended Form S-1 to be filed with
the SEC (if applicable). The Company shall provide to Bancorp a
"comfort" letter from the independent certified public
accountants for the Company, dated as of the date of the
Prospectus and updated as of the date of consummation of the
Offering, with respect to certain financial information
regarding the Company, each in form and substance which is
customary in transactions such as the Offering, and shall cause
its counsel to deliver to the placement agent for the Offering
such opinions as Bancorp may reasonably request.

(e) Bancorp shall give the Company and its counsel
the opportunity to review the Prospectus prior to its being
filed with the OTS and the SEC, and shall give the Company and
its counsel the opportunity to review all amendments and
supplements to the Prospectus and all responses to requests for
additional information and replies to comments prior to their
being filed with, or sent to, the OTS, and the SEC. Each of
Bancorp and the Company agrees to use all reasonable efforts,
after consultation with the other party hereto, to respond
promptly to all such comments of and requests by the OTS, and
the SEC and to cause the Prospectus and all required amendments
and supplements

34<PAGE>
<PAGE>
thereto to be mailed to the qualified depositors and other
qualified subsidiaries of First Federal at the earliest
practicable time.

ARTICLE VIII.

CONDITIONS TO THE OBLIGATIONS OF FIRST FEDERAL

The obligations of First Federal under this Agreement
to cause the transactions contemplated herein to be consummated
shall be subject to the satisfaction or written waiver by First
Federal of the following conditions:

8.1. NO MATERIAL ADVERSE CHANGE. Except as disclosed
in Schedule 3.5 to the Company Disclosure Schedule and except
for general changes in generally accepted accounting principles,
changes in economic, financial or market conditions, changes in
market interest rates, payments due under any employment
agreements or benefit plans and the transactions contemplated
hereby, costs and expenses relating to this Agreement (including
those resulting from actions or inactions pursuant to the
covenants of the Company and Mid-Iowa under this Agreement) and
the transactions contemplated hereby, there shall not have been
any material adverse change in the financial condition, results
of operations or business of the Company, Mid-Iowa, and the
Company's Subsidiaries, taken as a whole, from September 30,
1997 to the Closing Date.

8.2. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties by the Company and Mid-Iowa
contained in this Agreement shall be true and correct in all
material respects (or where any statement in a representation or
warranty expressly contains a standard of materiality, such
statement shall be true and correct in all respects taking into
consideration the standard of materiality contained therein) at,
or as of, the date of this Agreement and (except to the extent
such representation speaks as of an earlier date) and as of any
date subsequent, until and including the Closing Date (except as
otherwise contemplated or permitted by this Agreement) as though
such representations and warranties were made on and as of said
date. Any information provided by the Company and Mid-Iowa
pursuant to Section 6.5 hereof as a supplement to the Company
Disclosure Schedule shall be true and correct in all material
respects as of the date such information is supplied to First
Federal.

8.3. PERFORMANCE AND COMPLIANCE. The Company and Mid-
Iowa shall have performed or complied in all material respects
with all covenants and agreements required by this Agreement to
be performed and satisfied by it on or prior to the Closing
Date.

8.4. NO PROCEEDING OR LITIGATION. On the Closing
Date, no suit, action or proceeding shall be pending or overtly
threatened, and no liability or claim shall have been asserted
against the Company, Mid-Iowa or any Company Subsidiary
involving any of the assets, properties, business or operations
of the Company, Mid-Iowa or any Company Subsidiary that would
reasonably be expected to have a Material Adverse Effect.

35<PAGE>
<PAGE>
8.5. CONSENTS UNDER AGREEMENTS. First Federal shall
have received the consent or approval of each person or entity
whose consent or approval shall be required in order to permit
consummation of the Reorganization and the Conversion under any
loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument to which the Company, Mid-Iowa or
any Company Subsidiary is a party or to which its respective
property is subject, except those for which failure to obtain
such consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on First Federal,
whether prior to (if applicable) or following the consummation
of the transactions contemplated hereby.

8.6. NO AMENDMENTS TO RESOLUTIONS. Neither the Board
of Directors of the Company or Mid-Iowa nor any committee
thereof shall have amended, modified, rescinded or repealed the
resolutions adopted by such Board of Directors with respect to
this Agreement or shall have adopted any other resolutions in
connection with this Agreement and the transactions contemplated
hereby which are inconsistent with such resolutions, except
resolutions adopted consistent with the express rights of
Mid-Iowa under this Agreement.

8.7. CERTIFICATE OF MID-IOWA OFFICERS. The Company
shall have furnished First Federal a certificate, signed by its
Chief Executive Officer and its Chief Financial Officer, dated
the Closing Date, to the effect, based on his knowledge, that
the conditions described in Sections 8.1 through 8.6, and
Section 8.8, of this Agreement have been fully satisfied.

8.8. CORPORATE PROCEEDINGS. All action required to
be taken by, or on the part of the Company and Mid-Iowa to
authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
by this Agreement shall have been duly and validly taken by the
Company and Mid-Iowa.

8.9. LEGAL OPINION. First Federal shall have received
an opinion, dated the Closing Date, from legal counsel to
Mid-Iowa, in the form specified on Exhibit E.

8.10. CLOSING BOOK VALUE. Immediately prior to the
Closing, the total stockholders' equity account determined in
accordance with generally accepted accounting principles on a
basis consistent with the Company Financial Statements, of the
Company shall not be less than $13.5 million, as reasonably
determined by First Federal's independent public accountant, in
consultation with the Company's independent public accountant;
provided, however, that for purposes of calculating total
stockholders' equity, the Company's expense associated with the
severance payments due under the employment agreements between
Mid-Iowa and Kevin D. Ulmer and Gary Hill dated as of October
19, 1992, will not be counted.

8.11.CONVERSION. Bancorp and First Federal shall
have consummated the Conversion and the Offering.

36<PAGE>
<PAGE>
8.12 NON-COMPETITION AGREEMENT. First Federal shall
have received a duly executed non-competition agreement, in
substantially the form heretofore agreed to between First
Federal and the Company, from Kevin D. Ulmer.

ARTICLE IX.

CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND MID-IOWA

The obligations of the Company and Mid-Iowa under this
Agreement to cause the transactions contemplated herein to be
consummated shall be subject to the satisfaction or written
wavier by the Company or Mid-Iowa of the following conditions:

9.1. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of First Federal contained in
this Agreement shall be true and correct in all material
respects (or where any statement in a representation or warranty
expressly contains a standard of materiality, such statement
shall be true and correct in all respects taking into
consideration the standard of materiality contained therein) at,
or as of, the date of this Agreement and (except to the extent
such representation speaks as of an earlier date) and as of any
date subsequent, until and including the Closing Date (except as
otherwise contemplated or permitted by this Agreement) as though
such representations were made on and as of said date. Any
information provided by First Federal pursuant to Section 5.5
hereof as a supplement to the First Federal Disclosure Schedule
shall be true and correct in all material respects as of the
date such information is supplied to the Company or Mid-Iowa.

9.2. PERFORMANCE AND COMPLIANCE. First Federal shall
have performed or complied in all material respects with all
covenants and agreements required by this Agreement to be
performed and satisfied by it on or prior to the Closing Date.

9.3 CORPORATE PROCEEDINGS. All action required to
be taken by, or on the part of Bancorp and First Federal to
authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
by this Agreement shall have been duly and validly taken by
Bancorp and First Federal.

9.4. CERTIFICATE OF FIRST FEDERAL OFFICERS. First
Federal shall have furnished to Mid-Iowa a certificate, signed
by its Chief Executive Officer and its Chief Financial Officer
and dated the Closing Date, to the effect, based on their best
knowledge, that the conditions described in Sections 9.1, 9.2
and 9.3 of this Agreement have been satisfied.

9.5. LEGAL OPINION. Mid-Iowa shall have received an
opinion, dated as of the Closing Date, from Luse Lehman Gorman
Pomerenk & Schick, P.C., counsel for First Federal, in the form
specified on Exhibit F.

9.6. OPINION OF FINANCIAL ADVISOR. The Company shall
have received on or before the date on which the Company Proxy
Statement or other similar document is to be mailed to holders

37<PAGE>
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of Company Common Stock the written opinion of its investment or
financial advisor to the effect that the merger consideration
payable to the Company's stockholders pursuant to the
Reorganization is fair from a financial point of view to the
stockholders of the Company.

ARTICLE X.

CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES

In addition to the provisions of Articles VIII and
IXhereof, the obligations of First Federal, the Company and
Mid-Iowa to cause the transactions contemplated herein to be
consummated, shall be subject to the satisfaction or written
waiver by both First Federal and the Company of the following
conditions:

10.1. GOVERNMENTAL APPROVALS. The parties hereto
shall have received all necessary approvals of the transactions
contemplated by this Agreement from governmental agencies and
authorities, including, without limitation, those of the OTS and
the FDIC, and each of such approvals shall remain in full force
and effect and all statutory waiting periods in connection
therewith shall have expired at the Closing Date and such
approvals and the transactions contemplated thereby shall not
have been contested by any federal or state governmental
authority nor by any other third party by formal proceeding.
Provided, however, that no approval or consent referred to in
this Section 10.1 shall be deemed to have been received by First
Federal if it shall include any non-standard term, condition or
requirement that, individually or in the aggregate (i) would
have a Material Adverse Effect on the business, results of
operations, assets, or financial condition of First Federal on a
consolidated basis, or (ii) would reduce the economic or
business benefits of the transactions contemplated by this
Agreement to First Federal in so significant a manner that First
Federal, in its reasonable judgment, would not have entered into
this Agreement.

10.2. NO INJUNCTIONS OR RESTRAINTS. No suit,
action or proceeding shall be pending or overtly threatened
before any court or other governmental agency by the federal or
any state government in which it is sought to restrain or
prohibit the consummation of the Reorganization and no temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of
the Reorganization shall be in effect.

10.3. STOCKHOLDER APPROVAL. This Agreement shall
have been duly approved by the requisite affirmative vote of the
stockholders of the Company as contemplated by Section 7.1
hereof.

10.4 CORPORATE PROCEEDINGS. The obligations of
the parties to this Agreement required to be performed at or
prior to the Closing Date shall have been duly performed and
complied with in all material respects. All action required to
be taken by, or on the part of, the parties to this Agreement to
authorize the execution, delivery and performance of this
Agreement, and the

38<PAGE>
<PAGE>
consummation of the transactions contemplated hereby, shall have
been duly and validly taken by the parties hereto.

ARTICLE XI.

TERMINATION

11.1. REASONS FOR TERMINATION. This Agreement may
be terminated and the Reorganization abandoned at any time
before the Closing Date, whether before or after the approval or
adoption of this Agreement by the stockholders of the Company:

(a) By mutual written consent of the Board of
Directors of First Federal and the Board of Directors of the
Company;

(b) By written notice from First Federal to the
Company if:

(i) any condition set forth in Article VIII of
this Agreement shall have become impossible to substantially
satisfy at any time or has not been substantially satisfied or
waived in writing; or

(ii) any condition set forth in Article X of
this Agreement shall have become impossible to substantially
satisfy at any time or has not been substantially satisfied or
waived in writing, provided, however, First Federal shall not
have the right to terminate this Agreement pursuant to this
Section 11.1(b)(ii) if any condition imposed by Section 10.1
hereof was not met due to the failure of First Federal to
perform or observe the covenants and agreements set forth in
this Agreement; or

(iii) any warranty or representation as set
forth in Article III hereof made by the Company or Mid-Iowa
shall be discovered to be or to have become untrue or incorrect
in any material respect, or where any statement in a
representation or warranty expressly includes a standard of
materiality, such statement shall be discovered to be or to have
become untrue or incorrect in any respect taking into
consideration the standard of materiality contained therein, in
either case where any such breach has not been cured within
thirty (30) days following receipt by the Company or Mid-Iowa of
notice of such discovery; or

(iv) The Company or Mid-Iowa shall have breached
one or more provisions of this Agreement in any material respect
considering all such breaches in the aggregate, where such
breach has not been cured within thirty (30) days following
receipt by the Company or Mid-Iowa of notice of such breach; or

(v) The Board of Directors of Bancorp and First
Federal shall have determined in their sole discretion,
exercised in good faith, that the Conversion has become
inadvisable

39<PAGE>
<PAGE>
or impractical by reason of (A) the issuance of any order,
decree or letter of a regulatory authority containing conditions
or requirements reasonably deemed objectionable to Bancorp of
First Federal or (B) unfavorable market conditions. In the
event of termination of this Agreement pursuant to this Section
11.1(b)(v), then the Company shall be reimbursed pursuant to and
in accordance with the provisions of Section 12.2(c) hereof.

(i) any condition set forth in Article IX of
this Agreement shall have become impossible to substantially
satisfy at any time or has not been substantially satisfied or
waived in writing; or

(ii) any condition set forth in Article X of
this Agreement shall have become impossible to substantially
satisfy at any time or has not been substantially satisfied or
waived in writing; provided, however, the Company shall not have
the right to terminate this Agreement pursuant to this Section
11.1(c)(ii) if any condition imposed by Section 10.1 hereof was
not met due to the failure of the Company or Mid-Iowa to perform
or observe the covenants and agreements set forth in this
Agreement; or

(iii) any warranty or representation as set
forth in Article IV hereof made by First Federal shall be
discovered to be or to have become untrue or incorrect in any
material respect, or where any statement in a representation or
warranty expressly includes a standard of materiality, such
statement shall be discovered to be or to have become untrue or
incorrect in any respect taking into consideration the standard
of materiality contained therein, in either case where any such
breach has not been cured within thirty (30) days following
receipt by First Federal of notice of such discovery; or

(iv) First Federal shall have breached one or
more provisions of this Agreement in any material respect
considering all such breaches in the aggregate, where such
breach has not been cured within thirty (30) days following
receipt by First Federal of notice of such breach.

(d) By the Board of Directors of First Federal if the
Board of Directors of the Company shall not recommend, or shall
withdraw or modify in a manner adverse to First Federal, its
recommendation to the holders of Company Common Stock to approve
this Agreement.

(e) By the Board of Directors of First Federal or the
Company at any time after the Company Shareholders' Meeting as
contemplated in Section 7.1 if the stockholders of the Company
have not approved this Agreement by the requisite affirmative
vote.

(f) By the Board of Directors of First Federal or the
Company if the Reorganization has not been consummated on or
before August 31, 1999.

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<PAGE>
11.2. EFFECT OF TERMINATION. In the event of
termination of this Agreement by either the Company or First
Federal as provided in Section 11.1 hereof, this Agreement shall
forthwith become void, and there shall be no liability or
obligation on the part of First Federal or the Company or their
respective officers or directors except with respect to Sections
6.7, 7.9 and 12.2 hereof.

ARTICLE XII.

MISCELLANEOUS

12.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS. None of the representations, warranties,
covenants and agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective
Time, except for the covenants and agreements which by their
terms are contemplated to be performed after the Effective Time.

12.2. EXPENSES AND TERMINATION FEE. (a) Except as
otherwise provided herein, all expenses incurred by First
Federal and the Company in connection with or related to the
authorization, preparation and execution of this Agreement, the
solicitation of stockholder approvals and all other matters
related to the closing of the transactions contemplated thereby,
including, without limitation of the generality of the
foregoing, all fees and expenses of agents, financial advisors,
representatives, counsel and accountants employed by either such
party or its Affiliates, shall be borne solely and entirely by
the party that has incurred the same.

(b) Mid-Iowa also hereby agrees to pay First Federal, and
First Federal shall be entitled to payment of, a fee (the "Fee")
of $1.4 million, upon the occurrence of any of the following
events on or before the earlier of the date this Agreement is
terminated or August 31, 1999:

(i) if the Board of Directors of the Company
recommends a Superior Proposal and thereafter (A) the Company
Shareholders' Meeting shall not have been held or shall have
been postponed, delayed or enjoined prior to termination of this
Agreement or (B) the Company's shareholders do not approve this
Agreement;

(ii) if the Board of Directors of the Company
withdraws or modifies its recommendation of approval of this
Agreement, and thereafter (A) the Company Shareholders' Meeting
shall not have been held or shall have been postponed, delayed
or enjoined prior to termination of this Agreement or (B) the
Company's shareholders do not approve this Agreement;

(iii) if the Company's shareholders do not approve
this Agreement after a Superior Proposal is made and within
twelve (12) months thereafter the Company enters into a
definitive agreement to be merged into or acquired by another
entity (provided, however, that Mid-Iowa shall pay all Expenses
of First Federal, as defined in Section 6.7. hereof, in an
amount not to exceed $250,000, within five business days
following rejection of this Agreement by Company shareholders);

41<PAGE>
<PAGE>
(iv) if the Company or Mid-Iowa enters into an
agreement to be acquired by any other party; or

(v) if the Company both (1) fails to receive the
opinion of its financial advisor that the Merger is fair to the
Company's shareholders from a financial point of view, and such
failure occurs after a Superior Proposal is made, and (2) the
Reorganization is not consummated.

With the exception of the payment under subparagraph
(iii) above, which shall be paid within five business days
following the Company's execution of a definitive agreement of
merger or acquisition (except that the Expenses of First Federal
shall be paid as provided in (iii) above), such payment shall be
made to First Federal in immediately available funds within five
business days after the occurrence of an event set forth above.

(c) First Federal agrees to reimburse the Company for
all of the reasonable Expenses of Mid-Iowa, as defined in
Section 5.6 hereof, in an amount not to exceed $250,000,
incurred by the Company and Mid-Iowa in connection with the
transactions contemplated hereby in the event First Federal
terminates this Agreement pursuant to Section 11.1(b)(v).

12.3. Waivers; Amendments. At any time prior to
the Closing Date, either First Federal, by action taken by its
Board of Directors, or any committee or officers thereunto
authorized, or the Company or Mid-Iowa, by action taken by its
Board of Directors, or any committee or officers thereunto
authorized, may waive the performance of any of the obligations
of the other or waive compliance by the other with any of the
covenants or conditions contained in this Agreement or agree to
the amendment or modification of this Agreement by an agreement
in writing executed in the same manner as this Agreement;
provided, however, that after the favorable vote by the
stockholders of the Company pursuant to Section 7.1 of this
Agreement any such action shall be taken only if, in the opinion
of the Company's Board of Directors, such waiver, amendment or
modification will not have a material adverse effect on the
benefits intended under this Agreement for the shareholders of
the Company and will not require resolicitation of any proxies
from such shareholders.

12.4. ASSIGNMENT; PARTIES IN INTEREST. This
Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their respective successors and
assigns, but shall not be assigned by the parties hereto, by
operation of law or otherwise, without the prior written consent
of the other parties. Except with respect to the payment of
benefits pursuant to Section 7.12 and the obligation of First
Federal contained in Section 7.8, nothing in this Agreement,
express or implied, is intended to confer upon any third party
any rights or remedies of any nature whatsoever under or by
reason of this Agreement.

12.5. ENTIRE AGREEMENT. This Agreement supersedes
any other agreement, whether written or oral, that may have been
made or entered into by the Company, Mid-Iowa or First Federal
or by any officer or officers of such parties relating to the
acquisition of the business or the capital stock of the Company
or Mid-Iowa by First Federal, except for the Confidentiality
Agreement dated July 3, 1998, which shall remain in full force
and affect. This Agreement and such Confidentiality Agreement

42<PAGE>
<PAGE>
constitute the entire agreement by the respective parties, and
there are no agreements or commitments except as set forth
herein and therein.

12.6. CAPTIONS AND COUNTERPARTS. The captions in
this Agreement are for convenience only and shall not be
considered a part of or affect the construction or
interpretation of any provision of this Agreement. This
Agreement may be executed in several counterparts, each of which
shall constitute one and the same instrument.

12.7. CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:

(a) "Affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, another person;

(b) "Material Adverse Effect" shall mean a material
adverse effect on the operations, assets, or financial condition
of the parties to this Agreement other than the effects of any
such change attributable to or resulting from any change in law,
regulation or generally accepted accounting principles or
regulatory accounting principles and other than the effects of
any change attributable to or resulting from changes in economic
conditions applicable to depository institutions generally or in
general levels of interest rates.

(c) "Mid-Iowa Reports" shall mean all reports,
registrations and statements, together with any amendments
required to be made with respect thereto, that were and are
required by applicable law to be filed with the OTS, the FDIC,
and any other applicable state securities or bank regulatory
authorities by either Mid-Iowa or the Company; and

(d) "to the knowledge of First Federal" or "to the
best knowledge of First Federal" shall mean the actual knowledge
of any member of the Board of Directors or of any senior officer
of First Federal.

(e) "to the knowledge of the Company or Mid-Iowa" or
"to the best knowledge of the Company or Mid-Iowa" shall mean
the actual knowledge of any member of the Board of Directors or
of any senior officer of the Company or Mid-Iowa.

12.8. ENFORCEMENT OF THIS AGREEMENT. The parties
hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto will
be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
43<PAGE>
<PAGE>
12.9. GOVERNING LAW. This Agreement shall be
construed and interpreted in accordance with the laws of the
State of Iowa, except to the effect that Federal Law applies,
without regard to the conflicts of laws rules.

12.10. NOTICES. All notices given hereunder shall be
in writing and shall be hand delivered, sent by facsimile
transmission or sent by a nationally recognized overnight
delivery service, addressed as follows:

(a) If to First Federal to:

First Federal Savings Bank of Siouxland
329 Pierce Street
Sioux City, Iowa 51102
Attention: Barry E. Backhaus, President
and Chief Executive Officer

With A Copy To:

Luse Lehman Gorman Pomerenk & Schick
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
Attention: Robert B. Pomerenk, Esq.

(b) If to Mid-Iowa to:

Mid-Iowa Financial Corp.
123 West Second Street North
Newton, Iowa 50208
Attention: Kevin D. Ulmer, President and
Chief Executive Officer

with a copy to:

Housley Kantarian & Bronstein, P.C.
Suite 700
1220 19th Street, N.W.
Washington, D.C. 20036
Attention: Gary R. Bronstein, Esq.

Any notice provided hereunder shall be effective upon
receipt thereof.

44<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above
written.

ATTEST: FIRST FEDERAL BANKSHARES, M.H.C.

By:/s/ Suzette Hoevet By:/s/Barry E. Backhaus
-------------------- ---------------------------
Suzette Hoevet Barry E. Backhaus, President

ATTEST: FIRST FEDERAL SAVINGS BANK OF
SIOUXLAND

By:/s/ Suzette Hoevet By:/s/Barry E. Backhaus
---------------------- ---------------------------
Suzette Hoevet Barry E. Backhaus, President

ATTEST: MID-IOWA SAVINGS BANK, FSB

By:/s/ Gary R. Hill By: /s/Kevin D. Ulmer
---------------------- ---------------------------
Gary R. Hill Kevin D. Ulmer, President

ATTEST: MID-IOWA FINANCIAL CORP.

By:/s/ Gary R. Hill By: /s/Kevin D. Ulmer
---------------------- ---------------------------
Gary R. Hill Kevin D. Ulmer, President

45<PAGE>
<PAGE>
APPENDIX B<PAGE>
<PAGE>

PRAIRIE CAPITAL SERVICES INC.

Board of Directors February 10, 1999
Mid-Iowa Financial Corp.
123 W. Second Street, North
Newton, Iowa 50208

Members of the Board:

We understand that Mid-Iowa Financial Corp. (the "Company")
and its wholly-owned subsidiary, Mid-Iowa Savings Bank ("Mid-
Iowa"), intend to enter into an Agreement and Plan of
Reorganization (the "Agreement") with First Federal Savings Bank
of Siouxland ("First Federal") pursuant to which a wholly-owned
subsidiary of First Federal will be merged with and into the
Company and Mid-Iowa will be merged with and into First Federal
(the "Merger"). Under the terms of the Agreement, each issued and
outstanding share of Company common stock shall be converted into
the right to receive $15.00 in cash (the "Purchase Price") and
outstanding stock options of the Company shall represent the right
to receive the Purchase Price less the exercise of such option.
Among other conditions, the Company must have stockholder's equity
of at least $13.5 million at closing excluding the effect of
severance payments under employment agreements. Further, the
closing of the Merger is conditioned upon First Federal and its
parent company, First Federal Bankshares, M.H.C. ("Bankshares"),
effecting a simultaneous conversion of Bankshares from mutual
holding company form to stock holding company form and a public
offering of the resulting shares of common stock of Bankshares not
publicly-held prior to the offering. You have requested that we
render to you our opinion, as investment bankers, as to the
fairness, from a financial point of view, of the consideration to
be received in the Merger by the Company's stockholders.

Prairie Capital Services, Inc. ("Prairie Capital") is an
investment banking firm that specializes in providing investment
banking and financial advisory services to banks, thrifts and
related holding companies. The principals of Prairie Capital have
performed many independent valuations of bank and thrift securities
and rendered related fairness opinions. The principals of Prairie
Capital have significant experience in management and operations,
strategic planning, investment banking and investment research
relating to banks and thrifts.

In arriving at our opinion, we have reviewed and analyzed,
among other data: (1) the audited financial statements and annual
reports of the Company for the fiscal years ended September 30,
1993-1998; (2) the annual report, audited financial statements and
Form 10-K of First Federal for the fiscal years ended June 30,
1997-1998 and its unaudited financial statements for the three
months ended September 30, 1997-1998; (3) a copy of the Agreement
and Plan of Reorganization; (4) the announced terms of Iowa thrift
and bank merger and acquisition transactions in 1997 and 1998; (5)
other information Prairie Capital deemed relevant; and (6) other
internal financial and operating information provided to Prairie
Capital by the Company, First Federal and First Federal's financial
advisor. In addition, we have discussed the foregoing, as well as
other matters we deemed relevant to our inquiry, with members of
the Company's senior management.

Prairie Capital gathered information on other Iowa thrift and
bank merger and acquisition transactions and compared those
relevant transactions with the Merger. Prairie Capital prepared
an analysis that compared projected values for Company stockholders
from the Company operating independently for five years and then
effecting a sale with the value to be received by Company
stockholders in the Merger. We also gave consideration to the
amount of capital First Federal might raise in its second step
conversion and public offering and whether that capital would be
sufficient to assure regulatory approval. Finally, Prairie Capital
took into consideration the fact that Company management has had
contacts and discussions with financial institutions other than
First Federal regarding any interest in negotiating a transaction
with the Company.
B-1<PAGE>
<PAGE>
Prairie Capital also took into account its assessment of
general economic, market and financial conditions and its
experience in other transactions, as well as its experience in
securities valuation and its knowledge of the banking industry
generally. Prairie Capital's opinion is necessarily based upon
conditions as they exist and could be evaluated on the date hereof
and information made available to Prairie Capital through the date
thereof.

We assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by us for
purposes of our opinion. Prairie Capital did not make any
independent valuation or appraisal of the assets or liabilities of
the Company and First Federal, nor was Prairie Capital furnished
with any such appraisals. Prairie Capital assumed, without
independent verification, that the aggregate allowances and
reserves for loan losses of the Company and First Federal were
adequate to cover such losses.

Based on the foregoing and such other factors as we deem
relevant, it is our opinion as investment bankers that, as of the
date hereof, the consideration to be received in the Merger is
fair, from a financial point of view, to the stockholders of the
Company.

Very truly yours,

/s/ Prairie Capital Servics, Inc.

B-2

<PAGE>
<PAGE>
APPENDIX C<PAGE>
<PAGE>
APPENDIX C

SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW

262 APPRAISAL RIGHTS. -- (a) Any stockholder of a
corporation of this State who holds shares of stock on the date of
the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented
thereto in writing pursuant to Section 228 of this title shall be
entitled to an appraisal by the Court of Chancery of the fair value
of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a
nonstock corporation; the words "stock" and "share" mean and
include what is ordinarily meant by those words and also membership
or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument
issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation,
which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to Sections 251
(other than a merger effected pursuant to Section 251(g) of this
title), 252, 254, 257, 258, 263 or 264 of this title:

(1) Provided, however, that no appraisal rights under
this section shall be available for the shares of any class or
series of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers,
Inc. or (ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the
merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in
subsections (f) or (g) of Section 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent corporation
if the holders thereof are required by the terms of an agreement
of merger or consolidation pursuant to Sections 251, 252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything
except:

a. Shares of stock of the corporation
surviving or resulting from such merger or consolidation, or
depository receipts in respect thereof;

b. Shares of stock of any other corporation,
or depository receipts in respect thereof, which shares of stock
(or depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be either
listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system
by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders.

c. Cash in lieu of fractional shares or
fractional depository receipts described in the foregoing
subparagraphs a. and b. of this paragraph; or
<PAGE>
d. Any combination of the shares of stock,
depository receipts and cash in lieu of fractional shares or
fractional depository receipts described in the foregoing
subparagraphs a., b. and c. of this paragraph.
C-1<PAGE>
<PAGE>
(3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger effected under Section 253
of this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any
merger or consolidation in which the corporation is a constituent
corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including those
set forth in subsections (d) and (e) of this section, shall apply
as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be submitted
for approval at a meeting of stockholders, the corporation, not
less than 20 days prior to the meeting, shall notify each of its
stockholders who was such on the record date for such meeting with
respect to shares for which appraisal rights are available pursuant
to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent
corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his
shares shall deliver to the corporation, before the taking of the
vote on the merger or consolidation, a written demand for appraisal
of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of his
shares. A proxy or vote against the merger or consolidation shall
not constitute such a demand. A stockholder electing to take such
action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify
each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or
consolidation has become effective; or

(2) If the merger or consolidation was approved
pursuant to Section 228 or 253 of this title, each constituent
corporation, either before the effective date of the merger or
consolidation or within ten days thereafter, shall notify each of
the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval
of the merger or consideration and that appraisal rights are
available for any or all shares of such class or series of stock
of such constituent corporation, and shall include in such notice
a copy of this section; provided that, if the notice is given on
or after the effective date of the merger or consolidation, such
notice shall be given by the surviving or resulting corporation to
all such holders of any class or series of stock of a constituent
corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or
resulting corporation the appraisal of such holder's shares. Such
demand will be sufficient if it reasonably informs the corporation
of the identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the
merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date
of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger
or consolidation or (ii) the surviving or resulting corporation
shall send such a second notice to all such holders on or within
10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each
stockholders who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled to
receive either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than 10 days prior
to the date the notice
C-2<PAGE>
<PAGE>
is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date
shall be such effective date. If no record date is fixed and the
notice is given prior to the effective date, the record date shall
be the close of business on the day next preceding the day on which
the notice is given.

(e) Within 120 days after the effective date of the merger
or consolidation, the surviving or resulting corporation or any
stockholder who has complied with subsections (a) and (d) hereof
and who is otherwise entitled to appraisal rights, may file a
petition in the Court of Chancery demanding a determination of the
value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of
the merger or consolidation, any stockholder shall have the right
to withdraw his demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after
the effective date of the merger or consolidation, any stockholder
who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with
respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such written statement
shall be mailed to the stockholder within 10 days after his written
request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d)
hereof, whichever is later.

(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after such
service file in the office of the Register in Chancery in which the
petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares
have not been reached by the surviving or resulting corporation.
If the petition shall be filed by the surviving or resulting
corporation, the petition shall be accompanied by such as duly
verified list. The Register in Chancery, if so ordered by the
Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown
on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week before the
day of the hearing, in a newspaper of general circulation published
in the City of Wilmington, Delaware or such publication as the
Court deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section and
who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for their
shares and who hold stock represented by certificates to submit
their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings; and
if any stockholder fails to comply with such direction, the Court
may dismiss the proceedings as to such stockholder.

(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining their
fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all
relevant factors, including the rate of interest which the
surviving or resulting corporation would have had to pay to borrow
money during the pendency of the proceeding. Upon application by
the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings
and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving
or resulting corporation pursuant to subsection (f) of this section
and who has submitted his certificates of stock to the Register of
Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled
to appraisal rights under this section.
C-3<PAGE>
<PAGE>
(i) The Court shall direct the payment of the fair value
of the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders
of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The
Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and
expenses of experts, to be charged pro rata against the value of
all the shares entitled to an appraisal.

(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded his appraisal rights
as provided in subsection (d) of this section shall be entitled to
vote such stock for any purpose or to receive payment of dividends
or other distributions on the stock (except dividends or other
distributions payable to stockholders of record at a date which is
prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be
filed within the time provided in subsection (e) of this section,
or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of his demand for an appraisal and
an acceptance of the merger or consolidation, either within 60 days
after the effective date of the merger or consolidation as provided
in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court deems
just.

(l) The shares of the surviving or resulting corporation
to which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the surviving
or resulting corporation.

C-4<PAGE>
<PAGE>

APPENDIX D<PAGE>
<PAGE>
REVOCABLE PROXY

MID-IOWA FINANCIAL CORP.
NEWTON, IOWA

ANNUAL MEETING OF STOCKHOLDERS
MARCH 22, 1999

The undersigned hereby appoints the Board of Directors of
Mid-Iowa Financial Corp. (the "Company"), with full powers of
substitution, to act as attorneys and proxies for the undersigned,
to vote all shares of the common stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of
Stockholders, to be held on Monday, March 22, 1999, at 5:00 p.m.,
local time, at the office of the Company located at 123 West Second
Street North, Newton, Iowa (the "Annual Meeting"), and at any and
all adjournments thereof, as follows:

VOTE
FOR WITHHELD
--- --------
1. The election as director of the
nominee listed below (except as
marked to the contrary below). [ ] [ ]

Gary R. Hill

INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL
NOMINEE, INSERT THAT NOMINEE'S NAME ON THE LINE PROVIDED
BELOW.

______________________________________
<TABLE>
<CAPTION> FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
2. Approval of a $15.00 per share cash-out
of shares of Mid-Iowa Financial Corp.
stock and the Agreement and Plan of
Reorganization dated August 17, 1998,
providing for such cash-out.
The $15.00 per share consideration
received by stockholders in exchange
for shares of former stock will be a
taxable event for federal income tax
purposes. As a result of the
acquisition, stockholders will no
longer hold an equity interest in
Mid-Iowa Financial Corp. or any
subsidiary. [ ] [ ] [ ]

3. Adjournment of the meeting if necessary
to permit further solicitation of
proxies in the event that there are
not sufficient votes at the time of
the meeting to approve the Agreement
and Plan of Reorganization. [ ] [ ] [ ]

</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSITIONS
LISTED ABOVE.

THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING
MATTERS RELATING TO THE CONDUCT OF THE ANNUAL MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO
BE PRESENTED AT THE ANNUAL MEETING.
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof, then the power of
said attorneys and prior proxies shall be deemed terminated and of
no further force and effect. The undersigned may also revoke
his/her proxy by filing a subsequent proxy or notifying the
Secretary in writing of his/her decision to revoke his/her proxy.

The undersigned acknowledges receipt from the Company prior to
the execution of this proxy of a Notice of Annual Meeting and a
Proxy Statement dated February 10, 1999.

Dated: February 10, 1999

________________________ ____________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER

________________________ ____________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER

Please sign exactly as your name appears on this card. When
signing as attorney, executor, administrator, trustee or guardian,
please give your full title. Corporation proxies should be signed
in corporate name by an authorized officer. If shares are held
jointly, each holder should sign.

PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.