SCHEDULE 14A

(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. )

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

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials

First Federal Bankshares, Inc.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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

N/A
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:

N/A
________________________________________________________________________________

3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):

N/A
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:

N/A
________________________________________________________________________________
5) Total fee paid:

N/A
________________________________________________________________________________
[_] Fee paid previously with preliminary materials:

N/A
________________________________________________________________________________
[_] 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:
N/A
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
N/A
________________________________________________________________________________
3) Filing Party:
N/A
________________________________________________________________________________
4) Date Filed:
September 20, 2002
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September 20, 2002

Dear Fellow Stockholder:

On behalf of the Board of Directors and management of First Federal
Bankshares, Inc. (the "Company"), I cordially invite you to attend the 2002
Annual Meeting of Stockholders. The meeting will be held at 9:00 a.m., Iowa time
on October 24, 2002 at the Sioux City Convention Center, 801 4th Street, Sioux
City, Iowa.

The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted. During the meeting we will also report on the
Company's fiscal 2002 financial and operating performance.

An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to consider
and vote upon the proposals to elect three directors of the Company and to
ratify the appointment of independent auditors of the Company for the fiscal
year ending June 30, 2003. The Board has carefully considered these proposals
and believes that their approval is in the best interests of the Company and its
stockholders. Accordingly, your Board of Directors unanimously recommends that
you vote for each of these proposals.

I encourage you to attend the meeting in person. Whether or not you attend
the meeting, I hope that you will read the enclosed Proxy Statement and then
complete, sign and date the enclosed proxy card and return it in the postage
prepaid envelope provided. Returning a properly executed and dated proxy card
will save the Company additional expense in soliciting proxies and will ensure
that your shares are represented. Please note that you may vote in person at the
meeting even if you have previously returned the proxy.

Thank you for your attention to this important matter.

Sincerely,

/s/ Barry Backhaus
-------------------------------------
Barry Backhaus
President and Chief Executive Officer

FIRST FEDERAL BANKSHARES, INC.
329 Pierce Street
Sioux City, Iowa 51101
(712) 277-0200

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 24, 2002

Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of First Federal Bankshares, Inc. will be held at the Sioux City
Convention Center, 801 4th Street, Sioux City, Iowa at 9:00 a.m., Iowa time, on
October 24, 2002.

A Proxy Card and a Proxy Statement for the Meeting are enclosed.

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

1. The election of three directors of the Company;

2. The ratification of the appointment of KPMG LLP as the auditors
of the Company for the fiscal year ending June 30, 2003;

and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.

Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on September 3, 2002
(the "Record Date") are the stockholders entitled to vote at the Meeting and any
adjournments thereof.

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

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Suzette F. Hoevet
----------------------
Suzette F. Hoevet
Secretary

Sioux City, Iowa
September 20, 2002

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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 SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.

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PROXY STATEMENT

First Federal Bankshares, Inc.
329 Pierce Street
Sioux City, Iowa 51101
(712) 277-0200

ANNUAL MEETING OF STOCKHOLDERS
To Be Held October 24, 2002

This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of First Federal Bankshares, Inc. (the
"Company"), the parent company of First Federal Bank (the "Bank" or "First
Federal"), of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting") which will be held at the Sioux City Convention Center,
801 4th Street, Sioux City, Iowa on October 24, 2002, at 9:00 a.m., Iowa time,
and all adjournments of the Meeting. The accompanying Notice of Annual Meeting
and this Proxy Statement are first being mailed to stockholders on or about
September 20, 2002.

At the Meeting, stockholders of the Company are being asked to consider and
vote upon the proposals to elect three directors of the Company and to ratify
the appointment of KPMG LLP as auditors of the Company for the fiscal year
ending June 30, 2003.

Vote Required and Proxy Information

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

The holders of a majority of all of the shares of the Company's Common
Stock entitled to vote at the Meeting, present in person or by proxy, shall
constitute a quorum for all purposes. Abstentions and broker non-votes are
counted for purposes of determining a quorum.

As to the election of directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote FOR the election of the nominees
proposed by the Board, or to WITHHOLD AUTHORITY to vote for one or more of the
nominees being proposed. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, directors are elected by a plurality of votes cast,
without regard to either broker non-votes or proxies as to which authority to
vote for the nominees being proposed is withheld.

As to the ratification of the appointment of KPMG LLP as independent
auditors of the Company, by checking the appropriate box, a stockholder may: (i)
vote FOR the item; (ii) vote AGAINST the item; or (iii) ABSTAIN from voting on
the item. Under Delaware law and the Company's Certificate of Incorporation and
Bylaws, the ratification of this matter shall be determined by a majority of the
votes cast without regard to broker non-votes or proxies marked ABSTAIN.

Proxies solicited hereby will be returned to the Company and will be
tabulated by Inspectors of Election designated by the Board of Directors.

A proxy given pursuant to the 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 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 Meeting; or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Suzette F.
Hoevet, Secretary, First Federal Bankshares, Inc., 329 Pierce Street, Sioux
City, Iowa 51101.

In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. The Company's
Certificate of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary or desirable to implement the Limit, including
determining whether persons or entities are acting in concert, and (ii) to
demand that any person who is reasonably believed to beneficially own stock in
excess of the Limit supply information to the Company to enable the Board of
Directors to implement and apply the Limit.

Voting Securities and Certain Holders Thereof

Stockholders of record as of the close of business on September 3, 2002
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 4,172,169 shares of Common Stock issued and
outstanding. The following table sets forth information as of September 3, 2002
regarding share ownership of those persons or entities known by management to
own beneficially more than five percent of the issued and outstanding Common
Stock and of all directors and executive officers of the Company as a group.
This information is based solely upon information supplied to the Company and
the filings required pursuant to the Securities Exchange Act of 1934.

Shares
Beneficially Percent
Beneficial Owner Owned of Class
---------------- ----- --------

First Federal Employee Stock Ownership Plan (1) 292,675 7.01%
329 Pierce Street
Sioux City, Iowa 51101

Tontine Financial Partners, L.P. 392,700 9.40%
Tontine Management, L.L.C.
Jeffrey L. Gendell
237 Park Avenue, Suite 900
New York, New York 10166

Directors and executive officers of the Company 357,786(2) 8.58%
as a group (8 persons)

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(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), 152,277 shares of which have been allocated to accounts of
participants. First Bankers Trust Company, N.A. of Quincy, Illinois, the
trustee of the ESOP, may be deemed to beneficially own the shares held by
the ESOP that have not been allocated to accounts of participants.
Participants in the ESOP are entitled to instruct the trustee as to the
voting of shares allocated to their accounts under the ESOP. Unallocated
shares held in the ESOP's suspense account are voted by the trustee in the
same proportion as allocated shares voted by participants.
(2) Amount includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, shares held in a
fiduciary capacity or by certain family members, with respect to which
shares the holder may be deemed to have sole or shared voting and/or
investment power. The amount above excludes options that have not vested
and do not vest within 60 days of September 3, 2002.

PROPOSAL I - ELECTION OF DIRECTORS

The Company's Board of Directors is presently composed of eight members,
each of whom is also a director of the Bank. The directors are divided into
three classes. Directors of the Company are generally elected to serve for
three-year terms which are staggered to provide for the election of
approximately one-third of the directors each year. Three directors will be
elected at the Meeting to serve for three-year terms and until their respective
successors shall have been elected and shall qualify.

The following table sets forth certain information regarding the Company's
Board of Directors, including their terms of office and nominees for election as
directors. 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 the nominee)
will be voted at the Meeting for the election of the nominees identified in the
following table. If any nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why any nominee might be unable to serve, if elected. Except as described
herein, there are no arrangements or understandings between any director or
nominee and any other person pursuant to which such director or nominee was
selected.

Current Shares of Common
Age at Term Stock Beneficially Percent
June 30, Director to Owned at of
Name(1) 2002 Position(s) Held Since(2) Expire September 3, 2002(3) Class
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NOMINEES FOR TERMS TO EXPIRE IN 2005

Arlene T. Curry, J.D. 44 N/A N/A N/A -- --
Gary L. Evans 63 Director 1989 2002 23,732(4) *
Allen J. Johnson 63 Director 1993 2002 10,000(5) *

DIRECTORS CONTINUING IN OFFICE

Barry E. Backhaus 57 President, Chief Executive 1987 2004 115,920(6) 2.78%
Officer and Chairman of the
Board
David S. Clay 44 Director 1998 2004 15,614(7) *
Jon G. Cleghorn 60 Executive Vice President, 1997 2003 73,954(8) 1.77%
Chief Operating Officer and
Director
Steven L. Opsal 48 Executive Vice President 1998 2003 57,925(9) 1.39%
and Director
David Van Engelenhoven 59 Director 1993 2003 9,131(4) *

* Less than 1%.

(1) The mailing address for each person listed is 329 Pierce Street, Sioux
City, Iowa 51101.
(2) In certain cases, reflects initial appointment to the Board of Directors of
the Bank or its mutual predecessor, First Federal Savings and Loan
Association of Sioux City, as the case may be.
(3) Includes all shares of Common Stock held directly as well as by spouses and
minor children, in trust and other indirect ownership, over which shares
the directors effectively exercise sole or shared voting and/or investment
power. Includes shares granted under the 1999 Recognition and Retention
Plan (a restricted stock plan, described below) which are subject to future
vesting but as to which voting may currently be directed.
(4) Includes 1,000 shares subject to options under the 1999 Stock Option Plan
that have vested or that vest within 60 days of the Record Date.
(5) Includes 3,000 shares subject to options under the 1999 Stock Option Plan
that have vested or that vest within 60 days of the Record Date.
(6) Includes 24,000 shares subject to options under the 1999 Stock Option Plan
that have vested or that vest within 60 days of the Record Date.
(7) Includes 823 and 3,000 shares subject to options under the 1992 Directors'
Plan and the 1999 Stock Option Plan, respectively, that have vested or that
vest within 60 days of the Record Date.
(8) Includes 15,000 shares subject to options under the 1999 Stock Option Plan
that have vested or that vest within 60 days of the Record Date.
(9) Includes 6,588 and 15,000 shares subject to options under the 1992 and 1999
Stock Option Plans, respectively, that have vested or that vest within 60
days of the Record Date.
N/A - Not Applicable

The business experience of each director and director nominee is set forth
below. All directors have held their present positions for at least the past
five years, except as otherwise indicated.

Board of Directors and Director Nominee

Barry E. Backhaus has been President and Chief Executive Officer of the
Bank since 1990 and Chairman of the Board since 1997; he has been affiliated
with the Bank since 1969. Mr. Backhaus has been President, Chief Executive
Officer and Chairman of the Board of the Company since its formation in 1998.

David S. Clay is Vice President and Treasurer of Grinnell College,
Grinnell, Iowa.

Jon G. Cleghorn has been Executive Vice President of the Bank since 1990
and has been affiliated with the Bank in various capacities since 1974. Mr.
Cleghorn has been Executive Vice President and Chief Operating Officer of the
Company since its formation in 1998.

Arlene T. Curry, JD, serves as Executive Director of The Kind World
Foundation, Dakota Dunes, South Dakota, and Senior Counsel for Waitt Media,
Inc., a TV and radio broadcasting network. From 1995 to 1999, Ms. Curry served
as Vice President of Government Relations for the Siouxland Chamber of Commerce.

Gary L. Evans is the retired President and Chief Executive Officer of Sioux
Honey Association.

Allen J. Johnson is the retired President and Chief Executive Officer of
Great West Casualty Company, a property and casualty company located in South
Sioux City, Nebraska.

Steven L. Opsal is Executive Vice President of the Bank. Mr. Opsal was
previously the President and Chief Executive Officer of Grinnell Federal Savings
Bank and GFS Bancorp, Inc. prior to their merger into the Bank. Mr. Opsal has
been Executive Vice President of the Company since its formation in 1998.

David Van Engelenhoven is the President of Van Engelenhoven Agency, Inc.,
an insurance agency located in Orange City, Iowa.

Meetings and Committees of the Board of Directors

The business of the Company's Board of Directors is conducted through
meetings and activities of the Board and its committees. During the fiscal year
ended June 30, 2002, the Board of Directors held nine regular meetings. During
the fiscal year ended June 30, 2002, no directors attended fewer than 75 percent
of the total meetings of the Board of Directors and committees on which such
director served.

The Board of Directors of the Company maintains an Audit Committee and a
Compensation and Benefits Committee.

The Compensation and Benefits Committee consists of Directors David S.
Clay, Gary L. Evans, Harland D. Johnson and David Van Engelenhoven. The
Committee meets to review the performance of officers and employees and
determines compensation and benefits programs and adjustments. The Committee met
two times in fiscal 2002.

The Audit Committee of the Company consists of Directors David S. Clay,
Allen J. Johnson and David Van Engelenhoven. The Audit Committee met four times
in fiscal 2002. The Audit Committee of the Board of Directors of the Company
serves as the representative of the Board for general oversight of the Company's
financial accounting and reporting process, systems of internal controls
regarding finance, accounting and legal compliance and monitoring the
independence and performance of the Company's independent auditors and internal
auditing department. The Company's management has primary responsibility for
preparing the Company's financial statements and the Company's financial
reporting process. The Company's independent accountants, KPMG LLP, are
responsible for expressing an opinion on the conformity of the Company's
financial statements to generally accepted accounting principles. The Board of
Directors adopted a written Charter for the Audit Committee in May 2000, which
was revised in September 2001.

Audit Committee Report

As part of its responsibilities, the Audit Committee hereby reports the
following:

1. The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management.

2. The Audit Committee has discussed with the independent accountants the
matters required to be discussed by SAS 61 (Codification of Statements
on Auditing Standards, AU 380).

3. The Audit Committee has received the written disclosures and the
letter from independent accountants required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees,
and has discussed with the independent accountants the independent
accountants' independence.

4. Based on review and discussions referred to in paragraph 1 through 3
above, the Audit Committee recommended to the Board of Directors of
the Company, and the Board has approved, that the audited financial
statements be included in the Company's annual report on Form 10-K for
the fiscal year ended June 30, 2002, for filing with the Securities
and Exchange Commission.

Each of the members of the Audit Committee is independent as defined under
the listing standards of the National Association of Securities Dealers, Inc.

This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates this information by reference.
This report shall not otherwise be deemed filed under such Acts.

The undersigned members of the Audit Committee have submitted this report.

David S. Clay
Allen J. Johnson
David Van Engelenhoven

Ownership Reports by Officers and Directors

The Common Stock of the Company is registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934 (the "Exchange Act"). The officers and
directors of the Company and beneficial owners of greater than 10% of the
Company's Common Stock ("10% beneficial owners") are required to file reports on
Forms 3, 4 and 5 with the Securities and Exchange Commission (the "SEC")
disclosing changes in beneficial ownership of the Common Stock. SEC rules
require disclosure in the Company's proxy statement of the failure of an
officer, director or 10% beneficial owner of the Company's Common Stock to file
a Form 3, 4 or 5 on a timely basis. Based on the Company's review of such
ownership reports, no officer, director or 10% beneficial owner of the Company
failed to file such ownership reports on a timely basis for the fiscal year
ended June 30, 2002.

Directors' Compensation

Each non-employee member of the Board of Directors of First Federal
received fees of $750 for each meeting attended in fiscal 2002. Each
non-employee member of Board committees was paid $250 for each committee meeting
attended during fiscal 2002. During the fiscal year ended June 30, 2002, First
Federal paid a total of $53,000 in directors' and committee fees, which amounts
included fees deferred at the election of directors pursuant to the Deferred
Compensation Plan for Directors. See "Benefits--Deferred Compensation Plan for
Directors."

In addition to the foregoing fees, First Federal pays annual retainer fees
of $6,000 for each non-employee director. Such retainer fees are paid on a
quarterly basis.

No separate compensation was paid to directors for service on the Board of
Directors or Board Committees of the Company.

Benefits

Pension Plan. First Federal enrolls all regular full-time employees who
have attained the age of 21 and completed one year of service of 1000 hours or
more with First Federal, in a defined benefit non-contributory pension plan. The
pension plan provides for monthly payments to or on behalf of each covered
employee upon the employee's retirement. These payments are calculated in
accordance with a formula based on the employee's "average annual compensation,"
which is defined as the highest average of total compensation for five
consecutive calendar years of employment.

The formula for determining normal retirement allowance is: 1.5%* X years
of benefit service X high 5 average salary = regular annual allowance.

Under the plan, the Bank makes an annual contribution for the benefit of
eligible employees computed on an actuarial basis. The plan has been in a fully
funded status for a significant number of years, but it is expected that
contributions will be required in fiscal year 2003. Employee benefits under the
plan vest as designated in the schedule below:

Completed Years Vested
of Employment Percentages
------------- -----------

Fewer than 5 ...................................... 0%
5 or more.......................................... 100%

The following table illustrates regular annual allowance amounts at age 65
under the regular retirement benefit plan provisions available at various levels
of compensation and years of benefit service (figured on the formula shown
above):

Years of Benefit Service
---------------------------------------------------------------------------
Average Salary 10 15 20 25 30
-------------------------------------------------------------------------------------------------------

$ 20,000 $ 3,000 $ 4,500 $ 6,000 $ 7,500 $ 9,000
$ 30,000 $ 4,500 $ 6,750 $ 9,000 $ 11,250 $ 13,500
$ 50,000 $ 7,500 $ 11,250 $ 15,000 $ 18,750 $ 22,500
$ 75,000 $ 11,250 $ 16,875 $ 22,500 $ 28,125 $ 33,750
$ 100,000 $ 15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000
$ 150,000 $ 22,500 $ 33,750 $ 45,000 $ 56,250 $ 67,500

As of June 30, 2002, Mr. Backhaus had 31 years of benefit service, Mr.
Cleghorn had 26 years of benefit service, and Mr. Opsal had 26 years of benefit
service under the pension plan.

Employee Stock Ownership Plan and Trust. The Bank has established the
Employee Stock Ownership Plan (the "ESOP") for eligible employees. The ESOP is a
tax-qualified plan subject to the requirements of the Employee Retirement Income
Security Act of 1974 ("ERISA") and the Internal Revenue Code of 1986, as amended
(the "Code"). Employees with a 12 month period of employment with the Bank
during which they worked at least 1,000 hours and who have attained age 21 are
eligible to participate. Shares purchased by the ESOP are held in a suspense
account for allocation among participants.

______________________________________________

*2% on all accrued benefits through September 1, 1996.

Contributions to the ESOP and shares released from the suspense account are
allocated among participants on the basis of compensation in the year of
allocation, up to an annual adjusted maximum level of compensation. Benefits
generally become 100% vested after five years of credited service. Participants
were credited for years of service with the Bank prior to the effective date of
the ESOP. Forfeitures are reallocated among remaining participating employees in
the same proportion as contributions. Benefits may be payable upon death,
retirement, early retirement, disability, or separation from service.

The Compensation Committee of the Board of Directors administers the ESOP.
The committee may instruct the trustee of the ESOP regarding investment of funds
contributed to the ESOP. The ESOP trustee must vote all allocated shares held in
the ESOP in accordance with the instructions of the participating employees.
Under the ESOP, unallocated shares and shares held in the suspense account will
be voted in a manner calculated to most accurately reflect the instructions the
ESOP trustee has received from participants regarding allocated stock, subject
to and in accordance with the fiduciary duties under ERISA owed by the trustee
to the ESOP participants.

Stock Option Plans. In 1992, the Board of Directors of the Bank adopted the
First Federal Savings Bank of Siouxland 1992 Incentive Stock Option Plan (the
"1992 Stock Option Plan") and the 1992 Stock Option Plan for Outside Directors
(the "Directors' Plan"). In connection with the formation of the Company,
options under such plans to purchase common stock of the Bank were converted
into options to purchase the Company's Common Stock. All officers and key
employees of the Company, the Bank and its subsidiaries are eligible to
participate in the 1992 Stock Option Plan. Only non-employee directors are
eligible to participate in the Directors' Plan. In 1999, the Board of Directors
of the Company adopted the 1999 Stock Option Plan (the "1999 Stock Option
Plan"), which was approved by Company stockholders in October 1999. Officers,
employees and non-employee directors of the Company, the Bank and its
subsidiaries are all eligible to participate in the 1999 Stock Option Plan.

Pursuant to the 1992 Stock Option Plan, the Directors' Plan and the 1999
Stock Option Plan, stock options for 164,353, 41,088 and 263,500 shares,
respectively, were eligible for issuance to plan participants. As of June 30,
2002, options on 156,510, 34,663, and 249,000 shares, respectively, had been
issued to participants pursuant to these plans.

Pursuant to these option plans, grants may be made of (i) options to
purchase Common Stock intended to qualify as incentive stock options under
Section 422 of the Code, (ii) options that do not so qualify ("non-qualified
options"), and (iii) re-load options, dividend equivalent rights and "Limited
Rights" (described below) that are exercisable only upon a change in control of
the Company. Incentive stock options may only be granted to employees of the
Company, the Bank or an affiliate of the Company or the Bank. Non-employee
directors may be granted non-qualified stock options.

The grant of awards under the 1992 Stock Option Plan and the 1999 Stock
Option Plan is determined by a committee of the Board of Directors consisting of
the four non-employee directors serving on the Compensation and Benefits
Committee. With respect to the Directors' Plan, all options were granted at the
time of the implementation of the plan. Each then director was granted
non-qualified options to purchase 3,903 shares and the Chairman of the Board
received options for an additional 3,903 shares of common stock. The Directors'
Plan further provides that each new director shall be granted options to
purchase 500 shares to the extent options remain available in, or are returned
to, the Directors' Plan.

In granting options to plan participants, the Compensation and Benefits
Committee considers, among other things, position and years of service, and the
value of the individual's services to the Company and the Bank. Options are
exercisable on a cumulative basis in equal installments at a rate of 20% per
year commencing one year from the date of grant; provided, however, that all
options are 100% exercisable in the event the optionee terminates his employment
due to death or disability. In addition, options under the 1992 Stock Option
Plan also are 100% exercisable in the event the optionee terminates his
employment due to retirement or in the event of a change-in-control of the
Company or the Bank. The exercise price may be paid in cash or Common Stock.
Under the plans, the Company may issue replacement options in exchange for
previously granted non-statutory options at exercise prices that may be less
than the previous exercise price, but may not be less than 85% of the fair
market value of the Common Stock on the date such replacement options are
granted.

The term of stock options generally does not exceed 10 years from the date
of grant. No incentive stock option granted in connection with the plans is
exercisable more than three months after the date on which the optionee ceases
to perform services for the Bank or the Company, except that, in the case of the
1992 Stock Option Plan, incentive stock options may be exercised for up to one
year in the event of death, disability, retirement or a change-in-control of the
Company, and in the case of the 1999 Stock Option Plan, incentive stock options
may be exercised for up to five years in the event of death or disability.
However, if an optionee ceases to perform services for the Bank or the Company
due to retirement or following a change in control, any incentive stock options
exercised more than three months following the date the optionee ceases to
perform services shall be treated as a non-statutory stock option as described
above. Options granted under the Directors' Plan expire upon the earlier of 10
years following the date of grant or one year following the date the optionee
ceases to be a director.

Pursuant to the 1992 Stock Option Plan and the 1999 Stock Option Plan, the
Compensation and Benefits Committee may grant Limited Rights to employees
simultaneously with the grant of any option. A Limited Right gives the option
holder the right, upon a change in control of the Company or the Bank, to
receive the excess of the market value of the shares represented by the Limited
Rights on the date exercised over the exercise price. Limited Rights generally
will be subject to the same terms and conditions and exercisable to the same
extent as stock options, as described above. Payment upon exercise of a Limited
Right will be in cash, or in the event of a merger transaction, for shares of
the acquiring corporation or its parent, as applicable. Limited Rights may be
granted at the time of, and must be related to, the grant of a stock option. The
exercise of one will reduce to that extent the number of shares represented by
the other. If a Limited Right is granted with and related to an incentive stock
option, the Limited Right must satisfy all the restrictions and limitations to
which the related incentive stock option is subject.

The 1999 Stock Option Plan provides for dividend equivalent rights, which
may also be granted at the time of the grant of a stock option. Dividend
equivalent rights entitle the option holder to receive an amount of cash at the
time that certain extraordinary dividends are declared equal to the amount of
the extraordinary dividend multiplied by the number of options that the person
holds. For these purposes, an extraordinary dividend is defined under the plans
as any dividend paid on shares of Common Stock where the rate of dividend
exceeds the Bank's weighted average cost of funds on interest-bearing
liabilities for the current and preceding three quarters.

The 1999 Stock Option Plan also provides for reload options, which may also
be granted at the time of the grant of a stock option. Reload options entitle
the option holder, who has delivered shares that he or she owns as payment of
the exercise price for option stock, to a new option to acquire additional
shares equal in amount to the shares he or she has traded in. Reload options may
also be granted to replace option shares retained by the employer for payment of
the option holder's withholding tax. The option price at which additional shares
of stock can be purchased by the option holder through the exercise of a reload
option is equal to the market value of the previously owned stock at the time it
was surrendered to the employer. The option period during which the reload
option may be exercised expires at the same time as that of the original option
that the holder has exercised.

Shares as to which awards may be granted under the plans, and shares then
subject to awards, will be adjusted by the Compensation and Benefits Committee
in the event of any merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, combination or exchange of shares or other change
in the corporate structure of the Company without receipt of payment or
consideration by the Company.

Shares issued upon the exercise of a stock option may be either authorized
but unissued shares, reacquired shares held by the Company as treasury stock, or
shares purchased by the respective option plan. Any shares subject to an award
that expires or is terminated unexercised will again be available for issuance
under the respective plan. Generally, in the discretion of the Compensation and
Benefits Committee, all or any non-qualified stock options granted under a stock
option plan may be transferable by the participant but only to the persons or
classes of persons determined by the Committee. No other award or any other
right or interest therein is assignable or transferable except under limited
exceptions set forth in the option plan.

No additional options were granted to the named executive officers in
fiscal 2002. The table below sets forth certain information with respect to
options exercised by named executive officers in fiscal 2002.

====================================================================================================================

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
====================================================================================================================

Number of Unexercised Value of Unexercised
Shares Acquired Value Options at In-The-Money Options at
Name Upon Exercise Realized Fiscal Year-End Fiscal Year-End
------------------------- --------------------------

Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------

Barry E. Backhaus 3,688 $33,576 16,000/24,000 $67,200 / $100,800
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------

Jon G. Cleghorn 2,177 $23,368 10,000/15,000 $42,000 / $63,000
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------

Steven L. Opsal -- -- 16,588/15,000 $42,000 / $63,000
============================ ================ ================= ========================= ==========================

Recognition and Retention Plans. The Bank established in 1992 the First
Federal Savings Bank of Siouxland Recognition and Retention Plan and Trust (the
"1992 Recognition Plan"). In connection with the formation of the Company,
shares of common stock of the Bank issued or issuable under the Recognition Plan
were converted into shares of Company Common Stock. The Bank contributed funds
to the Recognition Plan to enable the Recognition Plan to acquire in the
aggregate 61,633 shares of Common Stock (as adjusted). In 1999, the Company
established the 1999 Recognition and Retention Plan (the "1999 Recognition
Plan"), which was approved by the Company stockholders in October 1999. The Bank
provided sufficient funds for the 1999 Recognition Plan to acquire 79,050
authorized-but-unissued shares of Common Stock of the Company.

Key employees and non-employee directors of the Company and the Bank are
eligible to participate in the 1999 Recognition Plan. Both plans are intended to
provide plan participants with a proprietary interest in the Company in a manner
designed to encourage such persons to remain with these entities and to provide
further incentives to achieve corporate objectives.

The non-employee directors of the Company's Compensation and Benefits
Committee administer the plans and make awards under the plans. Awards are
granted in the form of shares of Common Stock held by the plan. Awards are
nontransferable and nonassignable and the shares awarded are earned (i.e.,
become vested) at a rate of 20% per year commencing one year from the date of
the award. The Committee members may provide for a less or more rapid earnings
rate with respect to awards granted under the plan. Awards become fully vested
upon termination of employment due to death or disability. In addition, pursuant
to the 1992 Recognition Plan, awards become fully vested following a termination
of employment in connection with normal retirement or a change in the control of
the Company. In all other cases where an officer terminates employment with the
Company or the Bank prior to normal retirement, the officer's nonvested awards
will be forfeited.

When shares become vested, the participants will recognize income equal to
the fair market value of the Common Stock at that time. The amount of income
recognized by a participant will be a deductible expense for federal income tax
purposes for the Company. Under the 1992 Recognition Plan, earned shares are
distributed to participants as soon as practicable following the day on which
they are earned. When shares become vested and are actually distributed,
participants will also receive amounts equal to any accrued dividends (and
interest thereon) with respect thereto. Prior to vesting, recipients of awards
under the Recognition Plan may direct the voting of the shares allocated to
them.

Under the 1999 Recognition Plan, unvested shares are held by the Company in
escrow. Dividends on unvested shares are distributed to participants when paid.
In addition, participants have the right to vote the shares awarded to them,
whether or not vested.

Restricted stock awarded under these plans will be adjusted by the
Committee in the event of a reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or other
change in corporate structure.

Deferred Compensation Plan for Directors. In March 1995, the Board of
Directors of the Bank adopted a Deferred Compensation Plan for Directors (the
"Deferred Plan"), which became effective on January 1, 1995. Pursuant to the
Deferred Plan, directors of the Bank may elect to defer all or one-half of their
fees received for service on the Board of Directors and on committees of the
Board of Directors. The Bank shall credit to a special memorandum account the
amounts of any such deferred fees as of the last day of each month. Interest
will be paid on such amounts at a rate equal to the average weighted cost of
certificates of deposit of the Bank for the previous month. Deferred fees will
be paid out upon the death, disability or termination of a director as a
director of the Bank. At the election of the director, the distribution may be
paid out in a lump sum or in equal monthly installments over a period of ten
years, or such shorter period as shall be approved by the Board of Directors.

Discretionary Profit-Sharing Bonus Plan. In December 1994, the Board of
Directors of the Bank established the Bank's Performance Pay Plan pursuant to
which substantially all employees of the Bank are eligible for cash payments. In
April 1997, the plan was changed to the Bank's Incentive Pay Plan. In January
1999, the plan was changed to a Discretionary Profit-Sharing Bonus Plan with
payouts made annually to eligible employees. The total amount available to be
disbursed to employees is based upon the profits of the Bank and is calculated
using a formula based upon the Bank's return on average assets. The amount each
employee can receive is calculated as a percentage of his base salary, with 15%
of the eligible amount based upon the employee's tenure and 85% based upon his
individual performance as evaluated upon a variety of performance factors.
Employees in sales positions participate in the Plan on a limited basis since
they also have the opportunity to earn additional income through commissions.
For fiscal year 2002, executive management is expected to receive incentive
payouts equal to 30% of the amount available for all employees, distributed
based upon compensation.

Certain Transactions with the Bank

Under federal law, all loans or extensions of credit to executive officers
and directors must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. However, regulations
now permit executive officers and directors to receive the same terms through
benefit or compensation plans that are widely available to other employees, as
long as the director or executive officer is not given preferential treatment
compared to the other participating employees. In addition, loans made to a
director or executive officer in excess of the greater of $25,000 or 5% of the
Bank's capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the Board of Directors.
All loans made by First Federal to its officers, directors, and executive
officers were made in the ordinary course of business, were made on the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features.

As of June 30, 2002, the aggregate principal balance of loans outstanding
for all Company executive officers and directors, and family members was
$786,885.

Executive Compensation

The following table sets forth for the fiscal years ended June 30, 2002,
2001, and 2000, certain information as to the total remuneration paid by the
Bank to the Chief Executive Officer of the Bank and the Company, and each of the
other executive officers of the Company who received salary and bonuses that in
the aggregate exceeded $100,000 for fiscal year 2002.

===================== ======== =================================== =============================== ================

Annual Compensation (1) Long-Term Compensation
- --------------------- -------- ----------------------------------- ------------------------------- ----------------

Name and Year Other Awards Payouts
principal position Ended Annual ------------------------------- All
June Compensation Other
30, Salary Bonus Compensation
(3)(4) (2)
- --------------------- -------- ---------- --------- -------------- --------------------- --------- ----------------
Restricted Options/
Stock SARS LTIP
Awards (5) (#) Payouts
- --------------------- -------- ---------- --------- -------------- ----------- --------- --------- ----------------
$13,318
Barry E. Backhaus,
President and Chief 2002 $212,333 $-- $-- -- $-- $--
Executive Officer 2001 204,333 -- -- -- -- -- --
2000 200,000 44,000 -- 148,000 40,000 -- --
- --------------------- -------- ---------- --------- -------------- ----------- --------- --------- ----------------
Jon G. Cleghorn,
Executive Vice 2002 $135,287 $8,485 $-- $-- -- $-- $--
President and Chief 2001 129,752 -- -- -- -- -- --
Operating Officer 2000 127,000 31,740 -- 111,000 25,000 -- --
- --------------------- -------- ---------- --------- -------------- ----------- --------- --------- ----------------
$7,684
Steven L. Opsal,
Executive Vice 2002 $122,525 $-- $-- -- $-- $--
President 2001 117,492 -- -- -- -- -- --
2000 115,000 28,750 -- 92,500 25,000 -- --
===================== ======== ========== ========= ============== =========== ========= ========= ================

________________________________________________

(1) The Company does not maintain a deferred compensation plan for employees.
Amounts do not include benefits pursuant to the Bank's Pension Plan. See
"Benefits."
(2) The Company also provides certain members of senior management with the use
of an automobile, membership dues and other personal benefits. The
aggregate amount of such other benefits provided to each of the named
executive officers did not exceed the lesser of $50,000 or 10% of his cash
compensation.
(3) Regarding the fiscal year ended June 30, 2000, the payout to the executive
officer is pursuant to the Bank's Discretionary Profit-Sharing Bonus Plan
(See "Benefits - Discretionary Profit-Sharing Bonus Plan"), and also
reflects $18,000, $15,240, and $13,800 earned by Messrs. Backhaus,
Cleghorn, and Opsal, respectively, pursuant to the Company's executive cash
bonus plan tied to Company earnings per share targets, a plan in place only
for fiscal year 2000.
(4) Amounts represent bonuses earned by the executive and accrued as
compensation expense by the Company in the fiscal year shown. Amounts are
actually paid in the following fiscal year.
(5) Represents the fair value of the restricted stock awards at the date of
grant. Awards generally vest over a five-year period. Dividends paid with
respect to all shares awarded are paid to the recipient of the award.

Employment Agreements

The continued success of First Federal depends to a significant degree on
the skills and competence of its officers. First Federal has entered into
employment agreements with certain of its executive officers, including Barry E.
Backhaus, President and Chief Executive Officer; Jon G. Cleghorn, Executive Vice
President and Chief Operating Officer; and Steven L. Opsal, Executive Vice
President. The employment agreements are intended to assist First Federal in
maintaining a stable and competent management base by enabling First Federal to
offer protections to designated employees in the event of termination without
cause in connection with a change in control, as defined in the employment
agreements.

The employment agreement for each executive officer has a term of 36
months. On each anniversary date, the agreement may be extended for an
additional 12 months, so that the remaining term shall be 36 months. If the
agreement is not renewed, the agreement will expire 24 months following the
anniversary date. Under the agreement, the current Base Salary for Mr. Backhaus
(as defined in the agreement) is $216,000; for Mr. Cleghorn - $138,000; and for
Mr. Opsal - $125,000. The Base Salary may be increased but not decreased. In
addition to the Base Salary, the agreement provides for, among other things,
participation in retirement plans and other employee and fringe benefits
applicable to executive personnel. The agreement provides for termination by the
Bank for cause at any time. In the event the Bank terminates the executive's
employment for reasons other than disability,

retirement, or for cause, or in the event of the executive's resignation from
the Bank (such resignation to occur within the period or periods set forth in
the employment agreement) upon (i) failure to re-elect the executive to his or
her current offices, (ii) a material change in the executive's functions, duties
or responsibilities, or relocation of his or her principal place of employment
by more than 30 miles (with respect to Mr. Opsal, this restriction applies only
through September 1, 2001), (iii) liquidation or dissolution of the Bank or the
Company, (iv) a breach of the agreement by the Bank, or (v) following a change
in control of the Bank or the Company, the executive or, in the event of death,
his or her beneficiary would be entitled to a cash severance payment equal to
299% of the average of the last five years' compensation. Messrs. Backhaus,
Cleghorn and Opsal would receive an aggregate of $704,698, $448,973 and
$589,086, respectively, pursuant to the respective employment agreement upon a
change in control of the Bank or the Company, based upon current level of
compensation. The Bank would also continue the executive's life, health, dental
and disability coverage for 36 months from the date of termination. In the event
the payments to the executive would include an "excess parachute payment" as
defined by the Internal Revenue Code of 1986, as amended (relating to payments
made in connection with a change in control), the payments would be reduced in
order to avoid having an excess parachute payment.

Under the agreement, the executive's employment may be terminated upon
retirement in accordance with any retirement policy established on behalf of the
executive and with his or her consent. Upon the executive's retirement, he or
she will be entitled to all benefits available to him or her under any
retirement or other benefit plan maintained by the Bank. In the event of the
executive's disability for a period of six months, the Bank may terminate the
agreement provided that the Bank will be obligated to pay Base Salary for the
remaining term of the agreement or one year, whichever is longer, reduced by any
benefits paid to the executive pursuant to any disability insurance policy or
similar arrangement maintained by the Bank. In the event of the executive's
death, the Bank will pay Base Salary to named beneficiaries for one year
following death, and will also continue medical, dental, and other benefits to
his or her family for one year. The employment agreement provides that,
following termination of employment, the executive will not compete with the
Bank for a period of one year.

Report of the Compensation and Benefits Committee on Executive Compensation

Under rules established by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits provided
to its Chief Executive Officer and other executive officers. The Chief Executive
Officer and other executive officers did not receive compensation from the
Company in fiscal year 2002. Consequently, the compensation discussed in this
Compensation Committee Report relates to that provided by the Bank.

The Compensation and Benefits Committee each December reviews the
performance of senior management and approves changes to base compensation,
bonuses and benefits for senior management. It is intended that the executive
compensation program will enable the Company and the Bank to attract, develop
and retain strong executive officers who are capable of maximizing the Company's
performance for the benefit of the stockholders. The Committee has adopted a
compensation strategy that seeks to provide competitive compensation strongly
aligned with the financial performance of the Company and the Bank.

The Committee uses a peer comparison employing at least two published
compensation surveys in determining the salary, bonuses and benefits of senior
management. While the Committee weighs a variety of different factors in its
deliberations, it has emphasized and will continue to emphasize profitability,
return on average assets and earnings per share as factors in setting the
compensation of the Chief Executive Officer. In fiscal year 2001, no bonus was
earned by the executive officers. In fiscal year 2002, a bonus was earned by
executive officers. Other non-quantitative factors considered by the Committee
in fiscal 2002 included general management oversight of the Company and the
Bank, the quality of communication with the Board of Directors, and the
productivity of employees. Finally, the Committee considered the standing of the
Bank with customers and the community, as evidenced by the level of
customer/community complaints and compliments. While each of the quantitative
and non-quantitative factors described was considered by the Committee, such
factors were not assigned a specific weighting in evaluating the performance of
the Chief Executive Officer.

After evaluating the foregoing factors, the Committee granted a 3.85%
increase in the base salary of the Chief Executive Officer for calendar year
2002.

This report has been provided by the Compensation and Benefits Committee.

David S. Clay Harland D. Johnson
Gary L. Evans David Van Engelenhoven

Stock Performance Graph

Set forth below is a stock performance graph comparing the yearly
cumulative total return on the Company's Common Stock with (a) the yearly
cumulative total return on stocks included in the Nasdaq National Market Index,
and (b) the yearly cumulative total return on stocks included in the SNL Bank
Index. The cumulative total return on the Company's common stock was computed
assuming the reinvestment of dividends at the frequency rate with which
dividends were paid during the period shown, and reflects the exchange of
1.64696 shares of Company Common Stock for each share of Bank common stock in
April 1999. The information presented below is for the period beginning on June
30, 1997 and ending on June 30, 2002.

There can be no assurance that the Company's stock performance will
continue in the future with the same or similar trend depicted in the graph. The
Company will not make or endorse any predictions as to future stock performance.

Cumulative Return on First Federal bankshares, Inc. Common Stock

[GRAPHIC - CHART PLOTTED POINTS LISTED BELOW]

- --------------------------------- ------------ -------------- ------------- -------------- ------------- --------------
6/30/97 6/30/98 6/30/99 6/30/00 6/30/01 6/30/02
- --------------------------------- ------------ -------------- ------------- -------------- ------------- --------------

First Federal Bankshares, Inc. 100.00 153.85 69.27 58.66 97.29 106.13
Nasdaq National Market 100.00 131.39 186.27 275.03 149.00 101.46
SNL Bank Index 100.00 137.32 143.80 116.23 148.12 140.68
- --------------------------------- ------------ -------------- ------------- -------------- ------------- --------------

PROPOSAL II - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS

The Company's independent auditors for the fiscal year ended June 30, 2002
were KPMG LLP. The Company's Board of Directors has reappointed KPMG LLP to
continue as independent auditors for the Company for the fiscal year ending June
30, 2003, subject to ratification of such appointment by the stockholders.
Representatives of KPMG LLP are expected to attend the Meeting. They will be
given the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from stockholders present at the
Meeting.

Set forth below is certain information concerning aggregate fees billed for
professional services rendered by KPMG LLP during fiscal year 2002.

Audit Fees $ 97,650
Financial Information Systems
Design and Implementation Fees $ --
All Other Fees $ 58,900

The Audit Committee has considered whether the provision of non-audit
services, which relate primarily to tax services rendered, is compatible with
maintaining KPMG LLP's independence. The Audit Committee concluded that
performing such services does not affect KPMG LLP's independence in performing
its function as auditor of the Company.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR ENDING JUNE 30, 2003.

STOCKHOLDER PROPOSALS

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 office located at 329 Pierce
Street, Sioux City, Iowa 51101 no later than May 23, 2003. Any such proposal
shall be subject to the requirements of the proxy rules adopted under the
Securities Exchange Act of 1934.

ADVANCE NOTICE OF BUSINESS TO BE BROUGHT BEFORE
AN ANNUAL MEETING

The Bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before an
annual meeting. In order for a stockholder to properly bring business before an
annual meeting, or to propose a nominee to the Board, the stockholder must give
written notice to the Secretary of the Company not less than ninety (90) days
before the date fixed for such meeting; provided, however, that in the event
that less than one hundred (100) days notice or prior public disclosure of the
date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, describe briefly
the proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the stockholder in the proposed business.
In the case of nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to an annual
meeting any stockholder proposal that does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.

The date on which next year's annual meeting of stockholders is expected to
be held is October 23, 2003. Accordingly, advance written notice for certain
business, or nominations to the Board of Directors, to be brought before the
next Annual Meeting must be given to the Company by July 25, 2003. If notice is
received after July 25,

2003, it will be considered untimely, and the Company will not be required to
present the matter at the stockholders meeting.

OTHER MATTERS

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

The cost of solicitation of proxies will be borne by the Company. 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 the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE
30, 2002, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE
UPON WRITTEN OR TELEPHONIC REQUEST TO SUZETTE F. HOEVET, SECRETARY, FIRST
FEDERAL BANKSHARES, INC., 329 PIERCE STREET, SIOUX CITY, IOWA 51101 OR CALL
(712) 277-0200.

Sioux City, Iowa
September 20, 2002

REVOCABLE PROXY

FIRST FEDERAL BANKSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS

October 24, 2002

The undersigned hereby appoints the official proxy committee consisting of
the members of the Board of Directors of First Federal Bankshares, Inc. (the
"Company") who are not named as nominees below, with full powers of substitution
to act as attorneys and proxies for the undersigned to vote all shares of Common
Stock of the Company that the undersigned is entitled to vote at the 2002 Annual
Meeting of Stockholders ("Meeting") to be held at the Sioux City Convention
Center, 801 4th Street, Sioux City, Iowa, at 9:00 a.m. (Iowa time) on October
24, 2002. The official proxy committee is authorized to cast all votes to which
the undersigned is entitled as follows:
VOTE
FOR WITHHELD
--- --------
[ ] [ ]

1. The election as directors of all nominees listed below (except as marked to
the contrary below) for the respective terms specified in the proxy
statement:

Gary L. Evans
Allen J. Johnson
Arlene T. Curry, JD

INSTRUCTION: To withhold your vote for one or more nominees, write the
name of the nominee(s) on the line(s) below.

- ---------------------------

FOR AGAINST ABSTAIN
--- ------- -------

[ ] [ ] [ ]

2. The ratification of the appointment of KPMG LLP as auditors for the fiscal
year ending June 30, 2003.

The Board of Directors recommends a vote "FOR" Proposals 1 and 2.

- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE MAJORITY
OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect. This proxy may also be revoked by sending written notice to
the Secretary of the Company at the address set forth on the Notice of Annual
Meeting of Stockholders, or by the filing of a later dated proxy prior to a vote
being taken on a particular proposal at the Meeting.

The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of notice of the Meeting, a proxy statement dated
September 20, 2002, and audited financial statements.

Dated: [ ] Check Box if You Plan to Attend
--------------------- Annual Meeting

- --------------------------- -------------------------
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. If
shares are held jointly, each holder should sign.

- --------------------------------------------------------------------------------
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
- --------------------------------------------------------------------------------